US embassy cable - 05KUWAIT1733

S E C R E T SECTION 01 OF 03 KUWAIT 001733 
 
SIPDIS 
 
EB/ESC/TFS MSIDDIQUI, S/CT TKUSHNER, NEA/ELA DBARON 
NEA/ARPI TWILLIAMS, NEA/I-ECON K. BRONSON, IO/PSC 
JSCHWEITZER 
NSC FOR JKEMERSON 
TREASURY FOR JZARATE, OFAC RWERNER 
MANAMA FOR JBEAL 
TREASURY FOR DGLASER, RLEBENSON,AND MEPSTEIN 
 
E.O. 12958: DECL: 04/19/2015 
TAGS: EFIN, PTER, KTFN, KU 
SUBJECT: DAS GLASER DISCUSSES TERROR FINANCE LEGISLATION 
WITH GOVERNOR OF CENTRAL BANK OF KUWAIT AND ATTORNEY 
GENERAL'S OFFICE 
 
REF: A. 2005 KUWAIT 1557 
 
     B. 2005 STATE 59301 
     C. 2005 STATE 26825 
     D. 2004 KUWAIT 1107 
     E. 2004 KUWAIT 0510 
     F. 2004 KUWAIT 0480 
     G. 2003 KUWAIT 5537 
     H. 2003 KUWAIT 5415 
 
Classified By: Ambassador Richard LeBaron for reasons 1.4 (b) and (d) 
 
1.  (U) SUMMARY: Ambassador and Treasury DAS Daniel Glaser 
met with the Governor of the Central Bank of Kuwait on April 
17, 2005.  During the visit, DAS Glaser discussed the 
designation of Muhsin Al-Fadhli and inquired about any 
accounts that the Central Bank had frozen in response to that 
designation.  Glaser also asked about the status of the $78 
million in Iraqi assets that Kuwait currently is holding and 
when they can be expected to be transferred to the DFI.  The 
meeting concluded with a discussion of the status of Kuwait's 
new terrorist financing laws and an offer from the Embassy to 
have an upcoming visiting delegation from the Department of 
Justice meet with the Central Bank staff.  Later the same 
day, DAS Glaser also met with the Attorney General of the 
Money Prosecution Department to discuss that organization's 
role in the drafting of new terrorist financing legislation. 
END SUMMARY. 
 
Muhsin Al-Fadhli 
---------------- 
 
2.  (S) During an April 17 call on the Governor of the 
Central Bank of Kuwait Shaykh Salem Abdulaziz Al-Sabah, 
Ambassador and visiting Treasury DAS Daniel Glaser discussed 
the recent designation of Kuwaiti citizen Muhsin Al-Fadhli 
under E.O. 13224 (Ref C) and asked if the Central Bank had 
frozen any Al-Fadhli accounts in Kuwait.  The Governor 
acknowledged the Central Bank's awareness of Al-Fadhli's 
designation and said that in response to the Embassy's 
earlier request they already had forwarded the details to the 
MFA to pass to Embassy.  (Note: At the time of the discussion 
the Embassy had not received the information from the MFA. 
In a follow up call to DCM, Americas Department Director 
Ambassador Khalid Al-Babtain reported that the Central Bank 
had frozen at least one account in Al-Fadhli's name 
containing KD5300 - about $18,500.  End Note). 
 
Development Fund for Iraq 
------------------------- 
 
3.  (S) Glaser next inquired about the status of the $78 
million in frozen Iraqi assets that Kuwait is required to 
transfer to the Development Fund for Iraq (DFI) under UNSCR 
1483 (Refs D, G and H).  He asked when the transfer could be 
expected to happen.  The Governor expressed some surprise to 
this question, responding that the Kuwaitis had been prepared 
to transfer the funds to the DFI but were asked by (former) 
OFAC Director Richard Newcomb to delay the transfer.  The 
Governor was unable to recall when Director Newcomb made this 
request and suggested contacting the MFA for more details. 
(Note: Also on April 17, Ambassador reviewed with MFA U/S 
Khalid Al-Jarallah Embassy's earlier queries  regarding these 
frozen assets.  U/S Al-Jarallah suggested that a provision of 
UNSR 1483 exempted from transfer funds subject to claims and 
suggested the possibility of claims against these funds by 
Kuwaiti entities.  On April 18, Ambassador provided to 
Al-Jarallah a fax message with information from DAS Glaser 
clarifying that only claims with a judgment prior to UNSCR 
1483's adoption on May 22, 2003, could be made against the 
asset.  Ambassador followed up with a call to Al-Jarallah 
reiterating the need for the prompt action pledged by U/S 
Al-Jarallah during the April 17 meeting (Ref A).  End Note). 
 
