VZCZCXRO2006
OO RUEHROV
DE RUEHJM #1994/01 2670828
ZNY CCCCC ZZH
O 240828Z SEP 07
FM AMCONSUL JERUSALEM
TO RUEHC/SECSTATE WASHDC IMMEDIATE 9099
INFO RUEHXK/ARAB ISRAELI COLLECTIVE PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUEHBS/USEU BRUSSELS PRIORITY C O N F I D E N T I A L SECTION 01 OF 02 JERUSALEM 001994 
 
SIPDIS 
 
SIPDIS 
 
NEA FOR FRONT OFFICE; NEA/IPA FOR 
WILLIAMS/SHAMPAINE/BELGRADE; NSC FOR ABRAMS/WATERS; 
TREASURY FOR SZUBIN/GRANT/HARRIS/HIRSON 
 
E.O. 12958: DECL: 09/24/17 
TAGS:                
SUBJECT: PM FAYYAD DESCRIBES PA EFFORTS TO COMBAT MONEY 
LAUNDERING AND TERROR FINANCING; WELCOMES USG SUPPORT 
 
REF: A. JERUSALEM 1910 
      B. JERUSALEM 1719 
      C. JERUSALEM 1820 
 
JERUSALEM 00001994  001.2 OF 002 
 
 
Classified By: Consul General Jake Walles, Reasons 1.4 (b) and (d). 
 
 1.  (C) Summary:  Prime Minister and Finance Minster Salam 
Fayyad recently told a Treasury Department delegation that 
the Palestinian Authority (PA) is committed to taking 
aggressive action against groups and individuals involved in 
terrorism financing.  Fayyad urged the USG to pass him 
relevant information on individuals and groups of concern, 
particularly those affiliated with Hamas.  He noted recent PA 
actions taken against 140 charities and the imminent 
enactment, by presidential decree, of anti-money laundering 
(AML) legislation as evidence of the PA's commitment to 
enforcement action.  Fayyad insisted that the new AML law and 
existing regulations provide the tools necessary to take 
action against terrorism financing.  He stressed the need for 
the PA to implement the AML decree and complete the process 
of building a Palestinian financial intelligence unit (FIU), 
rather than creating a mechanism for Israeli and Palestinian 
information sharing on AML and TF issues.  Fayyad welcomed 
Treasury's offer to assist on combating trade-based money 
laundering (TBML).  End summary. 
 
------------------ 
PA Making Progress 
------------------ 
 
 2.  (C) In a September 11 meeting, Prime Minister Fayyad told 
a Treasury Department delegation led by Deputy Assistant 
Secretary Daniel Glaser that he eagerly welcomes any 
 
SIPDIS 
information the USG can provide on individuals and groups in 
the West Bank and Gaza involved in money laundering and/or 
terrorism financing.  Fayyad did not specify how such 
information should be passed, but insisted that, once it is 
received, he will ensure that the PA takes immediate action, 
to include the freezing of assets.  Fayyad highlighted the 
imminent enactment - by presidential decree -- of AML 
legislation.  He added that a final review of the law is 
being conducted, after which it will be sent to PA President 
Abbas.  He also noted the recent PA actions against 140 
suspected charities, including the freezing of assets (ref 
A), and added that the PA had identified additional charities 
for potential future action. 
 
---------------- 
Deeds, Not Words 
---------------- 
 
 3.  (C) Glaser stated that the draft of the AML law was 
professionally done, but did not adequately address terrorism 
financing.  Fayyad said that he had directed the PA to make 
changes to reflect this, but added, "It's not what th law 
says; it's what we produce after this."  Heexplained that, 
while the PA may not have the sae "body of law," it uses 
what it has "to accomplih the same result."  Fayyad stated 
that the recet actions against the suspect charities were 
caried out based on financial and administrative violtions 
of a 2000 law governing NGOs (reftels A an C). 
 
---------------------------- 
Trade-based oney Laundering 
---------------------------- 
 
.  (C) Fayyad reiterated his concern, previously epressed 
in his August 10 meeting with Treasury US Levey (ref B), 
that trade-based money launderig (TBML) is a serious problem 
that continues to bnefit Hamas.  Glaser stated that Treasury 
is preared to provide assistance on TBML.  He also noted 
that the ICE attace in Rome would be in the region in 
October and asked Fayyad to suggest an appropriate 
intermediary in the PA on TBML issues.  Fayyad suggested the 
Minister of Justice.  In addition, Glaser mentioned that the 
incoming Treasury financial enforcement advisor at Embassy 
Ammn has considerable experience in this area.  Fayya 
welcomed Treasury's support, adding that immedite action is 
needed, particularly in cutting off amas's access to funds. 
He opined that, as the P strengthens AML measures, the 
perpetrators are ursuing other options, including TBML and 
money exchanges. 
 
-------------------------- 
Special Mechanism Rejected 
 
JERUSALEM 00001994  002.2 OF 002 
 
 
-------------------------- 
 
 5.  (C) Responding to a Treasury proposal to create a special 
mechanism for Israeli and Palestinian information sharing on 
money laundering and terrorism financing, Fayyad said the 
PA's priority is to implement the AML law, establish a strong 
Palestinian financial intelligence unit (FIU), and "then work 
to build bridges to the relevant authorities."  Fayyad said 
he would welcome any USG assistance in building the FIU. 
(Note:  First proposed in 2004 after IDF raids on banks in 
the West Bank, the mechanism was intended to facilitate 
information exchanges in response to Israeli allegations 
about banking activities in the West Bank and Gaza.  End 
note.)  Fayyad said the proposed mechanism was a response to 
a specific situation, and the PA, in strengthening its own 
laws and regulations, has demonstrated its progress on AML 
and terror financing issues and is now in a position to take 
aggressive enforcement action. 
 
 6.  (U) Deputy Assistant Secretary Glaser cleared this 
message. 
WALLES