VZCZCXYZ0004
PP RUEHWEB

DE RUEHRB #2549/01 3551635
ZNR UUUUU ZZH
P 211635Z DEC 05
FM AMEMBASSY RABAT
TO RUEHC/SECSTATE WASHDC PRIORITY 2341
INFO RUEHAS/AMEMBASSY ALGIERS PRIORITY 3619
RUEHMD/AMEMBASSY MADRID PRIORITY 5293
RUEHNK/AMEMBASSY NOUAKCHOTT PRIORITY 2905
RUEHFR/AMEMBASSY PARIS PRIORITY 3924
RUEHTU/AMEMBASSY TUNIS PRIORITY 8527
RUEHCL/AMCONSUL CASABLANCA PRIORITY 0999
RUEATRS/DEPTTREAS WASHDC PRIORITY
RUEHNA/DEA HQS WASHDC PRIORITY
RUEAWJB/DEPT OF JUSTICE WASHDC PRIORITY

UNCLAS RABAT 002549 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR INL AND NEA/MAG 
JUSTICE FOR OIA, AFMLS 
TREASURY FOR FINCEN 
PARIS FOR DEA 
 
E.O. 12958: N/A 
TAGS: KCRM PTER KSEP SNAR KTFN EFIN MO
SUBJECT: 2005-2006 INTERNATIONAL NARCOTICS CONTROL STRATEGY 
REPORT FOR MOROCCO PART II, MONEY LAUNDERING AND FINANCIAL 
CRIMES 
 
REF: STATE 210351 
 
¶1.  Morocco is not a regional financial center and the 
extent of the money laundering problem in Morocco is not 
known. Morocco remains an important producer and exporter of 
cannabis, with estimated revenues of $13 billion annually, 
according to a joint study released in May 2005 by the 
United Nations Office on Drugs and Crime (UNODC) and 
Morocco's Agency for the Promotion and the Economic and 
Social Development of the Northern Prefectures and Provinces 
of the Kingdom. Some of these proceeds may be laundered in 
Morocco and abroad. There is no indication that 
international or domestic terrorist networks have engaged in 
widespread use of the narcotics trade to finance terrorist 
organizations and operations in Morocco. Press reports 
indicate, however, that the Spanish investigation into the 
March 11, 2004 terrorist bombings in Madrid found that the 
alleged Moroccan national perpetrators of the attacks 
financed the purchase of the explosives used in the blasts 
through modest sales of cannabis resin in Spain. 
¶2.  Morocco has a significant informal economic sector, 
including remittances from abroad and cash-based 
transactions. There are unverified reports of trade-based 
money laundering, including bulk cash smuggling, under-and 
over-invoicing, and the purchase of smuggled goods. Banking 
officials have indicated that the country's system of 
unregulated money exchanges provides opportunities for 
potential launderers. Morocco has a free trade zone in 
Tangier, with customs exemptions for goods manufactured in 
the zone for export abroad. There have been no reports of 
trade-based money laundering schemes or terrorist financing 
activities using the Tangier free zone or the zone's 
offshore banks, which are regulated by an interagency 
commission chaired by the Ministry of Finance. 
¶3.  There were no reported arrests or prosecutions for money 
laundering or terrorist financing in Morocco in 2005. 
Morocco has a relatively effective system for disseminating 
U.S. Government (USG) and United Nations Security Council 
Resolution (UNSCR) freeze lists to the financial sector and 
law enforcement. Morocco has provided detailed and timely 
reports requested by the UNSC 1267 Committee. A handful of 
small value accounts have been administratively frozen based 
on U.S. Executive Order 13224 freeze lists. 
¶4.  The Moroccan financial sector is modeled after the 
French system and consists of 16 banks, five government- 
owned specialized financial institutions, approximately 30 
credit agencies, and 12 leasing companies. The monetary 
authorities in Morocco are the Ministry of Finance and the 
Central Bank, Bank Al Maghrib (CBM), which monitors and 
regulates the banking system. A separate Foreign Exchange 
Office regulates international transactions. Morocco has 
used administrative instruments and procedures to freeze 
suspect accounts. 
¶5.  However, CBM issued Memorandum No. 36 in December 2003, 
in advance of passage of still pending anti-money laundering 
legislation, instructing banks and other financial 
institutions to conduct their own internal 
analysis/investigations. It also mandates "know your 
customer" procedures, reporting of suspicious transQtions 
and the retention of suspicious activity reports. Morocco 
also has in effect: legislation prohibiting anonymous bank 
accounts; foreign currency controls that require 
declarations to be filed when transporting currency across 
the border, although not strictly enforced; and internal 
bank controls designed to counter money laundering and other 
illegal/suspicious activities. 
¶6.  In June 2003, Morocco implemented a comprehensive 
counterterrorism bill that provided the legal basis for the 
lifting of bank secrecy to obtain information on suspected 
terrorists, freeze suspect accounts and prosecute terrorist 
finance-related crimes. The law also provides for the 
seizing and confiscation of terrorist assets and for 
international cooperation with regard to foreign requests 
for freezing assets of a suspected terrorist entity. This 
law brought Morocco into compliance with UNSCR 1373 
requirements for the criminalization of the financing of 
terrorism. 
 
 
¶7.  As of December 2005, Morocco has enacted two 
banking/financial sector reform bills that will further 
strengthen Morocco's anti-money laundering system.  A 
specific anti-money laundering (AML) bill is in the process 
of being presented to Parliament for passage.  The AML 
reportedly includes, among other provisions, a suspicious 
transaction reporting scheme and the creation of a Financial 
Intelligence Unit (FIU).  All three bills are based on the 
Financial Action Task Force (FATF) Forty Recommendations and 
Egmont Group guidelines and will help bring Morocco's 
financial sector in line with international standards. 
¶8.  Together, the three bills will enhance the supervisory 
and enforcement authority of the Central Bank and outline 
investigative and prosecutorial procedures.  The Central 
Bank has already mandated "know your customer" requirements 
and the reporting of suspicious transactions by financial 
institutions. All money transfer activities that take place 
outside the realm of the official Moroccan banking system-as 
set by the CBM guidelines-are deemed illegal. The bills also 
expand the CBM's regulatory authority over non-banking 
financial transactions. Other significant provisions 
include: the lifting of bank secrecy during investigations, 
as well as legal liability protection of bankers and 
investigators for cooperation during investigations. 
¶9.  Morocco is a party to the UN International Convention 
for the Suppression of Financing of Terrorism, and the UN 
Convention against Transnational Organized Crime. Morocco is 
also a party to the UN International Convention against 
Illicit Traffic in Narcotic Drugs and Psychotropic 
Substances (the Vienna Convention); in fact, Morocco has 
ratified or acceded to all UN and international conventions 
and treaties related to counterterrorism. 
¶10.  The Government of Morocco would strengthen its AML 
capacity by moving expeditiously to pass the anti-money 
laundering bill. Upon passage of the AML legislation, and as 
part of itQnti-money laundering program, Morocco's AML 
efforts would benefit from the establishment of a 
centralized Financial Intelligence Unit (FIU) that will 
receive and analyze suspicious transaction reports and 
disseminate them to appropriate law enforcement agencies for 
investigation.