US embassy cable - 05KUWAIT4717

C O N F I D E N T I A L SECTION 01 OF 03 KUWAIT 004717 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EB/ESC/TFS JCLARK, S/CT TKUSHNER, NEA/ARPI 
SWALKER AND RSMYTH, NEA/RA LLEE, IO/PSC BFITZGERALD, 
TREASURY FOR TFFC DGLASER AND OFAC FOR RWERNER, NSC FOR 
JZARATE, LONDON FOR LTSOU, MANAMA FOR JBEAL 
 
E.O. 12958: DECL: 11/08/2015 
TAGS: EFIN, ETTC, KTFN, PTER, PGOV, KU, TERROR FINANCE 
SUBJECT: POST ASSESSMENT OF KUWAIT CASH COURIER ENVIRONMENT 
 
REF: A. TREASURY 1346 
     B. KUWAIT 4672 
 
Classified By: Ambassador Richard LeBaron.  Reasons 1.4 (b) and (d) 
 
1.  (C)  Per reftel A request, the following is Post's 
assessment of Kuwait's cash courier environment. 
 
At the Border and Legal Environment 
----------------------------------- 
 
2.  (C) The GOK's 2002 law (No. 35) "Concerning Combating 
Money Laundering" criminalizes cash smuggling within the 
context of money laundering and criminal activity.  Article 2 
of the law makes illegal "the conversion, transfer, 
possession, acquiring, using, keeping or receiving money, 
knowing that that they are derived from a crime or one of the 
acts of participation herein.  The concealment or disguise of 
the true nature of the money, its origin, place, manner of 
disposition, movement or rights to it or its possession, 
knowing that it is derived from a crime or any act of 
participation in the same." 
 
3.  (C)  The GOK currently only has a cash entry declaration 
policy as stipulated in the 2002 law, and subsequent Finance 
Ministry resolutions.  GOK officials, most notably the 
Finance Minister, are skeptical about the practical 
applicability of cash exit declarations in Kuwait and are 
therefore reluctant to support the enactment of such measures 
in the foreseeable future (see ref B).  Article 4 of the law 
states that "on entering the country, every person shall 
inform the customs authorities of any national or foreign 
currency, golden bars or any other precious materials in 
his/her possession that exceeds three thousand dinars (Note: 
approximately $10,000) or equivalent in foreign currency." 
According to U.S. Customs advisors, these legal requirements 
are not well publicized nor are they immediately visible to 
travelers arriving through key entry points (e.g., airports, 
ports). 
 
4.  (C)  In July 2005, the Finance Ministry issued a 
resolution (No. 9) requiring KGAC to "prepare a Declaration 
Form (for entry only) in coordination with the related 
bodies" and making Kuwait General Administration of Customs 
(KGAC) "responsible for receiving the Declaration Form."  On 
August 15, the Director General of KGAC directed the KGAC 
Investigations Office to execute the ministerial resolution. 
It is Post's understanding that the forms have not been 
printed pending funding allocations from the Finance Ministry 
to cover printing and distribution costs.  (Note:  Finance 
Minister Undersecretary Al-Shamali informed Econoffs in 
October that KGAC has since been directed to fund the 
printing costs, estimated at $34,000, from its own budget.) 
 
5.  (C) The GOK does maintain an active inspection facility 
at Abdali near the Iraqi border to inspect and seize cash and 
other smuggled goods bound for Iraq.  This facility is 
equipped with an x-ray machine and is staffed by Kuwaiti 
police and customs inspectors.  U.S. Customs advisors are 
working with KGAC to replicate the efforts of the Abdali 
facility at other Kuwait entry points.  In an effort to 
outsource its revenue collection program, KGAC has signed a 
contract with two large private Kuwaiti firms (Global and 
PWC) to begin customs revenue collection at entry points as 
part of KGAC's broader privatization effort. 
 
6.  (C) While corruption does not appear to be recurrent 
and/or systemic, KGAC officials, by the virtue of their jobs, 
 remain vulnerable to bribery and extortion.  In an effort to 
counter such vulnerabilities, U.S. Customs advisors, working 
directly with KGAC officials, including the Director General, 
have been successful in raising awareness and sensitivities 
about the risks posed by cash couriers, particularly within 
the context of terrorist financing. 
 
