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Viewing cable 07KUWAIT808, TERRORIST FINANCE: TREASURY A/S O'BRIEN ENGAGES

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Reference ID Created Released Classification Origin
07KUWAIT808 2007-05-22 09:09 2010-12-05 21:09 SECRET//NOFORN Embassy Kuwait
Appears in these articles:
http://www.spiegel.de
VZCZCXRO2580
OO RUEHDE RUEHDIR
DE RUEHKU #0808/01 1420942
ZNY SSSSS ZZH
O 220942Z MAY 07
FM AMEMBASSY KUWAIT
TO RUEHC/SECSTATE WASHDC IMMEDIATE 9183
INFO RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE IMMEDIATE
RUEHAM/AMEMBASSY AMMAN IMMEDIATE 1806
RUEHGB/AMEMBASSY BAGHDAD IMMEDIATE 0879
RUEHKB/AMEMBASSY BAKU IMMEDIATE 0030
RUEHBK/AMEMBASSY BANGKOK IMMEDIATE 0223
RUEHKA/AMEMBASSY DHAKA IMMEDIATE 0374
RUEHMO/AMEMBASSY MOSCOW IMMEDIATE 0501
RUEHNR/AMEMBASSY NAIROBI IMMEDIATE 0164
RUEHPF/AMEMBASSY PHNOM PENH IMMEDIATE 0023
RUEHVJ/AMEMBASSY SARAJEVO IMMEDIATE 0010
RUEHTI/AMEMBASSY TIRANA IMMEDIATE 0072
RUEATRS/DEPT OF TREASURY WASHDC IMMEDIATE
RHEHNSC/NSC WASHDC IMMEDIATE
S E C R E T SECTION 01 OF 07 KUWAIT 000808

SIPDIS

NOFORN
SIPDIS

STATE FOR NEA/ARP, EB/ESC/TFS - LEAHY AND CANNON, S/CT -
MONOSSON, HILL, GALER, AND NOVIS;
TREASURY FOR A/S O'BRIEN, DANIEL HARRIS, AND BENJAMIM DAVIS;
NSC FOR KIFAYAT
AMMAN FOR GRANT

E.O. 12958: DECL: 05/22/2017
TAGS: KTFN EFIN ETTC PREL PTER

SUBJECT: TERRORIST FINANCE: TREASURY A/S O'BRIEN ENGAGES
GOK OFFICIALS

REF: A. STATE 53274
B. 06 STATE 146295
C. HARRIS/CATO E-MAIL DATED 21-APR-2007
D. Kuwait 730
E. 06 kuwait 4664
f. 06 kuwait 3503
g. State 1612

Classified By: Ambassador Richard LeBaron for reasons 1.4 (b) and (d).

1. (S/NF) Summary: On April 23-24, Treasury Assistant
Secretary for Terrorist Financing and Financial Crimes

Sipdis
Patrick O'Brien met with senior GOK officials on anti-money
laundering and counter-terrorism finance (AML/CTF) issues.
He conveyed USG concerns about the activities of the
Kuwait-based charity the Revival of Islamic Heritage Society
(RIHS), specifically the activities of branches in Albania,
Azerbaijan, Bangladesh, Bosnia, Cambodia, Russia, Somalia,
and Thailand. O'Brien urged the GOK to demonstrate support
for international counterterrorism efforts by withdrawing its
appeal to Qatar and allowing the UN 1267 Sanctions Committee
to designate three Kuwaiti terrorist facilitators: Jaber
Al-Jalahmah, Hamid Al-Ali, and Mubarak Al-Bathali, designated
by the U.S. in December 2006, pursuant to E.O. 13224.
O'Brien also pressed for the swift adoption of a revised
draft money laundering law that will criminalize terrorist
financing, create inbound and outbound cash reporting
requirements encompassing all ports of entry and exit, and
allow the Financial Intelligence Unit (FIU) to receive
Suspicious Activity Reports (SARs) directly from banks rather
than going through the Office of the Public Prosecutor (OPP).
In addition, he discussed the potential for further USG
technical assistance on cash couriers.

