C O N F I D E N T I A L SECTION 01 OF 04 KUWAIT 001687
SIPDIS
SIPDIS
STATE FOR NEA/ARP, EB FOR JSALOOM AND DAVID NELSON,
TREASURY FOR U/S LEVEY, NSC FOR JUAN ZARATE
E.O. 12958: DECL: 04/30/2016
TAGS: EFIN, PGOV, PTER, PREL, KTFN, KU
SUBJECT: TREASURY UNDER SECRETARY LEVEY DISCUSSES TERRORIST
FINANCING PRIORITIES WITH GOK OFFICIALS
REF: A. STATE 28021
B. STATE 25359
Classified By: Ambassador Richard LeBaron. Reasons 1.4 (b) and (d)
1. (C) Summary: During separate April 29 meetings with
senior GOK officials, Treasury Under Secretary Stuart Levey
praised the USG's strong alliance with Kuwait; called for a
law criminalizing terrorist financing to bolster the GOK's
steadfast CT support and address existing legal gaps;
encouraged enactment of a cash exit declaration policy to
counter cash couriers; urged greater GOK scrutiny of RIHS
operations, including the charity's branches abroad
(Albania, Bosnia, Bangladesh) suspected of financing
terrorism; urged the GOK to consider co-sponsoring a UN
designation of Kuwaiti terrorist financiers Jaber Jalahmah,
Mubarak Mishkhis Sanad Al-Bathali, and Hamid Al-Ali; U/S
Levey passed both the RIHS and Jalameh, Bathali and al-Ali
non-papers to the Foreign, Finance and Social Affairs
Ministers, and to the Deputy Central Bank Governor; and
updated the Foreign and Finance Ministers on a proposed USG
financial strategy to counter Iran's growing defiance
(septel).
2. (C) On April 29, Treasury Undersecretary for Terrorism
and Financial Crimes Stuart Levey met separately with Deputy
Prime Minister and Foreign Minister Shaykh Dr. Mohammed
Al-Sabah, Finance Minister Bader Al-Humaidhi, Social Affairs
and Labor Minister Shaykh Ali Jarrah Al-Sabah, Director
General of Kuwait Customs Ibrahim Al-Ghanim, and Deputy
Governor of the Central Bank Dr. Nabeel Al-Mannae to discuss
Kuwait's ongoing efforts to combat terrorist financing.
3. (C) The GOK officials reaffirmed their commitment to the
war on terror; highlighted ongoing GOK efforts to revise the
GOK's 2002 AML law to criminalize terrorist financing and
strengthen the Financial Intelligence Unit (FIU); welcomed
continued dialogue and cooperation with the USG on combating
terrorist financing and anti-money laundering (CTF/AML);
acknowledged GOK delays in implementing inbound cash
declaration policies; remained skeptical about enacting a
cash exit declaration policy; offered to investigate
allegations of terrorist financing against the Kuwait-based
charity Revival of the Islamic Heritage Society (RIHS) (ref
B); and concurred with the threat posed by terrorist
financiers Jalahmah, Al-Bathali, and Al-Ali (ref A), but
said they would need to get back to USG officials on
co-sponsoring a UN designation of the three individuals.
End Summary.
TF Law Long Overdue
-------------------
4. (C) U/S Levey praised the GOK's strong support for the
war on terror but pointed to existing legal gaps in the
country's CTF/AML regime, most notably the lack of a law
criminalizing terrorist financing, that undermined the
country's otherwise steadfast CT commitments. Finance
Minister Bader Al-Humaidhi acknowledged GOK procedural
delays on a new TF law but pointed to ongoing efforts to
draft a new TF law by the GOK inter-ministerial National
Committee to Combat Money Laundering and Terrorist Financing
(NC), chaired by the Central Bank (CBK) Governor.
5. (C) Deputy Central Bank Governor Dr. Nabeel Al-Mannae
voiced similar concerns about existing GOK CTF/AML
institutional weaknesses, including an FIU hampered by its
exclusion from the Egmont Group due to GOK restrictions on
the sharing of financial information. Al-Mannae added that
the draft TF law was now complete and pending a final review
by the Public Prosecutor's Office (PPO) before final NC
approval later this month. The NC's approval would open the
way for Cabinet and Parliamentary consideration and
adoption. The CBK would push for Cabinet and Parliamentary
approval before the summer recess, he underscored. Finance
Minister Al-Humaidhi was less optimistic about Parliamentary
approval until after the summer break. (NOTE: In April 2005,
GOK officials provided a similar update on GOK progress in
passing a CTF law in Kuwait to Treasury DAS Glaser.)
