US embassy cable - 05CAIRO8134

C O N F I D E N T I A L SECTION 01 OF 02 CAIRO 008134 
 
SIPDIS 
 
NSC STAFF FOR POUNDS 
 
E.O. 12958: DECL: 10/23/2015 
TAGS: ECON, EFIN, PTER, EG 
SUBJECT: VISIT TO EGYPT OF TREASURY ACTING A/S FOR 
TERRORIST FINANCE AND FINANCIAL CRIME DANIEL GLASER 
 
Classified by Economic and Political Counselor John Desrocher 
for reasons 1.4 (b) and (d). 
 
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Summary 
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1.  (C) Treasury Acting Assistant Secretary for Terrorist 
Financing and Financial Crimes Daniel Glaser met on October 1 
with officials of the Egyptian Ministries of Social Affairs 
(MSA), Finance (MOF), Justice and the Central Bank of Egypt 
(CBE).  At MSA, officials reviewed the Egyptian law 
regulating charities, which are considered NGOs, and 
responded to questions about possible connections between 
charities in Egypt and the Palestinian territories.  At MOF, 
officials reviewed Customs regulations for cash currency 
import/export and the means by which funds are transferred 
into and out of Egypt.  At CBE, officials in the Money 
Laundering Combating Unit (MLCU) explained the process for 
handling Suspicious Transactions Reports (STRs), reviewed 
procedures for monitoring charity finances and discussed 
assistance to the Palestinian Central Bank's Financial 
Intelligence Unit (FIU).  MLCU officials also discussed the 
GOE's procedures for handling information from the UN's 1267 
Committee.  End summary. 
 
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Ministry of Social Affairs 
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2.  (C) Ambassador Ahmed Abulkheir, Advisor to the Minister 
of Social Affairs, claimed that no Egyptian charities were 
linked to terrorism and no terrorist financing was carried 
out through charities in Egypt.  Under Egyptian law all 
charities were considered NGOs.  The NGO law required that: 
1) all NGOs register with MSA and obtain a registry number; 
2) all NGOs specify their objectives, which MSA reviewed to 
ensure that all funds received and spent were in line with 
the NGOs' stated objectives; 3) NGOs refrain from sending 
money aboard, unless MSA granted permission to do so, as it 
often did for the Red Crescent.  NGOs that transferred funds 
out of Egypt without MSA permission would, in theory, be 
dissolved.  In practice, however, no NGO had ever been 
dissolved.  Abulkheir noted that Egypt was often criticized 
for its restrictive NGO law, but he contended that Egypt's 
security situation required restrictive measures.  Despite 
these restrictions, Abulkheir admitted that a branch of the 
International Islamic Relief Organization (IIRO) was thought 
to be illegally operating in Egypt. 
 
3.  (C) Glaser asked about possible connections between 
charities in Egypt and groups in the Palestinian territories. 
 He noted that in a recent meeting in Saudi Arabia, the USG 
raised the issue of a Saudi TV station airing ads soliciting 
donations for families of Palestinian "martyrs."  The Saudis 
explained that the broadcasts came from Egypt and Italy. 
Abulkheir referred Glaser to the Ministry of Information, but 
suggested that these stations were broadcast via satellite 
and not from Egypt.  He added that all funds going to 
Palestine from Egypt went through MSA and the Red Crescent 
and stressed that charity funds were urgently needed in the 
Palestinian territories.  Glaser responded that the USG 
encouraged charitable giving, including through Muslim 
charities.  However, if a charity devoted even 1% of its 
funds to terrorism, it must be shut down.  Glaser also 
mentioned that Egypt was co-author of a Charities Working 
Paper adopted by the MENAFATF at its September 2005 plenary 
and encouraged MSA to implement the paper's recommendations. 
 
