US embassy cable - 05ANKARA5037

C O N F I D E N T I A L SECTION 01 OF 02 ANKARA 005037 
 
SIPDIS 
 
TREASURY FOR U/S LEVEY, RACHEL LEBENSON 
TREASURY FOR FINCEN - MARY JO MELACON 
DOJ FOR SUZANNE HAYDEN 
 
E.O. 12958: DECL: 08/26/2010 
TAGS: EFIN, KTFN, PTER, TU 
SUBJECT: TURKEY FOLLOW UP ON TERROR FINANCE 
 
REF: A. ANKARA 3863 
     B. ANKARA 4622 
     C. ANKARA 3194 
 
Classified By: Charge d'Affairs Nancy McEldowney.  Reasons 1.4, b and d 
. 
 
1. (SBU) Summary.  Taking up Treasury U/S Levey's offer to 
help in Turkey's preparation for its upcoming FATF review, 
Turkey's financial intelligence unit, MASAK, is organizing an 
interagency GOT group to meet with Embassy on September 15. 
The goal of the meeting is to identify areas for focused 
bilateral cooperation to address the deficiencies identified 
by U/S Levey, as well as to exchange actionable information 
lead to designations of PKK financiers and fronts in Europe 
and Iraq.  This is an unprecedented opportunity to engage 
deeply with the Turks on terrorism finance; to take advantage 
of it, the U.S. will need to be ready to share concrete 
information on PKK financing networks, as well as be prepared 
to work closely with the Turks at the expert level on 
specific steps needed to reach FATF standards.  End Summary. 
 
Please note action requests in paras 8-9. 
 
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September 15 Interagency Meeting 
-------------------------------- 
 
2. (SBU) In an August 24 meeting with Economic Counselor, 
MASAK President Genc Osman Yarasli confirmed that the GOT had 
agreed to the follow-up proposed in Treasury U/S Levey's June 
letters to Finance Minister Unakitan and Justice Minister 
Cicek (ref A).  Specifically, we set September 15 for a 
meeting between embassy representatives and an interagency 
group of Turkish officials and experts responsible for 
terrorism finance issues.  The agenda for the meeting will be 
two-fold: 1) discussing Turkey's preparation for its FATF 
review next year with the aim of identifying opportunities 
for cooperation with the United States, and 2) sharing 
information with a view to joint action to designate PKK 
financial fronts and organizations. 
 
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FATF Preparation 
---------------- 
 
3.  (SBU)  In the September 15 meeting, discussion of 
Turkey's preparedness for the FATF review will focus on the 
six points identified in Levey's letter.  Turkish officials 
will brief on Turkish progress in addressing the issues 
identified in those points with a goal of identifying areas 
requiring additional work where USG assistance and expertise 
could be of use. 
 
4.  (SBU)  Although Yarasli agreed that U.S. experience in 
the FATF could help Turkey prepare for the FATF review, he 
cautioned that on a technical level Turkish experts well 
understand Turkey's shortcomings in meeting the FATF 
recommendations.  The challenge in meeting those standards 
was in pushing new legislation and regulation through an 
overburdened government and parliament that had multiple 
high-priority legal and regulatory reforms on its agenda. 
Furthermore, MASAK and other agencies responsible for 
financial crime were already unable to cope with and absorb 
the amount of technical assistance currently on offer from 
the EU.  Thus, to be effective, any U.S. assistance would 
have to be highly targeted and focused. 
 
----------------------- 
PKK Financial Targeting 
----------------------- 
 
5.  (C)  The second objective of the meeting is to discuss 
specific plans for joint USG/GOT action against the PKK's 
financial support network.  Yarasli proposed an exchange of 
actionable information about PKK financing networks in Europe 
and Iraq that could be used by the U.S. and Turkey -- and 
eventually EU members -- to designate PKK front groups, 
financiers and sub-organizations so as to block and freeze 
their assets. 
 
6.  (C)  Yarasli emphasized an interest in learning more 
about the PKK's financing network in Iraq.  He mentioned the 
cigarette factory in northern Iraq that Turkish officials 
claim is producing counterfeit cigarettes for sale in Turkey 
and elsewhere as an example of how Kurdish separatists fund 
themselves.  (Note Finance Minister Unakitan raised this 
specific concern with Codel Shelby and Ambassador Edelman in 
June - see ref C.  Yarasli said this was an example of the 
type of information he would like to exchange with the United 
States; he was disappointed we had not yet responded to 
Unakitan's concerns.) 
 
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Comment and Action Requests 
--------------------------- 
 
7.  (C)  Building on U/S Levey's visit in June and Codel 
Shelby's discussions three weeks earlier, we have generated 
both an unprecedented focus by the GOT on their terrorism 
finance deficiencies and a readiness to engage with us for 
the first time on the meat of the issues.  Yarasli was, 
however, frankly skeptical of our commitment to this effort. 
He advised that if the initial September 15 meeting did not 
lead to concrete steps both on FATF cooperation and 
countering PKK financing, Turkish agencies would lose 
interest. 
 
8.  (C)  Action requests:  Yarasli's deputy Ender Tosun 
suggested that participation of U.S. terror finance experts 
in the September 15 meeting would be a signal of the 
seriousness of our engagement.  Post would also note that 
participation by a Washington-based official could facilitate 
the concrete follow-up measures needed to help prepare Turkey 
for a favorable FATF review.  Post would appreciate serious 
consideration of sending the right person to Ankara to help 
facilitate this dialogue. 
 
9.  (C)  The PKK dimension of this engagement is critical: 
it is an area where we can show our commitment to helping 
Turkey fight PKK terrorism short of kinetic military action 
in northern Iraq, and it creates incentives for the Turks to 
work better with us and the international community on broad 
terrorism financing issues.  Being in a position to share 
concrete information at this meeting that could be used to 
substantiate designation of PKK financiers and fronts is an 
absolute requirement for the success of this endeavor. 
MCELDOWNEY