2. (S/NF) O'Brien met with xxxxxxxxxxxx In all of his meetings, O'Brien stressed
that while U.S.-Kuwait cooperation on counterterrorism was
strong, there were significant areas of USG concern on
AML/CTF. GOK officials conveyed Kuwait's strong commitment
to fighting terror in all of its forms, including through
curbs on terrorist financing, and described GOK efforts to
raise public awareness of these issues in Kuwait. MOSAL and
MFA both disagreed that RIHS activities abroad constituted
support for terrorism. xxxxxxxxxxxx, in particular, suggested
the U.S. cases against RIHS and the three terrorist
facilitators were full of holes, but failed to provide hard
evidence to support his claims. Absent "concrete evidence,"
GOK officials said that it would be impossible for the GOK to
support USG efforts to designate RIHS branches abroad or ask
Qatar to remove its hold on the designation of the three
Kuwaitis at the UN 1267 Sanctions Committee. GOK
interlocutors also indicated that a technical review of a
draft amendment to the current GOK money laundering law is
nearing completion and the revision will be presented to the
National AML/CTF Committee Chairman, the CBK Governor, soon
(see para 18). End summary.

Ministry of Foreign Affairs:
"We Need Evidence, Not Speculation"
-----------------------------------

3. (S/NF) On April 23-24, Treasury Assistant Secretary for
Terrorist Financing and Financial Crimes Patrick O'Brien
visited Kuwait for meetings with senior GOK officials to
discuss AML/CTF issues, charities -- specifically RIHS -- and
UNSCR 1267. In a two-hour long meeting with xxxxxxxxxxxx,

Kuwait 00000808 002 of 007


O'Brien expressed concern about RIHS and passed xxxxxxxxxxxx a
non-paper on its activities (ref A). O'Brien noted that the
USG has shared information on RIHS activities with the GOK
since 2002 and that non-papers were passed to the GOK on
numerous occasions detailing ongoing RIHS terrorist support
activities. O'Brien conveyed USG intentions to pursue
domestic and UN designations of eight RIHS branch offices:
Albania, Azerbaijan, Bangladesh, Bosnia, Cambodia, Russia,
Somalia and Thailand. O'Brien described enforcement actions
taken by the governments of Afghanistan, Albania, Azerbaijan,
Bangladesh, Bosnia, Pakistan, and Russia against RIHS branch
offices. He added that the USG is working with foreign
governments that have RIHS branches of concern to gather
additional evidence and pass to the GOK.

4. (S/NF) xxxxxxxxxxxx reiterated GOK concerns about the
absence of solid evidence in the USG case against RIHS and
noted that "absent hard evidence" the GOK would not support
the USG designation of RIHS and would ask Qatar to block any
names associated with RIHS brought to the UNSC.xxxxxxxxxxxx
explained that charities must receive approval both
internally -- from the Ministries of Social Affairs and
Labor, Foreign Affairs, and the Central Bank of Kuwait -- and
externally from the host governments where projects are to be
carried out. xxxxxxxxxxxx insisted that "the GOK has yet to
receive reports of wrongdoing from any of the countries where
RIHS operates" and that the GOK will not take action on USG
accusations without investigating them first. xxxxxxxxxxxx
noted that when he received the expanded USG non-paper in
September 2006, he eagerly followed up with host governments,
but the responses he has received from them to date paint a
"completely different" picture from that conveyed by the USG.
Waving a sheath of documents, xxxxxxxxxxxx said the written
report of the GOK's own findings would be shared with the USG
soon. xxxxxxxxxxxx did not present any papers containing hard
evidence, asserting that he did not want to pass information
along until he had a "full and complete report."

