US embassy cable - 05ABUDHABI720

S E C R E T SECTION 01 OF 03 ABU DHABI 000720 
 
SIPDIS 
 
NOFORN 
 
STATE FOR A/S WAYNE, NEA/ARP, S/CT, INL/ENT, EB/ESC 
STATE PASS FEDERAL RESERVE 
TREASURY FOR ZARATE, GLASER, AND MURDEN 
NSC FOR PATRICK HEFFERNAN 
 
E.O. 12958: DECL: 02/02/2015 
TAGS: ECON, EFIN, ETTC, PTER, TC, KTFN 
SUBJECT: HOMELAND SECURITY ADVISOR FRAN TOWNSEND MEETS WITH 
UAE CENTRAL BANK GOVERNOR 
 
Classified By: (U) Classified by Ambassador Michele J. Sison for reason 
s 1.4 (b) and (d). 
 
 1. (U) This is an action request.  Please see para 12. 
 
Summary 
------- 
 
2. (S/NF) Homeland Security Advisor Frances Townsend and UAE 
Central Bank Governor Sultan Nasser Al-Suwaidi met February 7 
and discussed the possible formation of a USG-UAEG terrorist 
financing task force.  They agreed that the USG would provide 
the UAEG with a written proposal on the task force concept. 
Al-Suwaidi confirmed that the Central Bank had issued 
regulations revising its reporting requirements to include 
both cash imports and exports.  He stated that the Central 
Bank had received suspicious transaction reports (or cash 
declarations) from customs authorities, but directed Townsend 
to Customs for a discussion on how aggressively they were 
enforcing the regulation.  He noted, however, that this was 
an area in which the UAE would welcome USG training. 
Townsend stressed that the new MENA/FATF organization 
presented countries in the region a way to compare "best 
practices" on Anti-Money Laundering/Terrorist Financing. 
Al-Suwaidi commented that countries in the region needed to 
do a better job in developing "coordinated or similar" 
financial sector regulations to combat terrorist financing. 
He also stressed that, while effective regulation of the 
financial sector was good, total bans (for example on hawala 
-informal money remitters) were not.  End Summary. 
 
3. (U) Homeland Security Advisor Frances Townsend met with 
Central Bank Governor Sultan Nasser Al-Suwaidi on February 7. 
 Townsend was accompanied by Assistant Secretary of State for 
Economic and Business Affairs Tony Wayne, Ambassador Sison, 
NSC and S/CT staffers and EconChief (notetaker). 
 
Joint U.S. - UAE Terrorist Financing Task Force 
--------------------------------------------- -- 
 
4. (S/NF) Townsend thanked the Governor for the Central 
Bank's close cooperation with the USG in dealing with the 
threat of terrorist financing.  She proposed that the UAEG 
consider a joint USG-UAEG terrorist financing task force as a 
way to deepen this cooperation.  She explained that the USG 
had found these working level joint task forces, which bring 
together the key agencies in both countries, made for more 
effective and rapid cooperation.  Al-Suwaidi, expressing 
initial skepticism, asked how this would improve USG-UAEG 
coordination.  He noted that the FBI was already working 
closely with the Central Bank on its Terrorist Financing 
Operations Section (TFOS) investigations, adding that he 
believed there was "nothing pending" from the Central Bank's 
side.  He asked whether Townsend could identify specific 
bottlenecks.  In response to Ambassador's comment that these 
types of task forces could also enhance Federal-State (or 
Federal-Emirate) level cooperation in both countries, he 
responded that the UAEG already coordinated through the 
national anti-money laundering committee and the 
anti-terrorism committee.  He emphasized that "in reality, we 
are in regular contact with all concerned parties across the 
UAE." 
 
5. (S/NF) Nonetheless, Al-Suwaidi suggested that the UAE 
could benefit from such a task force if it could get access 
to the USG's "watch list" of persons and entities of concern 
before the USG designated them or notified them to the UN. 
He explained that the UAE would also be able to help more 
effectively if it learned of U.S. concerns earlier.  Townsend 
replied that these task forces did improve informal 
communication earlier in the process.  Al-Suwaidi also asked 
whether this task force would improve Central Bank training 
opportunities.  He asked whether the organization would meet 
periodically or whether representatives from both countries 
would work together on a daily basis. 
 
6. (C) Townsend and Al-Suwaidi agreed that the USG would 
provide the UAEG with a written document outlining the 
proposal and possible options.  Speaking with Ambassador 
after the meeting, Al-Suwaidi emphasized that he didn't 
oppose the proposal, but needed to understand it in order to 
explain the idea to the Central Bank board of directors. 
 
