US embassy cable - 05PARIS6687

UNCLAS SECTION 01 OF 02 PARIS 006687 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR EB/ESC/TFS (LLAMBERT), EUR/ERA, AND EUR/WE 
TREASURY FOR TFFC, OFAC, OIA 
JUSTICE FOR CRM/AFMLS 
 
E.O. 12958: N/A 
TAGS: ETTC, PTER, EFIN, KTFN, FR 
SUBJECT:  GOF receptive to blocking WMD Financing 
 
SENSITIVE BUT UNCLASSIFIED, NOT FOR INTERNET 
 
1. (SBU) SUMMARY: GOF officials welcomed proposals by 
visiting Treasury U/S Levey to block the financing of WMD 
proliferators.  They also described progress on new anti- 
terrorist legislation, which will close some loopholes while 
providing a framework to guarantee individual liberties. 
The legislation should enter into force before the end of 
the year.  END SUMMARY 
 
2. (U) Under Secretary of Treasury for Terrorism and 
Financial Crimes Stuart Levey led a delegation for meetings 
with GOF officials during a visit to Paris September 26-27. 
Delegation members included David Nelson, Director, 
Terrorism Finance and Economic Sanctions Policy, EB; Adam 
Szubin, Senior Advisor; Justin Serafini, Policy Advisor for 
Europe; Molly Millerwise, Public Affairs Specialist for 
Enforcement; Susan Ireland, Regional Specialist (FINCEN); 
and Christopher Burdick, Regional Specialist (OFAC). 
Meetings were held with the Bank of France's Banking 
Commission; the GOF FIU, TRACFIN; at the MFA with Interior 
and Defense Ministry representatives; and at the Ministry of 
Economy, Finance & Industry. 
 
WEAPONS OF MASS DESTRUCTION FINANCING 
------------------------------------- 
3. (SBU) The main accomplishment of the visit was securing a 
positive response to the idea that the international 
community should find a way to combat those who are engaged 
in WMD proliferation.  At the MFA meeting, arranged as an 
inter-ministerial meeting to maximize GOF buy-in, the USDEL 
spoke of US Executive Order 13382, and pressed the GOF to 
consider helping the USG convince other countries to take 
similar action.  Paul Dahan, Deputy Director of the MFA 
bureau of Strategic Affairs, Security and Disarmament, 
replied that the GOF would need to see two elements to 
support this approach: legitimacy and efficiency.  He 
stressed the need for an international norm or treaty, and 
inquired if the USG intention was to have a treaty, a UN 
resolution, or a coalition of willing states.  He suggested 
the USG should very clearly define what it wants, and 
invited the USDEL to produce a paper, which could form the 
basis for pushing the matter forward with other countries. 
He cautioned that the problem of persuasion would be the 
perception that the large countries were imposing their will 
on small countries, so he advocated assembling a critical 
mass of countries.  He signaled the GOF interest in 
supporting the USG on this issue, and willingness to further 
explore implementation modalities. 
 
NEW FRENCH ANTI-TERRORISM LAW 
----------------------------- 
4. (SBU) The day before the USDEL arrived in Paris, the 
Ministry of Interior leaked to the press that it has 
prepared new anti-terrorism legislation.  The USDEL asked 
for more details, and according to TRACFIN contacts, the new 
legislation would close a loophole in French law, namely, 
the inability of the GOF to freeze the assets of EU citizens 
resident in France who engage in terrorist-related 
activities.  To address concerns about due process, the 
legislation would grant oversight authority of data 
collection to the National Commission for Information and 
Liberty (CNIL).  The legislation would expand the circle of 
professionals required to file Suspicious Activity Reports 
with TRACFIN to include attorneys and real estate agents. 
Greater details are planned to be unveiled at the next FATF 
meeting.  The proposed legislation is still under internal 
review but according to TRACFIN should enter into force by 
the end of this year. 
 
OTHER ISSUES 
------------ 
5.  (SBU) The USDEL met with the central bank's Banking 
Commission Secretary General, Daniele Nouy, who described 
the GOF regulatory approach.  France encourages private 
sector responsibility, with a new focus on "knowing your 
structure" (as opposed to simply "your clients").  She 
characterized this focus as moving in the direction of the 
Spanish form of regulation.  The Commission insists that the 
private financial sector use all available information, even 
information publicized by other countries, in deciding how 
to undertake their financial transactions.  The USDEL 
encouraged the Commission to have financial institutions 
look at our 311 actions as guides to entities of money 
laundering concern.  Turning to the underground economy, 
Nouy commented that postal orders in France have been very 
convenient, which has been an incentive to use regular 
financial channels.  The principal destinations have been 
India, Algeria, Mali and China.  Iran and the former French 
colonies tend to use informal transfers.  The problem with 
implementing FATF guidelines is that tightening postal 
transfers would encourage illicit transfers.  Nevertheless, 
France will continue pressuring its postal service, and will 
launch a campaign against illegal transfers next year. 
 
6.  (SBU) TRACFIN stated GOF priorities now are to pay 
attention to the movement of cash, as experience shows only 
a small amount of money can cause great harm.  Another 
priority, which TRACFIN pressed the USDEL to emulate, 
includes scrutinizing the activities of charities.  TRACFIN 
is particularly interested in the Arabic communities in 
rural areas, and suggested more information exchanges with 
deeper analysis are needed within the intelligence 
community. 
 
7.  (SBU) At the Ministry of Economy, Xavier Musca, Director 
General of Finance and Political Economics, pointed out that 
the US focuses on targets, which tends to chase targets into 
the underground economy, while France focuses on systems, to 
ensure it keeps getting financial intelligence.  France, for 
example, does not allow the use of cash for any transaction 
greater than 3,000 euros, nor are check endorsements 
allowed.  The USDEL countered that the USG also emphasizes 
the systemic side, and takes many measures to keep people in 
the banking system.  However, when it comes to terrorist 
financing, banks face difficulties in detection, as the 
transactions are not inherently suspicious.  Musca agreed 
that in this area, governments must use intel to trace the 
money flow and inform banks of problematic targets.  He 
stressed in this regard the primacy in France of the police 
and intelligence agencies, in contrast with US Treasury 
enforcement powers. 
 
8. (U) U/S Levey also engaged the media at a press 
conference, where he outlined his goals in France, Italy and 
Austria and urged EU members to improve their anti-terrorist 
procedures. 
 
9. (SBU) COMMENT:  The positive GOF response to the WMD 
initiative is no doubt due in part to the appeal of solving 
a problem of mutual self-interest in a multilateral context. 
While much work remains to be done to implement this idea in 
France, France appears as willing as always to be helpful in 
the international arena in counter-terrorism cooperation. 
 
10. (U) U/S Levey has cleared this report. 
STAPLETON#