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Ministry of Finance 
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4.  (C) MOF First Undersecretary Momtaz El Said told Glaser 
that MOF supervised currency imported/exported to Egypt.  MOF 
recently issued a decree requiring disclosure of domestic or 
foreign currency over LE 10,000 carried in and out of the 
country ) a reduction from the previous LE 20,000.  El Said 
insisted that most cash transfers into and out of Egypt went 
through the "formal" banking system, and only a small 
proportion went through "informal" means, despite large 
communities of Egyptian workers living abroad.  Glaser noted 
that the U.S. now required money transfer organizations to 
register with the USG.  El Said replied that the Ministry of 
Interior and the Customs Authority had established a joint 
committee to investigate suspicious imports/exports of cash 
currency, which were also reported to CBE's MLCU.  El Said 
also claimed that no weapons were crossing Egypt's borders 
illegally, asking Glaser not to "be influenced by the stories 
you hear."  Such transfers would be an issue of national 
security and would not be permitted. 
 
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Central Bank of Egypt 
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5.  (C) At the MLCU, Executive Director Samir El Shahed noted 
that Egypt's economy was still cash-based, so monitoring all 
financial transactions was not easy.  CBE was studying what 
could be done to move Egypt's economy to a non-cash basis. 
CBE did regular audits of all banks in Egypt and shared the 
information with MLCU.  Banks were broken down into high, 
medium and low risk levels for money laundering operation and 
terrorist financing, based on volume of transactions.  Since 
its inception in 2002, the MLCU had received over 1,000 STRs. 
 Three money laundering cases had been prosecuted 
successfully, and 5-6 other potential cases were pending in 
the prosecutor's office.  Egyptian law also required 
prosecution of predicate crimes related to the money 
laundering cases. 
 
6.  (C) On the issue of charity financing, El Shahed pointed 
out that in addition to the provisions of the NGO law 
mentioned above, the law also specified that:  1) all NGOs 
operate for one year on a trial basis; 2) penalties be 
implemented for non-compliance with the law; 3) NGO funds be 
placed in a bank account, so transactions could be monitored. 
 No STRs on charities, such as the IIRO, had been received. 
The MLCU did not handle issues related to funding of the 
Muslim Brotherhood (MB), as all MB issues were handled by 
other GOE agencies.  Deputy Minister of Justice Serry Seyam 
noted that President Mubarak had made a campaign promise to 
replace the Emergency Law with an anti-terrorism law.  The 
GOE had also established a committee to write a terrorist 
financing law, and the MLCU was playing a prominent role on 
the committee.  El Shahed pointed out that it would be 
helpful if FinCEN, as the leading international FIU, 
developed a list of terrorist finance indicators, which would 
assist other FIUs in identifying terrorist financing. 
 
7.  (C) Glaser noted that the USG was concerned about getting 
the Palestinian FIU up and running, and asked if Egypt could 
help.  Treasury was considering putting a person in the U.S. 
Embassy in Amman to work on this.  El Shahed replied that the 
MLCU had already met with Palestinian Central Bank officials 
to assist them in operationalizing their FIU, which had 
already received some STRs.  Shahed agreed to send 
information on this meeting to the embassy.  He also noted 
that MLCU was working with the Egyptian Banking Institute, 
the UN and the World Bank to develop a money laundering 
training certificate that would be offered on a regional 
basis. 
 
8.  (C) Glaser thanked El Shahed for the submission of 22 
names to the UN 1267 Sanctions Committee.  Egypt's submission 
affirmed the UN 1267 process.  Glaser inquired about the 
process of freezing assets in Egypt.  El Shahed responded 
that MLCU had the authority to freeze assets, but a public 
prosecutor's order was required.  The Ministry of Foreign 
Affairs monitored the UN 1267 list and reported names on the 
list to CBE.  CBE then sent a letter to all Egyptian banks 
requiring them to freeze any assets immediately.  El Shahed 
claimed that no assets of entities on the 1267 list had been 
frozen in Egypt.  He was not sure if CBE had frozen the 
accounts of the 22 names the GOE sent to the UN 1267 
Committee.  Glaser asked that the MLCU encourage banks to 
report to CBE on any frozen assets and that CBE in turn share 
this information with the USG.  Glaser also suggested a 
meeting to follow up on USG/GOE issues.  El Shahed agreed and 
suggested sometime after the upcoming MENA-FATF meeting in 
Cairo in March 2006. 
 
 
RICCIARDONE