VZCZCXRO8507
RR RUEHDU RUEHGI RUEHJO RUEHMR RUEHPA
DE RUEHSA #1299/01 0901021
ZNR UUUUU ZZH
R 311021Z MAR 06
FM AMEMBASSY PRETORIA
TO RUEHC/SECSTATE WASHDC 2512
INFO RUEHZO/AFRICAN UNION COLLECTIVE
RUEAIIA/CIA WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHDC
RHEHNSC/NSC WASHDC
RUCNDT/USMISSION USUN NEW YORK 0244

UNCLAS SECTION 01 OF 02 PRETORIA 001299 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
EB/ESC/TFS (DBROWN), S/CT (GNOVIS), INL/C, IO/PHO, TREASRUY 
(ICRUM), AF/S (MTABLER-STONE), INL/AAE (EROESS) 
 
E.O. 12958: N/A 
TAGS: EFIN KFTN PTER ETTC PREL PGOV KCRM PINR SF
SUBJECT: SOUTH AFRICA SHINES FATF SPOTLIGHT ON DEVELOPING 
COUNTRIES AND CORRUPTION 
 
REF: 05 PRETORIA 2671 (NOTAL) 
 
(U) This cable is Sensitive But Unclassified.  Not for 
Internet distribution. 
 
¶1. (SBU) Summary.  The Eastern and Southern Africa Anti-Money 
Laundering Group (ESAAMLG) demonstrated its commitment to 
Anti-Money Laundering/Counter Financing of Terrorism 
(AML/CFT) as observers during the February Financial Action 
Task Force (FATF) meetings in Cape Town.  South Africa, as 
the current chair of the global AML/CFT organization, invited 
ESAAMLG to focus the FATF's attention on developing country 
challenges in fighting financial crimes.  South Africa also 
emphasized the need to explore AML/CFT links to corruption 
and criticized the FATF's "Western-dominated" decision making 
process.  South Africa plans to put corruption issues high on 
ESAAMLG's agenda for its next meeting.  End Summary. 
 
Eastern and Southern African AML/CFT Commitment 
--------------------------------------------- -- 
 
¶2. (SBU) During the first ever Financial Action Task Force 
(FATF) Plenary held in Africa, the Eastern and Southern 
Africa Anti-Money Laundering Group (ESAAMLG) expressed its 
commitment to Anti-Money Laundering/Counter Financing of 
Terrorism (AML/CFT).  South Africa, as the current chair of 
the global AML/CFT organization, invited the fourteen ESAAMLG 
members to observe the February 12-17 meetings in Cape Town 
in efforts to strengthen ESAAMLG ties to the international 
AML/CFT community.  The Zambian Deputy Minister of Finance, 
Kapambwe Simbao, stressed in his remarks that anti-money 
laundering and terrorism finance were global problems, as 
illustrated by the bombings of U.S. embassies in Kenya and 
Tanzania, and the recent arrests of suspected terrorists in 
Zambia.  Simbao made an appeal to FATF-member countries for 
capacity-building assistance in strengthening ESAAMLG's 
AML/CFT regimes. 
 
SAG Criticizes Western Dominance 
-------------------------------- 
 
¶3. (SBU) Throughout the week, the South African Government 
(SAG) criticized developed countries for dominating the FATF 
and elaborated on developing country challenges in complying 
with FATF standards.  In his brief remarks to the plenary, 
Finance Minister Trevor Manuel encouraged the FATF to work 
outside the "comfort zone" of current membership and think 
about the challenges facing developing countries.  He stated 
that many FATF standards were onerous for countries with 
cash-based economies.  Kader Asmal, South Africa's FATF 
President, echoed Manuel's comments in his closing address, 
urging members to find a balance between the slowest and 
fastest countries when it came to complying with FATF 
standards.  Asmal decried the "northern-dominated" process 
and beckoned for extreme sensitivity for "southern" 
countries.  In a disjointed dinner address to the FATF, South 
African Reserve Bank (SARB) Governor Tito Mboweni continued 
in the same vein when he expressed his displeasure with the 
fact that Western Union's headquarters were allowed to 
continue operations in "some large Western country" (i.e., 
the United States) after the company's operations in South 
Africa had to be shut down because of illegal activity.  He 
went on to say that if this situation were reversed, South 
Africa would have been expected to shut down the company's 
headquarters. 
 