The Political Environment 
------------------------- 
 
7.  (C) Based on discussions with Emboffs, senior GOK 
officials are aware of the problems and challenges posed by 
successfully countering the informal cash courier networks. 
The main GOK entities in the CTF/AML effort are the Ministry 
of Finance (policies), Central Bank's FIU (reporting), 
Ministry of Interior (enforcement), the Public Prosecutor 
(investigations), Ministry of Social Affairs and Labor 
(charity oversight) and the KGAC (secondary investigative 
 
KUWAIT 00004717  002 OF 003 
 
 
role).  GOK officials continue to express their commitment to 
addressing legal and systemic shortfalls and are redrafting 
the 2002 law to strengthen the country's CTF/AML regime. 
Sustained engagement with the GOK leadership remains an 
important priority to ensure tangible progress on these and 
other CTF/AML measures. 
 
8.  (C) The degree of effective information sharing among 
relevant GOK agencies varies depending on bureaucratic 
rivalries and potential systemic deficiencies resulting from 
inadequate resourcing and over-centralized decision making. 
Information sharing externally is hampered by the lack of 
Egmont Group membership for Kuwait's FIU (Note:  Current GOK 
policies require the FIU to secure the approval of the Public 
Prosecutor's Office prior to sharing information with non-GOK 
entities.) 
 
9.  (C) The Central Bank's AML unit and FIU (housed in 
Central Bank) are well-versed in FATF rules and regulations, 
including Special Recommendation IX on cash couriers.  The 
Central Bank also enacts and maintains good oversight of 
Kuwait's banking and financial sector.  Ambassador and 
visiting senior USG officials, most recently Treasury DAS 
Glaser and OFAC Director Werner, have engaged the Central 
Bank and other relevant GOK agencies on these and other 
CTF/AML priorities.  However, more remains to be done to 
overcome delayed execution of existing cash declaration 
policies and secure GOK support for a cash exit declaration 
policy to augment the Government's overall CTF/AML efforts. 
 
 
USG Assistance 
-------------- 
 
10.  (C) Since 1992, the GOK has funded a U.S. Customs 
Advisory program to help strengthen its customs enforcement 
regime.  There are presently two U.S. Customs advisors, 
assigned to KGAC, working directly with KGAC officials, 
including the Director General, to strengthen the KGAC's 
operations.  Through daily interactions and formal training 
seminars, hosted by the advisors and other USG participants 
(most recently in March 2005) KGAC officials are increasingly 
exposed to new methods and ways of assessing the threats 
posed by money laundering and terrorism financing.  However, 
sustained training, at all levels, is needed to enhance KGAC 
performance and institutional awareness. 
 
11.  (C) On December 11-14, DHS and KGAC, in coordination 
with Post, will host a conference on money laundering and 
terrorism financing for GOK officials in order to expand 
intra-GOK awareness and understanding of CTF/AML priorities 
and objectives. 
 
12.  (C) Apart from in-country training conducted by U.S. 
Customs, Post is not aware of any other technical assistance 
or training relating to cash couriers conducted by the USG or 
other countries.  GOK contacts in different agencies welcome 
and request continued USG technical assistance in all fields 
related to CTF/AML, ranging from legal reform to 
investigative training.  The U.S. Customs advisors are 
working closely with KGAC offices to identify outstanding 
equipment needs to enhance KGAC operations.  KGAC officials 
benefited from training in the 1990s at the Foreign Law 
Enforcement Training Center and would welcome similar 
training today.  These and other practical training measures, 
either in the U.S. or in Kuwait, would foster greater GOK 
activism and improve their operational capacity. 
 
The Strategic Picture 
--------------------- 
 
13.  (U) Post concurs with reftel points outlining essential 
elements to combating terrorists' use of cash couriers and 
recommends adding:  "Ensuring senior host-government 
awareness and commitment to adopting, implementing and 
sustaining policies to ensure timely and tangible success 
against cash smugglers and the broader CTF/AML effort." 
 
 
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KUWAIT 00004717  003 OF 003 
 
 
LEBARON