US embassy cable - 04MADRID995

C O N F I D E N T I A L SECTION 01 OF 02 MADRID 000995 
 
SIPDIS 
 
STATE FOR EB, S/CT, EUR/ERA AND EUR/WE 
TREASURY FOR DAS ZARATE AND OFAC 
 
E.O. 12958: DECL: 03/25/2014 
TAGS: ETTC, EFIN, PTER, SP, Counterterrorism 
SUBJECT: TERRORISM FINANCE:  MORE IMPORTANT THAN EVER FOR 
SPAIN 
 
REF: A) STATE 37211 B) MADRID 960 
 
Classified By: Economic Counselor Judy Garber, reason 1.4 (b) and (d). 
 
1. (C) Summary.  Spain has been a strong ally in the fight 
against terrorism finance.  That said, the GOS has not always 
been as pro-active as we believe they could and should be in 
this fight.  While Spain passed bold new laws after September 
11 providing the government with administrative authorities 
to freeze suspected terrorist assets, we sense a reluctance 
on the part of our contacts to utilize these new powers and 
the regulations to implement those laws have stalled.  The 
horrific attacks of March 11 may well provide new impetus. 
Whereas before, Spain looked to test these new authorities 
against ETA rather than joining us in actions against 
non-Al-Qaeda Sanctions Committee targets, officials may now 
feel less comfortable with such a narrow approach. We are 
consulting closely with our working level contacts involved 
in these issues as they prepare transition papers for the new 
government.  We believe terrorism finance is an area ripe for 
continued strong bilateral cooperation.  End Summary. 
 
Strong Support With Lackluster Results 
-------------------------------------- 
 
2. (C) Spain has been as strong ally of the United States in 
the fight against terrorism finance.  They worked closely 
with the United States during their EU Presidency on UNSCR 
1373.  Spain agreed to chair with the United States the 
Financial Action Task Force (FATF) Working Group on Terrorism 
Finance.  They have worked closely with the United States as 
UN Counterterrorism Committee (CTC) Chair.  At our urging, 
they adopted new terrorism finance legislation providing the 
government with unprecedented administrative authority to 
freeze suspected terrorist financial assets.  Spain has been 
an important part of a core group of EU countries seeking to 
reform the EU clearinghouse process to make it more 
effective.  They strongly supported our efforts to have the 
EU designate Hamas as a terrorist organization and have been 
working with other EU member states to extend the designation 
of the PKK to KADEK/Kongra Gel.  Last but not least, Spain 
has been a prominent provider of counter-terrorism assistance 
in Latin America, North Africa and elsewhere. 
 
3.  (C) Yet for all of that support, the results in Spain 
have been marginal in measurable terms.  While Spanish 
authorities have moved rapidly to freeze accounts of those 
individuals added to UN 1267 Sanctions Committee or EU lists, 
little actual monies have been seized.  Of those accounts 
that have been frozen, the majority have been later unblocked 
due to lack of clear identifiers leading to initial error in 
the freezing action or upon petition of hardship.  Action 
taken by Spanish authorities through judicial rather than 
administrative channels are very difficult to track as there 
is no central registry of such freezing orders. 
 
Areas for Improvement 
--------------------- 
 
4.  (C) While we do not believe that Spain has failed to 
freeze any accounts of individuals on these lists, we believe 
they have not used administrative authorities now at their 
disposable to go after suspected terrorist assets.  In 
fairness, implementing regulations for the law passed in May 
2003 have yet to be approved and relevant authorities 
(members of the Terrorism Finance Oversight Committee) are 
concerned about using their new powers without full legal 
cover.  Likewise, there is considerable reluctance by the 
Ministry of Interior to notify for coordinated UN freezing 
(or EU action) any suspected Islamic terrorist financiers 
already in custody, much less those under suspicion. 
Officials voice concern that without an actual prior 
conviction of such individuals by a court of law, a judicial 
appeal process could theoretically overturn administrative 
actions to freeze assets. Our arguments that such 
administrative actions are meant to be preventative and 
pro-active in nature have fallen on deaf ears. 
 
5. (C) We also suspect that oversight of Islamic charities in 
Spain has not been as strong as it could be.  We base this 
conclusion on primarily anecdotal evidence.  For example, one 
Spanish businessman told us that in the process of due 
diligence for a multimillion dollar investment in Cartegena, 
he inquired whether there were security concerns arising from 
the area's large immigrant population.  The police reportedly 
responded that they knew that many of the North African 
immigrants in the area gave heavily to Islamic charities and 
suspected that some of these funds were being siphoned off to 
extremist causes but had no real proof.  This tracks with 
comments of our Ministry of Economy contacts who questioned 
with us the conviction of senior level officials at the 
Ministry of Interior (prior to March 11) that Islamic 
terrorism in Spain was an area of legitimate concern.  The 
focus was clearly on ETA. 
 
New Government, New Opportunities 
--------------------------------- 
 
6. (C) Spanish President-elect Zapatero has stated clearly 
that the fight against terrorism will be a priority for his 
government.  The terrorist attacks of March 11 virtually 
leave him no choice.  Our working level contacts on terrorism 
finance are starting to prepare the briefing papers for the 
incoming Zapatero government.  We are consulting closely with 
them, sharing thoughts on areas of emphasis -- ie, the 
importance of Spain notifying UNSC of suspected Al-Qaeda 
members for asset freezing purposes, reform of the EU 
clearinghouse, eliminating distinctions in EU law between 
domestic and international terrorism, etc. We will also try 
to glean inklings of the likely views of incoming officials 
(as they are named) who will be vital to keeping Spain front 
and center on these issues. 
 
7.  (C) Our contacts believe Spain will continue to be active 
on terrorism finance issues given the long-standing fight 
against ETA terrorism and the need to apply lessons learned 
from the investigation of the March 11 terrorist attacks. 
Many think the new government will want to announce new 
initiatives (real or recycled) in the fight against terrorism 
quickly, including in the area of terrorism finance.  We 
understand Treasury has already reached out to its contacts 
offering to support a conference on these issues should Spain 
still be interested in hosting an event similar to January's 
ill-fated terrorism finance conference.  It is too soon to 
know if such a conference would be favored by the new 
government, but such offers will be important gestures to the 
new government.  Spain has a lot to offer on terrorism 
finance -- and a lot more to do itself as evidence of its 
role as an al-Qaeda logistical base becomes ever clearer.  We 
strongly believe terrorism finance should remain a key area 
for continued bilateral cooperation. 
ARGYROS