Daunting Challenges for Developing Countries 
-------------------------------------------- 
 
¶4. (SBU) The SAG and ESAAMLG used the FATF meeting to 
highlight the AML/CFT challenges that face developing 
countries.  SARB Governor Mboweni spoke of South Africa's 
competing challenges in addition to financial crimes, 
including poverty, HIV/AIDS, housing backlogs, crime, and 
building a black business class.  A Kenyan presenter, Mrs. 
Dorcas Odour, listed the challenges facing her country in 
terms of ethnic biases, border disputes, cash-based 
transactions, alternative remittance systems, lack of proper 
ID cards, and the competing demands of resources (e.g., 
hunger, AIDS).  Mr. Dev Bikoo from Mauritius noted that many 
developing countries lacked the political will to move 
forward with AML/CFT efforts. 
 
¶5. (SBU) Murray Michell, Director of South Africa's Financial 
 
PRETORIA 00001299  002 OF 002 
 
 
Intelligence Centre (FIC), gave a more detailed presentation 
on the challenges that ESAAMLG faces in complying with the 
FATF standards.  Michell specifically focused on FATF Special 
Recommendation IX dealing with measures to track cash 
movement across borders.  He stated that each of the ESAAMLG 
countries, while at different stages of development, faced 
many similar challenges, such as a large number of cash-based 
transactions and informal banking systems.  Michell also 
emphasized that most member countries had porous borders 
monitored by immigration and law enforcement agencies that 
were understaffed, poorly trained, and deprived of 
information technology.  Moreover, many countries lacked 
proper legislation to prosecute AML/CFT crimes.  Even where 
there was the political will to strengthen AML/CFT regimes, 
countries had to make critical budget choices involving such 
development and health challenges as alleviating poverty and 
combating the spread HIV/AIDS. 
 
A South African View of ESAAMLG 
------------------------------- 
 
¶6. (SBU) Michell highlighted what in his view ESAAMLG had 
accomplished and contemplated its future role.  He said that 
ESAAMLG had improved cooperation among the Southern African 
Customs Union (SACU) and Interpol.  ESAAMLG had also 
established the Southern Africa Regional Police Chiefs 
Cooperation Organisation (SARPCO) and had increased the 
presence of border police in the region.  Michell questioned, 
however, whether developing countries should implement all 
40 9 FATF standards at once.  Perhaps it was more realistic 
for them to focus on priority areas first and phase-in 
compliance later.  He also wondered whether there were enough 
sustainable resources available for ESAAMLG countries to 
attain and maintain FATF membership.  Michell noted that 
ESAAMLG was building a strategy this year to assess the 
technical assistance needs of its member countries, and that 
this could be a guide for donor countries. 
 
Corruption Link to AML/CFT 
-------------------------- 
 
¶7. (SBU) Since becoming FATF President in July 2005, Asmal 
has linked AML/CFT to corruption (reftel).  Asmal bolstered 
this theme in February by authoring an article in a major 
South African business newspaper that focused attention on 
the close ties between money laundering and rampant 
corruption.  During the FATF, Asmal publicly linked the 
terrorist bombings in Kenya and Tanzania to high levels of 
corruption there.  Asmal's main argument, as presented by FIC 
Director Michell, is that good governance must be established 
before a country can fight financial crimes.  Michell 
concluded that if governance and corruption issues were not 
addressed, then all AML/CFT assistance efforts would be for 
naught.  For this reason, he explained, the SAG was pushing 
to have corruption issues high on the agenda at the next 
ESAAMLG meeting. 
TEITELBAUM