US embassy cable - 05AMMAN8170

C O N F I D E N T I A L SECTION 01 OF 03 AMMAN 008170 
 
SIPDIS 
 
E.O. 12958: DECL: 10/02/2020 
TAGS: KTFN, EFIN, JO 
SUBJECT: TREASURY ACTING A/S GLASER DISCUSSES TERRORIST 
FINANCING WITH JORDANIAN OFFICIALS 
 
REF: AMMAN 7547 
 
Classified By: Charge d'affaires David Hale for reasons 1.4 (b), (d), a 
nd (e). 
 
1.  (C) SUMMARY: Treasury Acting A/S 
Daniel Glaser met with Finance Ministry and Central Bank of 
Jordan officials to discuss terrorism finance issues, 
including the status of the Anti-Money Laundering (AML) law 
and Arab Bank's follow-up to U.S. regulatory actions against 
it.  He also explored Jordan's handling of charities, 
informal remittance providers, and the regulatory environment 
for cash couriers.  Glaser found that improvements can be 
made in each of these areas, even prior to passage of the AML 
law.  Glaser toured the Central Bank's provisional Financial 
Intelligence Unit (FIU), and reviewed post's support in 
helping Jordan bring its FIU up to international standards. 
Glaser also met with two local banks to review their 
"know-your-client" procedures and use of name-checks, 
including the list maintained by the Office of Foreign Assets 
Controls.  END SUMMARY. 
 
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THE CENTRAL BANK OF JORDAN 
-------------------------- 
 
2.  (C) Treasury Acting A/S for Terrorism Financing and 
Financial Crimes Glaser visited Jordan September 28-29, 
accompanied by Policy Advisor Lebenson.  In his meeting with 
Central Bank of Jordan (CBJ) Deputy Governor Mohammad Shahin, 
Glaser emphasized the importance of a reporting system 
(either disclosure or declaration) for cash flows handled by 
couriers both in-bound and out-bound, noting that such a 
recommendation had been adopted at the MENA/FATF meeting held 
earlier in the week in Beirut.  (Currently, Jordan only has 
an in-bound reporting requirement).  Glaser refuted the claim 
that a reporting system could be interpreted as a capital 
control; such a system would not in fact constitute a capital 
control, but would bring transparency to Jordan,s 
cross-border cash flow by documenting amounts above a certain 
threshold. 
 
3.  (C) Shahin reiterated that as long as cash transfers 
follow proper procedures, there are no controls.  He noted 
that the region is comprised largely of cash-based economies, 
and said that using cash was a common practice for travelers 
in the region, particularly those coming from Iraq.  Glaser 
told Shahin that Treasury is working with the Iraqi 
government on improving check-clearing and electronic banking 
systems in Iraq, a move that could help reduce reliance on 
cash. 
 
4.  (C) On the draft Anti-Money Laundering law, Shahin 
reported that it was being considered in Parliament and that 
the CBJ has been urging passage.   Jordan already completed 
an IMF Financial Sector Assessment Program (FSAP) in 2004, 
and that program had an AML component.  Shahin added that 
Jordan's FIU would need a statutory basis if Jordan were to 
be accepted as a member of the Egmont Group, the 
international body promoting cooperation among between FIUs. 
 
5.  (C) On Arab Bank (AB) - whose New York branch was fined 
in August for not implementing anti-money 
laundering/counter-terrorist financing (AML/CFT) procedures 
through its wire transfer facility - Glaser noted that AB,s 
recent press release in response to the fine seemed out of 
step with the bank's private comments.  Glaser said he had 
understood that AB was committed to implementing an AML/CFT 
"gold standard" in its banking operations.  Shahin responded 
that AB feels it is being targeted because of its work in the 
Palestinian Territories, though he personally did not agree 
with that assertion.  As AB's regulator, the CBJ also wants 
the bank to implement proper procedures, and continues to 
impress that upon AB.  Despite the press release, the CBJ is 
confident that AB will have all necessary procedures in place 
in October.  Shahin also said AB is committed to a global 
compliance program to ensure its procedures were up to world 
standards. 
 
