VZCZCXYZ0000
PP RUEHWEB

DE RUEHLO #5503/01 2081028
ZNY CCCCC ZZH
P 271028Z JUL 06
FM AMEMBASSY LONDON
TO RUEHC/SECSTATE WASHDC PRIORITY 7766
INFO RUEHSW/AMEMBASSY BERN PRIORITY 0383
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RHEHNSC/NSC WASHDC PRIORITY

C O N F I D E N T I A L LONDON 005503 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EB/ESC/TFS YORKS, EUR/PGI REASOR, EUR/UBI ROY, 
S/CT KUSHNER, 
TREASURY FOR PONCY, HEFFERNAN, SERAFINI 
TREASURY FOR OFAC LUIRE 
NSC FOR HINNEN 
 
E.O. 12958: DECL: 07/26/2016 
TAGS: ETTC KTFN PTER PREL EU UK
SUBJECT: TERRORISM FINANCE: MONTREUX INITIATIVE ON ISLAMIC 
CHARITIES 
 
REF: 7/19 HAAS EMAIL 
 
Classified By: Economic Minister Counselor Mark Tokola for reasons 1.5 
(b) and (d) 
 
¶1. (U) This is an action request.  Please see paragraph 2. 
 
¶2. (C) Summary and Action Request:  The Montreux Initiative 
is a non-governmental project designed to promote cooperation 
in removing unjustified obstacles to the effective operation 
of legitimate Islamic charities.  The initiative, which is 
being partially financed by the UK and Swiss governments, 
seeks to develop a rigorous, voluntary code of conduct for 
Islamic charities.  The code of conduct will be buttressed by 
independent assessments of charities' financial and 
management controls.  The Montreux Initiative is still in the 
process of identifying a "Group of Friends" -- countries 
which support the initiative.  While they have a number of 
Western government interested, they are seeking 
representatives from the Gulf States.  Representatives of the 
initiative would like to present their project to Washington 
agencies this fall.  Our assessment is that they will not ask 
the U.S. to join the Group of Friends; and there are a couple 
of problems with the overall initiative which may preclude 
our participation.  But they would be interested in our 
honest appraisal of the project, and possibly a quiet word 
from us to Gulf States that we support the overall objectives 
of the initiative to encourage Muslim states to join the 
intitiave.  Action requested: We would appreciate Washington 
guidance regarding a fall visit by representatives of the 
Montreux Initiative.  End Summary. 
 
¶3. (U) Embassy representatives met with members of the 
Montreux Initiative's core group on July 21 and separately 
with core group member and England Charity Commission head of 
international programs James Shaw-Hamilton on July 24 to 
discuss the Montreux Initiative.  Core group members provided 
a detailed briefing of the initiative (FAQ sheet and other 
documentation emailed to Washington - ref A).  The basic 
objective of the initiative is to remove obstacles -- many 
put into place to combat terrorism -- to the operations of 
legitimate Islamic charities worldwide.  Members of the core 
group acknowledged that cases exist where charities have been 
used to support terrorism, but they argue that many 
legitimate charities are being unfairly caught up in 
counter-terrorism finance measures. 
 
¶4. (U) The initiative is working to develop a voluntary, 
rigorous code of conduct for Islamic charities to adopt. 
Core group members stressed that this code of conduct will be 
fully consistent with the Financial Action Task Force's 
Special Recommendation VIII on combating the abuse of 
non-profit organizations and the associated best practice 
papers and interpretive notes.  Islamic charities who adopt 
this code of conduct will subsequently be reviewed by an 
independent assessment team to make sure that the charity has 
the proper financial and operational controls in place.  It 
is hoped that this assessment process will give banks, aid 
agencies, and donors confidence that the charity with which 
they are dealing is serious and legitimate.  Once a charity 
has been assessed, members of the initiative's core group 
will lobby any banks, institutions, or governments which 
still have restrictions on the charities to eliminate those 
obstacles. 
 
¶5. (U) The initiative is in the process of establishing a 
"Group of Friends," or countries willing to provide financial 
and political support to the initiative.  Switzerland, the 
United Kingdom, and Spain have already provided funding, and 
there are talks underway with several other European nations. 
 The initiative is also trying to recruit Muslim countries -- 
especially in the Gulf region -- to join the Group of 
Friends.  The core group views the participation of Muslim 
countries as vital to the success of the initiative.  They 
admitted that they have encountered some reluctance from 
these countries; most do not want to embrace the initiative 
until they know what the U.S thinks of it. 
 
¶6. (C) Members of the core group would be interested in 
traveling to Washington this fall in order to present their 
project to interested Washington agencies.  Our assessment is 
that they would not ask the U.S. to join the "Group of 
Friends" of the initiative.  And there are some aspects of 
the initiative that we would be unwilling to accept.  For 
 
example, the UK charity Interpal, which has been designated 
in the U.S. for its funding of Hamas, is a member of the 
initiative's core group.  In addition, the initiative calls 
on governments to require evidence in the case of 
designations on par with criminal law.  It also calls on 
governments to transfer frozen assets to other legitimate 
charities. 
 
¶7. (C) The core group would likely seek two things: expert 
input and tacit support.  Members of the core group are aware 
of the expertise of the U.S. government in terrorism finance. 
 We believe that they would welcome detailed comment on their 
initiative and how it might be tightened both to improve the 
governance of Islamic charities and to boost the credibility 
of the entire initiative.  We also believe that they will 
seek our tacit support of the initiative, as well as a quiet 
word to key Muslim countries that we do not oppose it, so 
that they can convince Muslim countries to join their Group 
of Friends. 
 
 
Visit London's Classified Website: 
http://www.state.sgov.gov/p/eur/london/index. cfm 
Tuttle