5. (S/NF) xxxxxxxxxxxx made the following specific points:

- Bangladesh: xxxxxxxxxxxx asserted that USG charges are
different from those of the GOB. "The USG non-paper said
RIHS' accounts were frozen while in reality the Bangladesh
NGO Office renewed RIHS' registration for another 5 years in
November 2006," he stated. He added that the GOK has been
told RIHS projects in Bangladesh are going well. (Note: the
two issues are separate, and restrictions on RIHS
Bangladesh's bank accounts should merit more concern by the
GOK. The government of Bangladesh canceled RIHS's license on
May 18. End Note).

- Russia: xxxxxxxxxxxx noted that there are no RIHS branches
in Russia, a point which the GOK has already discussed with
the GOR. All charities in Russia are approved by the
Ministry of Assistance, and the GOK was very surprised to
learn that the GOR designated RIHS -- a charity that had
Ministry approval, he continued. O'Brien replied that in
July 2006 the GOR publicly identified RIHS as a terrorist
organization, listing it among a group of 17 organizations
banned in Russia.

- Bosnia: xxxxxxxxxxxx said the GOK has received two official
letters praising RIHS' work from the Ministry of Immigration.
(Note: European forces and Sarajevan Cantonal police raided
the Sarajevo office of RIHS in December 2006. End Note).

- Albania: xxxxxxxxxxxx acknowledged that the RIHS office in
Albania has been closed since 2005, but noted that all
charity branches in Albania were closed at that time as the
result of a political decision. All charity work, he
continued, now goes through the "Religious Committee" in
Tirana. (Note: In addition to the closure of the office,

Kuwait 00000808 003 of 007


the GOA also froze RIHS's funds. End Note).

- Kosovo: xxxxxxxxxxxx stated that all charity work in Kosovo
must have the approval of European Forces Command. He
acknowledged that the GOK has received some comments, but
maintained they still differ from USG accounts. O'Brien
pointed to derogatory information on RIHS Kosovo's activities
in the RIHS non-paper (ref A).

6. (S/NF) O'Brien briefed xxxxxxxxxxxx ref A reiterating
previous assurances (ref D) that the USG will work with the
countries concerned to provide additional information to the
GOK. O'Brien noted that the USG welcomes additional
information on GOK findings, but added that the USG believes
it is time to take action. (Comment: xxxxxxxxxxxx
indicated his willingness to share GOK findings in writing in
previous meetings with Emboffs, but Post has yet to receive
anything in writing. It is unclear if he actually has any
hard evidence, including the infamous two letters of
commendation from the Bosnian Ministry of Immigration. In
mentioning RIHS Kosovo, xxxxxxxxxxxx noted that it is not among
the eight branches currently being considered for
designation. Post would appreciate additional information on
why Kosovo and Indonesia are no longer being considered, for
internal use and/or to share with the GOK if asked. End
comment.)

Ministry of Foreign Affairs on
Bathali, Al-Ali, Al-Jalahmah
------------------------------

7. (S/NF) O'Brien presented xxxxxxxxxxxx with ref B non-paper
outlining continued activity by Al-Jalahmah, Al-Ali, and
Bathali in spite of their December 7, 2006 designation in the
United States. Despite GOK assurances that their activities
would be monitored and restricted, the three have continued
to engage in fundraising and the provision of logistical
support for terrorism as well as travel outside of the
country. When asked, xxxxxxxxxxxx said the GOK would not be
willing to ask Qatar to remove its hold on the UN designation
of the three, placed there at the GOK's behest. xxxxxxxxxxxx
argued that the charges against the three have not been
proven and "the GOK would be sued" if it supported such
accusations at the UN. Speaking generally about the three
individuals, xxxxxxxxxxxx stated they were taken to the
"highest courts" and proven innocent. "I can't put them in
jail because of suspicions," he continued. When queried by
O'Brien on the nature of their crimes, it turned out that the
three were acquitted for crimes unrelated to their current
activities. For example, Jalahmah was tried for beating a
woman who was not fully covered. O'Brien pressed xxxxxxxxxxxx
on the issue, stating that current USG concerns and
derogatory information are unrelated to any prior GOK legal
action against these individuals.