6.  (C) Glaser noted that Jordanian banks have helped the 
banking system in the Palestinian territories function, and 
that the Palestinian Monetary Authority (PMA) had been 
working with the CBJ.  Shahin said the CBJ needs to sign an 
MOU with the PMA before the CBJ can help in regulating 
Jordanian bank branches in the Palestinian territories, and 
that it cannot physically do so due to the 
security situation there.  Glaser said it was important that 
bank branches in Gaza and the West Bank be effectively 
supervised for AML/CFT, and urged the CBJ to work closely 
with the PMA.  Shahin agreed, adding that the CBJ hopes to 
establish MOUs with every country in which Jordanian bank 
branches are located, adding that Syrian banking officials 
had come to Jordan to learn Jordan's systems. 
 
7.  (C) Glaser asked if Shahin was aware of Jordanian banks 
encountering difficulty in their U.S. correspondent banking 
relationships; Shahin answered that he was not. 
 
8.  (C) Finally, Glaser mentioned that Jordan's assumption of 
the MENA/FATF vice-presidency was imminent, and that it was 
an opportunity for Jordan to show real leadership in the 
region.  (NOTE: Post subsequently learned that CBJ Deputy 
Governor Faris Sharaf will represent Jordan in that position. 
 END NOTE.) 
 
-------------------- 
THE FINANCE MINISTRY 
-------------------- 
 
9.  (C) In his meeting with Finance Secretary General Hamad 
Khasasbeh, Glaser asked about the prevalence in Jordan of 
alternate remittance systems such as hawalas.  Khasasbeh 
noted that it was hard to calculate their impact on the 
economy.  Glaser said Treasury faced the same problem in the 
U.S., but added that the USG requires money service providers 
to register.  Khasasbeh said there was no such requirement in 
Jordan, and opined that the "errors and omissions" figure in 
Jordan's balance of payments calculation should include 
informal remittances.  Glaser emphasized that Treasury was 
not advocating the elimination of alternate remittance 
systems - only highlighting the fact that such systems were 
not transparent and thus subject to abuse. 
 
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PROVISIONAL FIU 
--------------- 
 
10.  (C) Glaser toured Jordan's provisional FIU which though 
functioning, has not yet been mandated by an AML law.  Two of 
the officers in the FIU - who had just returned from a 
USAID-sponsored study tour to visit the Financial Crimes 
Enforcement Network (FINCEN) outside Washington - told Glaser 
the CBJ is working with Embassy Amman's USAID mission to buy 
FINCEN software for use in Jordan's FIU.  Meanwhile, the CBJ 
is working with the World Bank in drafting the FIU 
regulations. 
 
11.  (SBU) NOTE: In a later meeting with USAID, Post agreed 
with Glaser to explore sending CBJ officials to Beirut to 
examine the FIU there. In addition, AID is already working 
with the CBJ on automation of its forms, including Suspicious 
Activity Reports, the key document for tracking money 
laundering and terrorist financing flows.  AID is also 
helping carry out a security assessment of the network 
linking the CBJ with Jordanian banks, and upgrading it as 
needed.  Glaser agreed to talk to the head of Lebanon's FIU 
on how it could help the CBJ with developing a comprehensive 
scope of work.  Glaser added that Lebanon had  agreed to 
sponsor Jordan's membership in the Egmont group, and 
considered Lebanese-Jordanian cooperation in this area is a 
logical step.  Glaser also received interest from the 
Egyptian FIU during his subsequent stop in Cairo in providing 
Jordan technical advice. END NOTE.) 
 
12.  (SBU) CBJ officials sketched out for Glaser the 
terrorist finance freezing mechanism in Jordan as follows: 
The CBJ receives the list of UN designated terrorists from 
the Ministry of Foreign Affairs via the U.S. Embassy, after 
which it issues an order to the banks to freeze any accounts 
under those names.  They reported that Jordan has frozen no 
assets pursuant to UN 1267 to date. 
 
