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DE RUEHCL #0676/01 1710957
ZNY CCCCC ZZH
R 200957Z JUN 06
FM AMCONSUL CASABLANCA
TO RUEHC/SECSTATE WASHDC 6826
INFO RUEHAS/AMEMBASSY ALGIERS 2810
RUEHRB/AMEMBASSY RABAT 7622
RUEHTU/AMEMBASSY TUNIS 1935
RUEATRS/DEPT OF TREASURY WASHDC

C O N F I D E N T I A L CASABLANCA 000676 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR S/CT AND FOR NEA MAG 
 
E.O. 12958: DECL: 05/22/2016 
TAGS: EFIN KTFN PTER MO
SUBJECT: NO HAWALAS PLEASE, WE'RE MOROCCAN 
 
Classified By: Principal Officer Douglas Greene 
for reasons 1.4 (b) and (d) 
 
¶1.  (SBU)  Summary:  Despite government denials, it appears 
"hawalas" and other informal money-transfer mechanisms are 
alive and well in Morocco.  (Hawala, meaning "trust", is an 
informal money transfer system characterized by low cost and 
lack of transparency.)  Government of Morocco (GOM) officials 
strongly and consistently deny that hawala exists in Morocco 
and cite current laws prohibiting non-licensed banking 
institutions (even while admitting the GOM has not charged or 
prosecuted a single hawala case in recent years.)  Meanwhile, 
banking contacts scoff at the idea that hawalas "don't exist" 
but concede they are not nearly as prevalent as compared to 
other parts of the Arab world.  Ministry of Finance (MOF) 
officials recount recent efforts by the GOM to strengthen 
Morocco's banking and financial system, including passage of 
Morocco's long-awaited Anti-Money Laundering (AML) 
legislation.  However, banking professionals warn of the 
immediate effects following AML implementation, with some 
forecasting dramatic reductions in commercial bank deposits 
and a steep spike in illegal, and possibly 
hawala-facilitated, cash transfers. End Summary. 
 
¶2.  (SBU)  Abdelaziz Al Khaoua, Chief of the Ministry of 
Finances's (MOF's) Credit Division, told Econoff that under 
Morocco's current laws it is illegal for any individual or 
institution to engage in any type of banking transaction 
without express authorization from the MOF.  Penalties in 
Morocco can be severe, including hefty fines and even jail 
time. The definition of "banking transactions" is 
deliberately broad and encompasses anything related to 
collecting and holding deposits, extending credit and 
transferring or exchanging of currency. In addition, 
Morocco's strict currency controls prohibit exportation of 
the Moroccan dirham.  The GOM does however allow limited 
financial transfers abroad to facilitate international 
tourism as well as for investment, education and health care 
purposes.  Moroccans wishing to transfer money abroad (within 
the legally imposed annual limits) must exchange their 
dirhams in Morocco and send the money via an MOF-authorized 
banking institution.  Hawala and other informal money 
transfer devices are illegal in Morocco and officially do not 
exist.  At the same time, Al Khaoua admitted that GOM has not 
charged or prosecuted a single hawala case in recent years. 
 
 
¶3. (SBU)  Banking contacts tell Emboffs that hawala systems 
most certainly do exist in Morocco, but concede it is not 
nearly as prevalent as in other parts of the Arab world. 
Part of the reason is cultural- hawala systems do not have 
the same strong cultural roots in Morocco as in Gulf Arab 
countries and South Asia.  Banking contacts add that Morocco 
also has a fairly well developed financial system offering 
accessible, affordable and fast money transfers to much of 
the population.  For example Wafa Cash, in partnership with 
Western Union, (and ubiquitous in most large Moroccan cities) 
can transfer money almost anywhere in the world.  Hawala 
systems more commonly service populations without access to a 
formal financial sector. That said, contacts tell us Moroccan 
elites allegedly use hawala to help finance expensive 
vacations abroad that would otherwise exceed the GOM-imposed 
limits on currency exportation.  In addition, consular 
section colleagues familiar with local financial statements 
suspect that many affluent Moroccans shelter their wealth in 
Europe, but Conoffs remain unsure how the money is 
transferred there. 
 
¶4.  (C)  Local financiers warn that pending AML legislation, 
although beneficial in the long-run, may have the immediate 
effect of driving Morocco's large informal sector even more 
toward alternative, illegal financial devices and encourage 
growth of informal money exchange and hawala services.  (The 
World Bank estimates that the informal sector accounts for 
almost 40% of Morocco's GDP.)  Financial sector contacts 
forecast decreases in bank deposits and a steep spike in 
illegal cash transfers immediately following implementation 
of AML.  This fear has mobilized Morocco's biggest banks. 
Pressure from Morocco's six largest banks is often cited by 
business contacts as a contributing, if not the primary cause 
of continued GOM delays in adopting AML legislation.  "The 
risks have been high enough that the big six have used all 
their influence (to delay)," explained Citicorp 
vice-president Soundous Bouhia, "But (AML) is inevitable.  We 
need it to draw international investment and everybody knows 
it." 
 
¶5.  (C)  COMMENT: Without a means to measure, it is 
impossible to know with any certainty the size, scope and 
reach of hawalas and other informal money-transfer systems in 
Morocco.  GOM "official" denials and apparent lack of zeal in 
prosecuting hawalas does not inspire confidence, but is 
somewhat assuaged by private sector assurances that hawalas 
really are not all that prevalent in Morocco.  That said, 
while we have no direct evidence linking Morocco-based 
hawalas to financing of terrorist activities, its role in 
Morocco's large informal economic sector remains a cause for 
concern.  Even if there are no hawalas per se, it is not 
unreasonable to suspect that in addition to drugs, contraband 
and people, Morocco's sophisticated smuggling networks are 
equally adept at moving cash across national borders.  While 
the GOM's pending AML legislation is a necessary, valuable 
(and long overdue) tool, banking sector professionals have 
valid fears that increased scrutiny will push more of their 
business underground.  Efforts and assistance to help 
de-emphasize and absorb the informal sector, including 
hawalas, will not only improve GOM tax receipts and Morocco's 
investment climate, but will also help contain the growth of 
informal money transfer mechanisms, thus reducing their 
availability to finance terrorism in Morocco and elsewhere. 
 
GREENE