6. (C) Kuwait Customs Director General Ibrahim Al-Ghanim
pointed to ongoing efforts by his agency to improve
coordination and dialogue with other GOK CTF/AML entities at
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the PPO, CBK, and the Ministries of Interior and
Commerce/Industry. Kuwait Customs was also conducting
seminars and conferences to learn more about CTF/AML
policies and procedures, he added. He welcomed increased USG
technical assistance and underscored repeatedly the critical
importance of timely information and analysis to target
Kuwait Customs' efforts against terrorist financiers and
smugglers. These and other issues were also being discussed
with GCC Customs counterparts to improve coordination, he
noted.
7. (C) Al-Mannae expressed CBK dissatisfaction with the
Council of Minister's decision to house the FIU in the CBK,
pointing out that the CBK preferred housing the FIU in the
PPO or another GOK legal entity. He added that the new
draft law would rectify the FIU's existing shortfalls,
including the lack of Egmont Group membership, in order to
enhance GOK access to timely information and strengthen its
CTF/AML regime. He confirmed that the law would criminalize
terrorist financing. He said the draft had been reviewed by
the IMF. Al-Ghanim also explained that Kuwait Customs was
interested in assigning one of its officials to the FIU in an
effort to enhance Kuwait Customs' role in the CTF/AML process
and improve its access to information.
Cash Inbound and Outbound Policies Needed
-----------------------------------------
8. (C) U/S Levey pointed to increasing reliance upon cash
couriers for the financing of terrorism and called on the
GOK to implement existing inbound declaration policies and to
enact a cash exit declaration policy, despite inherent
cultural challenges posed by the country's cash-reliant
traditions. Al-Humaidhi agreed that inbound policies were
not being implemented effectively but voiced skepticism about
the possibility of a cash exit declaration policy, adding
that he was not aware of a similar requirement in the U.S.
9. (C) Customs DG Al-Ghanim apologized for the delay in
printing cash inbound declaration forms, noting that Kuwait
Customs was working closely with the Finance Ministry to
resolve the problem. U/S Levey allayed Finance Ministry
concerns that increased cash controls ran counter to a free
market economy, explaining that possessing cash was not the
issue at hand, but rather the lack of effective tracking and
declarations aimed at identifying possible misuse of funds
or revealing leads by failure to report. He encouraged
Al-Ghanim to consider targeted cash outbound enforcement at
border posts or select flights heading to countries of
concern as an important first step in tracking cash
outflows. (NOTE: After the Kuwait Customs luncheon, the
DHS/ICE official informed Treasury that the forms should have
been printed 9 months ago. Due to the printing delay, he
added that he is working with the GOK to now print both in
and outbound customs declaration forms.
Vigilance Toward Charities and Terrorist Financiers
--------------------------------------------- -------
10. (C) U/S Levey underscored the importance of increased
GOK vigilance toward Kuwaiti charities and individuals
suspected of ties to terrorism, pointing out that Kuwait's
own international reputation was threatened by such
organizations and entities. Social Affairs and Labor
Minister Shaykh Ali Jarrah Al-Sabah pointed to improved
controls over charities' activities, including the
appointment of a new audit firm to monitor charities'
accounts and the fact that all overseas funds transfers are
channeled through one GOK-regulated bank account, as part of
the GOK's continued effort to address this important issue.
11. (C) Ministry of Social Affairs and Labor Charities
Oversight Director Nasser Al-Amar provided an overview of
his office's efforts, including closures of kiosks and
charity branch bank accounts, as part of the GOK's improved
effort to enhance its oversight of charities. When asked if
the Ministry had checked up on RIHS activities in Albania,
Bosnia or Bangladesh, Al-Amar responded that Ministry of
Social Affairs coordinates with the Foreign Ministry on such
issues. U/S Levey warned of the difficulty in identifying TF
problems by simply reviewing financial records produced by a
suspect NGO, and encouraged reaching out to security services
and host governments for additional information when
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investigating suspected TF activities. U/S Levey
acknowledged improved GOK regulations and urged increased
information sharing among GOK agencies including Kuwait
State Security and the Ministry. Shaykh Ali added that "we
are doing our best" to address the challenges.
