US embassy cable - 05KUWAIT1734

C O N F I D E N T I A L KUWAIT 001734 
 
SIPDIS 
 
SENSITIVE 
 
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, MEPSTEIN 
 
E.O. 12958: DECL: 04/27/2015 
TAGS: EFIN, PTER, KTFN, KU 
SUBJECT: TREASURY DAS GETS THE COMMERCIAL VIEW ON TERRORIST 
FINANCING IN KUWAIT 
 
 
Classified By: DCM Matthew H Tueller for reasons 1.4 (b) and (d) 
 
1.  (SBU) On April 16, 2005 Treasury DAS Daniel Glaser 
attended a dinner hosted at the DCM's residence.  Several key 
members of Kuwait's commercial banking sector attended and 
over the course of the evening terrorist financing and the 
Central Bank's regulations to monitor banking transactions 
were discussed.  When asked their opinions on the Central 
Bank's regulations all of the bankers responded that while 
the regulations were tough and inevitably annoying, they were 
fair and justified nonetheless. 
 
2. (C) With regard to Islamic Banking, one of the banking 
guests commented that Islamic Banking in Kuwait has 
traditionally been run by a spectrum of ideologically 
conservative to extremist Islamists who cater to the same 
kind of customer.  In contrast, the non-sectarian banks have 
traditionally served the more moderate elements of society, 
he said.  The general Islamicization of Kuwaiti society has 
pushed people to demand more Islamic banking products and 
venues, he added, and that preachers in the mosques and 
educators in the school system urge people to conduct their 
business in Islamic banks.  As a result of this trend, the 
banking manager concluded, the non-sectarian banks have been 
pushed to open their own Islamic finance departments.  (Note: 
Currently in Kuwait there are two Islamic banks, the Kuwait 
Finance House and the new Bubiyan bank.  The Kuwait Real 
Estate Bank is converting into an Islamic Bank. End Note). 
The bankers and DAS Glaser agreed that there is nothing about 
Islamic financial products which makes them inherently more 
susceptible to abuse by terrorist financiers. 
 
3. (SBU) At the end of the evening an invitation was issued 
by Mr. Ibrahim M. Ibrahim, General Manager, International 
Banking Division at the Al-Ahli Bank of Kuwait (ABK), to tour 
the bank's Risk Management Department to see how it complies 
with the Central Bank's regulations. 
 
4.  (SBU) The DAS met with Ibrahim and his Risk Management 
Department on April 17 to discuss the bank's practices on 
monitoring transactions.  ABK uses a software package, 
RiskSecure (TM), to help manage its workflow.  With this 
system, using parameters set by the bank, suspicious 
transactions and all transactions over 3000KD (USD 10,270) 
will be flagged for review by ABK's Risk Management 
Department.  The review must be conducted within two hours of 
the transaction being flagged.  As part of their "know your 
customer" practices, Ibrahim explained, all new customers are 
checked against four separate databases prior to the bank 
allowing them to open new accounts, also through the 
RiskSecure system.  The databases checked against include 
those maintained by: OFAC, the Kuwait Central Bank, the 
United Nations and WorldCompliance (Politically Exposed 
Persons). 
 
 
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Visit Embassy Kuwait's Classified Website: 
http://www.state.sgov.gov/p/nea/kuwait/ 
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LEBARON