Cash Couriers and Hawala 
------------------------ 
 
7. (C) Townsend thanked Al-Suwaidi for his leadership in 
regulating hawala and cash couriers.  Al-Suwaidi said that 
the UAE Central Bank would be hosting its 3rd Hawala 
Conference on April 2-3 and was working with MENA/FATF, and 
the IMF and World Bank on the program.  He also confirmed 
that the UAE Central Bank had issued a revised regulation 
requiring individuals to report cash exports (as well as 
imports) in excess of approximately $10,000.  In response to 
Townsend's question about implementation, Al-Suwaidi 
explained that the Central Bank issued regulations, but that 
the emirate level customs agencies were responsible for 
implementation.  He confirmed that customs authorities had 
sent suspicious transaction reports (or cash declarations) to 
the Anti Money Laundering and Suspicious Cases Unit, but that 
he did not know how aggressively they were enforcing the 
regulations.  He agreed that implementation was key and asked 
Townsend if the USG could provide customs with any training 
on the subject.  (Note: In a subsequent meeting, Chairman of 
Dubai's Ports, Customs & Free Zone Corporation Sultan bin 
Sulayem confirmed that Dubai customs was enforcing the cash 
reporting requirement for all passengers entering Dubai, and 
was even screening transit passengers for cash smuggling. 
According to Central Bank statistics, customs officials have 
sent the central bank 111 STRs -- or cash declarations -- 
from December 2000 until end-November 2004, or about 5% of 
the total STRs/cases received by the Central Bank during that 
time. 
 
MENA/FATF 
--------- 
 
8. (C) Townsend stressed that the new MENA/FATF organization 
provided the countries of the region an opportunity to 
coordinate "best practices" and for the UAE to demonstrate 
its leadership in the area of anti-money laundering. 
Al-Suwaidi said that, although regional central bankers met 
regularly, they needed to agree on common regulatory 
standards.   He asserted that the lack of similar standards 
hindered international cooperation and opened the door to 
subjective criticisms of financial institutions rather than 
objective assessments.  Townsend added that the lack of a 
common set of standards allowed criminals and terrorists the 
opportunity to move to jurisdictions with lower regulatory 
standards.  The Governor agreed. 
 
Saudi Arabia 
------------- 
 
9. (C) After a brief discussion of the Saudi counterterrorism 
conference, the Governor stated that the Saudis needed to 
deal with a number of underlying problems to address the 
terrorist threat.  The people in Saudi Arabia, he said, 
needed to be able to improve their lives.  He added that, in 
his opinion, growth and development would resolve many 
problems.  He explained that he had visited Jeddah in 
December and everyone he met complained about difficulties 
getting licenses to operate.  He criticized the Saudis for 
closing the money changers and exchange houses and replacing 
them with one bank.  This didn't make sense in his view, 
because a country that hosts millions of pilgrims in a year 
needs to provide more options for pilgrims and visitors to 
change money, rather than limiting them to a few bank 
branches.  He agreed that regulation was important, but 
emphasized that total bans were the wrong response to the 
terrorist financing threat.  Townsend acknowledged while the 
Saudis have made enormous progress fighting terrorism, we 
continued to work with them and more would be need to be 
done. 
 
Atmospherics 
------------ 
 
10. (C) The Central Bank Governor's first reaction to 
Townsend's proposal on joint task forces was skeptical and 
defensive.  Based on his reaction, we believe that he 
misperceived her proposal as an attack on "his" Central Bank. 
 Interestingly, he appeared to feel that there had been a 
miscommunication as well.  In a subsequent meeting with 
Legatt, Al-Suwaidi said that he might have "miscommunicated" 
with her.  He explained that when he was referring to the 
need for common standards, he was criticizing inconsistencies 
among Arab Gulf States and was not commenting on the United 
States.  He said that he had had the impression that Townsend 
may have misunderstood his remarks.  After the meeting, he 
added, he was even more concerned about the possible 
miscommunication. 
Comment and Action Request 
-------------------------- 
 
11. (S) We continue to believe that the UAEG needs to improve 
its interagency coordination and that the task force 
mechanism could help in this area.  During Townsend's meeting 
with the Dubai Crown Prince, Dubai security services (SSD) 
chief Brigadier Al-Qamsi inadvertently provided an excellent 
example of the need for better UAE interagency coordination: 
he explained that Dubai SSD had developed, independently, a 
software program to track hawala use that it thought would be 
beneficial in tracking and blocking terrorist financing. 
After developing the program, now ready for testing, they 
discovered that the Central Bank had developed its own 
computer program aimed at accomplishing the same purpose. The 
two agencies were in discussions to see which program was 
better. 
 
12. (U) Please provide embassy with a proposal for the 
terrorist financing task force that we may share with the 
UAEG. 
 
13. (U) This cable has been cleared by Homeland Security 
Advisor Townsend and Assistant Secretary for Economic and 
Business Affairs Wayne. 
SISON