8. (S/NF) xxxxxxxxxxxx continued that Bathali was not mentally
stable and that he is getting more attention than he
deserves. O'Brien responded that regardless of xxxxxxxxxxxx
impression of Bathali's mental state, he remains a threat as
demonstrated by his actions. Responding to a point in ref B
non-paper on Al-Jalahmah and Bathali's travel to Qatar to
appear on Al-Jazeera. xxxxxxxxxxxx asked O'Brien if appearing
on Al-Jazeera was a crime. O'Brien explained that the USG
concern was their travel outside of Kuwait despite GOK
assurances (ref D) to monitor their actions. xxxxxxxxxxxx
insisted that the GOK is monitoring them and is coordinating
its efforts with other Gulf countries. O'Brien reiterated
his call for GOK action noting that public action against a
bad actor engenders greater confidence in a country's AML/CTF
regime.

Ministry of Social Affairs and Labor:

Kuwait 00000808 004 of 007


Culture of Giving, Change Takes Time
--------------------------------------------

9. (S/NF) Reflecting upon the history of charitable work in
Kuwait, xxxxxxxxxxxx noted that the GOK is
trying to work with a culture of giving that is ingrained in
both society and religion, "and it is not an easy mix in
Kuwait." A 1969 law legalized charities in Kuwait and for
many years they operated on their own with little to no GOK
supervision. Today, the GOK is doing its best to determine
"how much they collect and where it goes" while not
alienating charities or their benefactors, some of whom have
considerable influence. The problem, he said, is cash
transactions. O'Brien agreed that charity is an integral and
important part of society and therefore needs to be
safeguarded. O'Brien noted that the diversion of funds
remains an important vulnerability for charities and
reiterated the importance of these external oversight
efforts. He added that of additional concern are charities
that provide funding or support on behalf of terrorist
organizations. O'Brien went on to stress the importance of
monitoring both the front and back-end of charitable giving.
He urged the need to vet organizations and recipients on the
ground and work with charities to implement sound reporting
and oversight mechanisms on the back-end.

10. (S/NF) xxxxxxxxxxxx outlined ongoing efforts (ref F) to
ensure the integrity of charitable work by increasing GOK
oversight. He highlighted four alternative donation
collection initiatives -- SMS, using K-net for electronic
transfers, opening small offices in malls staffed by a
representative from an NGO and MOSAL, and setting up an
ATM-like machine in which prospective donors can choose from
a menu of projects -- designed to create an electronic record
of all transactions that will enhance MOSAL and other GOK
entities, ability to track funds. MOSAL has an ongoing
dialogue with charities to increase the use of electronic
collection methods creating a record MOSAL and other GOK
entities can review, but he acknowledged that "it is not easy
to get them to accept." "We are not happy with the progress,
but at least they are starting to consider the options," he
explained.

11. (S/NF) Briefing MOSAL on ref A and passing ref B
non-papers, O'Brien reiterated concern about RIHS activities
and said that the USG is looking into taking domestic and UN
action against these eight branches in the near future. In
addressing O'Brien's concerns about RIHS activities abroad,
xxxxxxxxxxxx explained that while MOSAL oversees charitable
operations inside Kuwait, it continues to rely on the MFA to
oversee charities' external activities. External RIHS
projects must be endorsed by both the host government and the
local Kuwaiti Embassy before they receive GOK approval, as
was the case in Bangladesh. He conceded, however, that this
puts pressure on Kuwaiti embassy officials, especially those
in Africa and Asia. xxxxxxxxxxxx thanked the USG for encouraging
the exchange of information on RIHS noting that the GOK has
been waiting for a response from the Russians for eight
months. In response to the ref B non-paper on the three
Kuwaiti terrorist facilitators, he noted that the GOK is
aware of these individuals and is following this matter
through an interagency committee. (Comment: This is the
first we have heard of this committee. We will pursue with
the GOK. End comment).