Current and Proposed Terrorist Financing Laws in Kuwait 
--------------------------------------------- -------- 
 
4.  (C) Based on information gained during an earlier meeting 
at the Ministry of Social Affairs and Labor (reported 
septel), Glaser asked the Governor about the recent focus on 
regulating charities in Kuwait and what oversight 
responsibilities the Central Bank has on these charities. 
The Governor explained that all banks must submit monthly 
reports to the Central Bank on all fund transfers made by 
charities.  He added that the chairmanship of the AML/CFT 
committee was recently transferred from the Ministry of 
Finance to the Central Bank.  Per Cabinet Resolution 868, he 
continued, all charities must have written permission from 
the Ministry of Social Affairs before funds can be 
transferred outside of Kuwait.  He did clarify that the 
approximately 40 exchange houses in Kuwait are allowed to 
send money abroad, but these transactions are under the 
supervision of the Central Bank.  The new concern, he said, 
is individuals who circumvent the charities by collecting the 
money themselves and using their personal accounts to 
transfer the funds outside of Kuwait.  There is no easy 
solution to this problem, he concluded, since it's almost 
impossible to monitor every transaction made through personal 
accounts. 
 
5.  (S) When asked about the Central Bank's involvement in 
the drafting of Kuwait's new terrorist financing legislation, 
the Governor confirmed that his office is part of the 
committee drafting the law.  (Note: The committee drafting 
new terrorist financing is different than the AML/CFT 
committee. End Note).  Glaser mentioned two key concerns that 
his office has with Kuwait's current laws: that the Bank's 
Financial Intelligence Unit (FIU) is not allowed to share 
information with other entities without the permission of the 
public prosecutor's office (which has prevented the U.S. from 
sponsoring Kuwait's membership in the Egmont Group) and that 
Kuwait has no legislation specifically criminalizing 
terrorist financing. 
 
6.  (U) Glaser presented to the Governor English and Arabic 
copies of the International Monetary Fund's "Suppressing the 
Financing of Terrorism: A Handbook for Legislative Drafting," 
explaining that the book has good information on 
international standards for terrorist financing laws. He also 
offered Treasury assistance for drafting Kuwait's new 
terrorist financing legislation. 
 
7.  (S) The Ambassador mentioned that a team from the 
Department of Justice would be coming to Kuwait soon and 
offered to have them meet with the Central Bank to discuss 
any proposed terrorist financing that Kuwait is considering. 
The Governor readily accepted this offer and the Ambassador 
said that the Embassy would contact the Central Bank to 
schedule the meeting. 
 
Request from the U.S. Attorney's Office 
--------------------------------------- 
 
8.  (S) The meeting concluded with a request for assistance 
from the U.S Attorney for the Eastern District of Virginia. 
Glaser provided the Governor with a copy of the U.S 
Attorney's written request, explaining that the U.S. 
Attorney's office is currently investigating individuals in 
the Northern Virginia area and that some of the suspicious 
transactions went through Kuwait.  The U.S. Attorney's office 
is asking Kuwait to provide specific information on these 
transactions and the accounts involved.  While expressing 
willingness to help, the Governor qualified that the Central 
Bank would have to receive permission from the Ministry of 
Justice prior to releasing any information.  He suggested 
that a copy of the request be presented to Kuwait's Attorney 
General.  Any information provided by the Kuwaitis in 
response to this request will be reported septel. 
 
Meeting with the Attorney General 
--------------------------------- 
 
9. (C)   Also on April 17 DAS Glaser met with Riyadh 
Al-Hajri, the Attorney General in the Money Prosecution 
Department of the Ministry of Justice.  When asked about his 
role in the drafting of new anti-money laundering/terrorist 
financing laws, Al-Hajri said that his office leads the 
committee that is drafting the new legislation.  (Note: this 
is a separate committee from the AML/CFT committee.  Al-Hajri 
is a member of both committees. End Note). 
 
10. (U) DAS Glaser presented to Al-Hajri English and Arabic 
copies of the International Monetary Fund's "Suppressing the 
Financing of Terrorism: A Handbook for Legislative Drafting," 
explaining that the book has good information on 
international standards for terrorist financing laws. 
Al-Hajri admitted that he supports the idea of the Kuwaiti 
FIU taking part in the international community, but 
recognized that there are no laws to allow for such 
cooperation at the moment. 
 
11. (C) DAS Glaser also provided a copy of the written 
request from the U.S. Attorney for the Eastern District of 
Virginia to Al-Hajri, explaining that the U.S. Attorney's 
office is currently investigating individuals in Northern 
Virginia and that some suspicious transactions went through 
Kuwait.  Al-Hajri agreed to review the request and would 
provide any releasable information to the Embassy. 
 
******************************************** 
Visit Embassy Kuwait's Classified Website: 
http://www.state.sgov.gov/p/nea/kuwait/ 
******************************************** 
LEBARON