Cablegate: Gof Receptive to Blocking Wmd Financing

This record is a partial extract of the original cable. The full text of the original cable is not available.





E.O. 12958: N/A
SUBJECT: GOF receptive to blocking WMD Financing


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.

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.

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.

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

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

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.

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