Central Bank of Kuwait
----------------------

12. (SBU) xxxxxxxxxxxx lauded
the increased awareness and vigilance of local banks as
evidence of Kuwait,s commitment to combating financial

Kuwait 00000808 005 of 007


crime. Banks know that the GOK is serious and will enforce
penalties, he explained. He added that CBK has also begun to
receive inquiries from private citizens outside of the
financial sector who are concerned about money laundering.

13. (S/NF) Econoff asked xxxxxxxxxxxx about an April 22 report
in Kuwaiti Arabic-language daily "Al-Watan" in which Bathali
complained about his account being frozen per "instructions
from the U.S. Department of Treasury." xxxxxxxxxxxx
confirmed that a local bank froze and will soon close
Bathali,s account based on his inclusion in the Treasury
OFAC List. However, he stressed that while his account will
be closed, Bathali's funds will be returned to him.
xxxxxxxxxxxx emphasized that financial institutions in Kuwait
take this matter very seriously because of both concern for
their reputation and the impact on their relationship with
the correspondent bank. (Comment: Post believes the local
bank involved was the Kuwait Finance House. This has also
been suggested in the Kuwaiti press. End comment.)

Ministry of Finance:
Kuwait is "Making Strides in AML/CTF"
--------------------------------------

14. (C/NF) Briefing the Assistant Secretary on the GOK,s
ongoing AML/CTF efforts,xxxxxxxxxxxx noted that the GOK is doing its best to counter
money laundering and terrorist financing and has made
tremendous strides in the last 10 years, outpacing some of
its regional neighbors. He acknowledged that "there are
cancers," but reiterated that the GOK can not take action
based on rumors, and that documentation is required. In
response, O'Brien passed the Ministers non-papers on RIHS and
Jaber Al-Jalahmah, Hamid Al-Ali, and Mubarak Al-Bathali.

15. (C/NF) Customs operations also fall under the purview of
the Minister of Finance who noted that cash smuggling from
Iraq and Iran continues to be a concern, particularly on the
Iraq-Kuwait border because of volume and a lack of personnel.
He looks forward to the May 2007 opening of the Khabari
Crossing (ref C), aka K-Crossing -- which will be used
exclusively by U.S. military, Coalition Forces, and military
contractors going into and out of Iraq -- as it will take
some of the pressure off the civilian crossing at Abdali.
xxxxxxxxxxxx disclosed that Turkey has requested permission
for Turkish trucks to transit Kuwait. The GOK is unable to
accommodate the request at this time due to the already heavy
volume of traffic but he noted that the opening of K-Crossing
may allow the GOK to reconsider.

xxxxxxxxxxxx
Cash Couriers Continue to Be Problematic
--------------------------------------------- -----

16. (C/NF) O'Brien also met with xxxxxxxxxxxx, who outlined
the various challenges facing Customs operations in Kuwait,
particularly in light of continued instability in Iraq. A
priority AML/CTF concern is cash smuggling which he said is
caused, at least in part, by a ban on the export of currency
from Iraq and Iran. xxxxxxxxxxxx noted that the bulk of these
incidents seem to involve merchants who are trying to move
their money in and out of closed markets and are not related
to criminal/terror activity. To combat this trend, Kuwait
has a disclosure system for inbound travelers requiring them
to report currency in excess of KD 3000 (USD 10,000). In the
proposed draft law, xxxxxxxxxxxx said that Kuwait will move to a
declaration system. A reporting form is now in use at some
land and sea borders, specifically those with Iraq and Iran,
and will soon be in place at airports. xxxxxxxxxxxx said that
signs would be placed in airports once approved by civil

Kuwait 00000808 006 of 007


aviation authorities.

