US embassy cable - 04MANAMA1835

UNCLAS SECTION 01 OF 02 MANAMA 001835 
 
SIPDIS 
 
STATE FOR EB/ESC/TFS, S/CT, INL/C, IO/PHO, NEA/ARPI, EUR/PGI 
TREASURY FOR JZARATE, DGLASER, AND OFAC 
 
E.O. 12958: N/A 
TAGS: ECON, EFIN, ETTC, PREL, PTER, KTFN, BA 
SUBJECT: MENA FATF ESTABLISHED TO COMBAT MONEY LAUNDERING 
AND TERRORISM FINANCING 
 
1. (U) SUMMARY:  The inaugural meeting of the MENA FATF held 
on November 29 and 30 in Manama, Bahrain was attended by 
Ministers of Finance and Central Bank Governors from fourteen 
countries in the Middle East and North Africa.  The ministers 
selected a President, Vice President and Executive Secretary, 
but postponed action on the work program until the first 
Plenary in March 2005.  In discussing the MOU, a conflict 
over decision-making was resolved by increasing the size of a 
quorum to three quarters and requiring consensus of those in 
attendance at a Plenary for a decision.  The US delegation 
led by Treasury A/S Zarate held bilateral meetings with 11 
countries during the conference.  Zarate also met with 
Bahraini Minister of Finance and National Economy Saif who 
discussed the establishment, in Bahrain, of a special court 
to try financial crimes cases.  END SUMMARY. 
 
2. (U) On November 29 and 30, in Manama, Bahrain, ministerial 
delegations from fourteen Middle East and North Africa 
nations attended the inaugural meeting of the Middle East and 
North Africa Financial Action Task Force (MENA FATF). (Note: 
FATF is an international body that sets standards and 
promotes best practices on anti-money laundering and 
combating the financing of terrorism (AML/CFT) issues.  End 
note) The meeting was attended by the Minister of Finance 
and/or Central Bank Governor from Algeria, Bahrain, Egypt, 
Jordan, Kuwait, Lebanon, Morocco, Oman, Qatar, Saudi Arabia, 
Syria, Tunisia, UAE, and Yemen. There were also observer 
delegations from Iraq, France, the GCC, the UK, IMF, World 
Bank, FATF, and a US delegation headed by Assistant Secretary 
of the Treasury, Juan Zarate.  The US Delegation had 
representatives from Treasury, OFAC, FinCEN, FBI, State EB 
and INL, and Embassy Baghdad. 
 
3. (U) The first day of the conference was a technical 
session during which attendees quickly agreed on the 
President, Vice President, and Executive Secretariat. 
However, there was intense debate on the MOU over how 
decisions for the body would be made.  The discussion hinged 
on the word for "consensus" in the Arabic translation of the 
MOU that some parties argued be interpreted as "unanimous." 
The USG delegation was concerned that with this 
interpretation any party could passively block an initiative 
by not acting and thereby deny unanimity.  After some 
wrangling, the group eventually agreed to a "consensus of all 
members attending the Plenary Meeting" and increased the 
necessary quorum from half to three-fourths of the total 
members.  In later discussions, Sultan Bin Nasser Al Suwaidi, 
UAE Central Bank Governor, felt that the issue was not 
critical and predicted that the internal group pressure would 
keep the group from deviating from FATF principles. 
 
4. (U) On the second day of the conference, the delegation 
heads from the attending member nations ratified the 
memorandum of understanding (MOU) to create the new body and 
establish the secretariat in Bahrain.  This was followed by a 
press conference announcing the new organization's  first 
President, Vice President and Executive Secretary.   The 
group chose Dr. Muhammad Baasiri of Lebanon as the first 
President, and Mahmoud Abdel Latif of Egypt as the first Vice 
President to serve 1-year terms.  Additionally, Adel Hamad Al 
Qulish of Saudi Arabia will act as the Executive Secretary 
for a four-year term.  They also announced that the first 
plenary meeting would be held no later than the end of March 
2005 in Lebanon.  The only item not agreed upon, or even 
discussed at the meeting was the work program for the MENA 
FATF - this will be the primary discussion at the upcoming 
plenary. 
 
US/ME & NA Bilateral Meetings on AML/CFT 
 
5. (U) During the two-day conference, the US delegation met 
with representatives from Syria, Jordan, Lebanon, Oman, Iraq, 
Kuwait, Egypt, Yemen, Qatar, UAE, Algeria, and Bahrain.  They 
also held a trilateral meeting with Syria, Iraq and the 
United States.  During the bilateral meetings, the US 
delegation addressed implementation of money laundering and 
terrorism financing regulations and inquired about the 
problem of cash couriers and how the countries were 
regulating this possible loophole.  (Note: The meetings with 
Syria, Jordan, Kuwait, and UAE, are addressed in Septels. End 
note.) 
 
Kudos to the Bahrainis 
 
6. (U) On December 1, A/S Zarate and Charge met with Abdullah 
Hassan Saif, Minister of Finance and National Economy, and 
Sheikh Hamad Bin Khalifa Al Khalifa, the Governor of the 
Bahrain Monetary Agency.  Zarate congratulated the Minister 
on the success of the MENA FATF inaugural and on his 
leadership in bringing about this new regional body.  Saif 
felt the new organization was a vote of confidence for 
Bahrain,s efforts in AML/CFT issues. 
 
7. (U) Saif also indicated that Bahrain was working to 
establish a special court to try financial crimes and that 
they had already sent some judges to training courses on 
financial crimes.  When Zarate brought up new Section 311 
authority created by the USA PATRIOT Act, Saif recommended 
that instead of using this unilateral tool the USG should 
provide countries with the necessary information and let them 
take steps to correct any problems.  Specifically Saif said 
that they would take the action if there was any issue in 
Bahrain. 
 
8. (U) Comment. MENA FATF is a significant development for 
the region.  As a FATF styled regional body, it will promote 
best practices on AML/CFT issues, do mutual evaluations of 
its members against the FATF standards, and work with its 
members to comply with international standards and measures. 
The MENA region has been slow to loosen banking secrecy laws, 
adopt proper compliance systems, and is seen as a haven for 
terrorism financing.  Therefore, the creation of the MENA 
FATF is critical for pushing the Middle East and North 
African region to improve the transparency and regulatory 
frameworks of their financial sectors.  However, the real 
success of the MENA FATF will be if it can get its members to 
implement and enforce the new laws and regulations. 
 
MONROE