--------- 
CHARITIES 
--------- 
 
13.  (C) In Acting A/S Glaser's meeting with Minister of 
Social Development Abdullah Oweidat (whose ministry regulates 
charities), the Minister said that charities in Jordan must 
submit their budgets annually, inform the ministry of the 
areas in which they intend to work, and submit quarterly 
activity reports to the ministry.  Oweidat asserted that the 
Ministry set the priorities for the work of charities in the 
country.  Oweidat added that he is establishing a unit under 
his office to oversee charities, and emphasized the GoJ's 
commitment to combating terrorism. 
 
14.  (C) Oweidat reported there are 1,000 Jordanian 
charities, but that all of them work solely in Jordan and 
have no international operations.  Oweidat's deputy said all 
fund-raising campaigns by charities in Jordan must be 
approved by the Ministry, in consultation with the Ministry 
of Interior and the security services.  All money raised by a 
charity must be spent within Jordan.  Each governorate has a 
Ministry representative to supervise the charities there. 
The only exception to the rule of domestic-only charity work 
was the official Jordan Hashemite Charity Organization, the 
King's charity which directed funds and other assistance to 
other countries affected by disasters.  Such funds were 
strictly controlled by the government. 
 
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PRIVATE BANKS 
------------- 
 
15.  (C) Directors of two local banks (the Export and Finance 
Bank, and Union Bank) told Glaser they had either a 
compliance department or an officer with AML 
responsibilities, as well as training programs on AML. 
Glaser stressed the importance of carefully following 
"know-your-client" guidelines, as well as using the list of 
names maintained by the Office of Foreign Assets Controls 
(OFAC).  Most commercially available software should include 
the OFAC list, in addition to other watch lists.  Glaser 
emphasized that these are tools banks should consider using 
in an effort to manage their overall risk portfolios.  One of 
the bank heads suggested to Glaser that he should tell the 
CBJ to require banks to upload the OFAC list. 
 
16.  (C) Union Bank's director told Glaser that alternate 
remittance systems were most common in foreign worker 
communities in Jordan, such as those from Egypt, the 
Philippines and Sri Lanka.  These workers use the systems 
because of lower costs, and due to their familiarity in 
dealing in cash.  Glaser cautioned that these systems can 
also be used by terrorists, while emphasizing that the USG 
does not want to impinge on the ability of people to carry 
out legitimate transfers of remittances through these 
systems.  For that reason, the registration of alternative 
remittance systems brings transparency to the sector. 
 
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CUSTOMS 
------- 
 
17.  (C) Customs Director General Ala Al-Bataineh told Glaser 
that his focus on cash moving across Jordan's borders was 
specifically geared to whether or not the bills were 
counterfeit.  He cited an incident in which a person carrying 
$1 million was recently let go without any documentation once 
the cash was determined to be genuine.  Bataineh recognized 
that the in-bound reporting requirement was ineffective 
without associated penalties, and believed that imposing a 
penalty for not declaring cash would require legislation. 
(NOTE:  Post will explore this option.  END NOTE.)  Bataineh 
agreed that attention should be given to outbound reporting 
requirements as well.  Glaser recommended that Customs liaise 
with the U.S. Bureau of Immigration and Customs Enforcement 
to tap its expertise in detecting money Laundering, as well 
as with the Rome office of the Secret Service on counterfeit 
identification issues. 
 
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PLANNING 
-------- 
 
18.  (C) Planning Minister Suhair Al-Ali (former head of 
Citibank in Jordan) assured Glaser that, "the political will 
to pass the AML law is there" within the government.  She 
said she is a strong supporter of passage, highlighting its 
importance for attracting foreign investment.  Al-Ali said 
the issue of in-bound cash declaration requirements needed to 
be addressed by the GoJ; Glaser mentioned that Jordan had 
agreed to a regime for declaring cash at the recent MENA/FATF 
meeting, noting,  that the Director General of Customs had 
told him there was no penalty for failure to declare. 
 
19.  (U) Acting A/S Glaser cleared this message. 
 
HALE 
HALE