Revival of the Islamic Heritage Society (RIHS)
--------------------------------------------- -
12. (C) U/S Levey passed copies of two USG briefing papers
on RIHS branches in Bosnia, Bangladesh, and Albania and on
Kuwaiti terrorist financiers Jalahmah, Bathali, and Al-Ali
and urged timely GOK action to address USG concerns based on
the papers' substantial incriminating evidence. GOK
interlocutors, most notably Deputy Prime Minister and Foreign
Minister Shaykh Dr. Mohammed Al-Sabah, acknowledged the
USG's rationale for GOK action and welcomed the USG's
willingness to share information.
13. (C) Regarding RIHS, U/S Levey voiced USG concern with
RIHS operations overseas, pointing to the 2002 designations
of RIHS offices in Pakistan and Afghanistan and the
sustained trend of RIHS support to terrorist organizations
through other branch offices. U/S Levey highlighted
disruptive measures taken by local authorities in Albania,
Bosnia and Bangladesh in response to suspected RIHS terrorist
support activities. U/S Levey stressed that GOK vigilance on
confronting terrorist threats within Kuwait needs to be
extended to address Kuwait-based individuals and
organizations supporting terrorism abroad. With numerous
overseas branches of RIHS suspected of supporting terrorist
networks, U/S Levey stated that RIHS was like a tree bearing
poisonous fruit, a problem that must be addressed at its
roots, i.e. at its headquarters in Kuwait. He encouraged
increased GOK information sharing, vigilance and scrutiny of
RIHS headquarters in Kuwait and its branches abroad to
address the concerns outlined in the paper and to protect
Kuwait's international reputation in the war on terror.
14. (C) Dr. Mohammed asked whether Kuwait had been the sole
source of RIHS funds abroad. U/S Levey noted that the
substantial majority of the funds originated from RIHS
headquarters in Kuwait. Dr. Mohammed also stressed the
importance of determining if RIHS authorities in Kuwait were
complicit in any way. He promised to investigate the
allegations to determine if the charity had indeed violated
Kuwaiti laws. U/S Levey noted to the Foreign Minister that UN
designations can be an effective option in cases where
domestic laws cannot be successfully applied to disrupt a
suspected terrorist support network. He stressed the
importance of public accountability for terrorist financiers
in demonstrating Kuwait,s commitment to stopping
Kuwait-based entities from facilitating terrorism abroad.
15. (C) Social Affairs and Labor Minister Shaykh Ali
concurred with the importance of protecting Kuwait's
reputation abroad and agreed to review the paper closely and
respond accordingly, noting that his ministry coordinates
charity oversight abroad through the MFA and GOK Embassies.
Shaykh Ali did comment that though the GOK does check up on
projects outside of Kuwait, it is a possibility that there
are "too many transfers (funds) and too many projects
overseas" for the MSA and MFA to deal with. Information
sharing, especially input from the GOK security services and
other interagency departments, added Levey, is imperative for
effective oversight. U/S Levey stated that the Albania,
Bosnia and Bangladesh branches of RIHS are worthy of adding
to the UN 1267 list, noting that it would send a powerful
statement if the U.S. and Kuwait went to the UN together on
this issue.
Jalahmah, Bathali and Al-Ali
----------------------------
16. (C) Regarding Kuwaiti terrorist financiers Jalahmah,
Al-Bathali, and Al-Ali, U/S Levey pointed to failed GOK
attempts to prosecute the individuals because of
non-existent terrorist financing and conspiracy laws. U/S
Levey explained that a UN designation was the best
alternative to a criminal prosecution and urged the GOK to
consider co-sponsoring a UN designation of the three
individuals. A joint U.S.-Kuwait designation would
demonstrate Kuwait's resolve in holding these individuals
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accountable, U/S Levey stressed.
17. (C) Dr. Mohammed agreed that the individuals in question
were "bad characters," especially Hamid Al-Ali whom he
described as the "most dangerous." He offered to follow-up
with the Minister of Interior and said that he would get back
to USG officials on co-sponsoring a UN designation, offering
to discuss the matter further with the Prime Minister.
18. (U) U/S Levey has cleared this message.
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For more Embassy Kuwait reporting, see:
http://www.state.sgov.gov/p/nea/kuwait/?cable s
Or Visit Embassy Kuwait's Classified Website:
http://www.state.sgov.gov/p/nea/kuwait/
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LEBARON