17. (C/NF) xxxxxxxxxxxx noted that communication with his Iraqi
counterparts, whom he described as a fragmented group of
individuals "representing their own party," is sporadic and
dysfunctional at best. In contrast, the DG described
communication with his Iranian counterparts as good, noting
that bilateral meetings are held at least twice a year.
xxxxxxxxxxxx welcomed continued cooperation with the U.S. and
suggested that USG sponsorship of a GCC conference on AML/CTF
with representatives from various government agencies --
Customs, MOI, Justice, Finance, etc. -- would be an
appropriate next step. Customs officials already have a
formal network to exchange ideas, he explained, but as the
nature of these issues requires a multifaceted approach an
expanded forum would be beneficial. "In the Gulf these cases
are seen as the responsibility of MOI, but Customs should be
more engaged because Customs is the first line of defense,"
he concluded. O'Brien noted that evidence shows that as
governments limit the AML/CTF vulnerabilities in the formal
financial sector, terrorist and other criminals turn to other
less regulated avenues, including cash. He commended Customs
for its efforts to date and reiterated that cash declaration
programs play a key role in combating illicit activity.
O'Brien offered technical assistance and discussed the
successful DHS/ICE cash courier training in the Philippines
and proposed a similar training in Kuwait. He suggested that
xxxxxxxxxxxx contact the DHS/ICE Attach on how to move forward.
(Note: O'Brien did not pass ref A or B non-papers during
this meeting. End note.)

Draft Terror Finance Law:
Still Undergoing Technical Review
---------------------------------

18. (C/NF) In response to A/S O'Brien's concerns about the
failure to criminalize terrorist financing in the current GOK
money laundering law, multiple interlocutors indicated that
the draft amendment to the law would include such language
and was reviewed by the National Committee's (NC) Technical
Committee on April 23. The revised draft should be presented
to the National Committee Chairman, the CBK Governor, soon.
The Governor will then forward the draft to the Cabinet who
will in turn pass it to Parliament's Legal Committee. Once
it passes the Committee, it will be presented to the full
Parliament. xxxxxxxxxxxx noted that the
Technical Committee plans to actively lobby MPs to facilitate
the draft's timely passage. xxxxxxxxxxxx
said Committee members are united on the merits of the new
draft which included two key enhancements to the FIU: 1) The
FIU will receive SARs directly, and 2) Kuwait's FIU will be
able to exchange information with other FIUs. (Note: The
GOK has chosen not to share a copy with the USG, but says the
current draft criminalizes terror financing, includes a
provision to require both inbound and outbound declarations
of cash, and allows the FIU, not the OPP, to directly receive
SARs. A similar provision on cash declarations was taken out
of the 2002 AML draft law. End note.)

19. (C/NF) O'Brien lauded the proposed amendments and
explained that changes to the structure and function of the
FIU are required for Egmont group membership. He also
offered USG assistance and comments on the draft law. When
asked for his assessment of AML/CTF regimes in the region,
O'Brien noted that, although some countries are still working
to criminalize terrorist financing, the legal framework has
developed rapidly in a relatively short period of time. The
focus now should shift toward implementation and capacity
building as the GOK and others focus on acquiring the
resources and abilities to enforce the new regimes.
xxxxxxxxxxxx also asked about the availability of a list for

Kuwait 00000808 007 of 007


money laundering and narcotics offenders. O'Brien noted that
while no such list exists for money laundering, the GOK can
subscribe to Worldcheck and other services that track UN,
OFAC, and public data like criminal charges. He further
noted that the USG has a narcotics Kingpin List, aka the
Clinton list, for narcotics indictments.

20. (SBU) A/S O'Brien cleared this cable.

********************************************* *
For more reporting from Embassy Kuwait, visit:
http://www.state.sgov.gov/p/nea/kuwait/?cable s

Visit Kuwait's Classified Website:
http://www.state.sgov.gov/p/nea/kuwait/
********************************************* *

LeBaron