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DE RUEHLO #6059 2291530
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O 171530Z AUG 06
FM AMEMBASSY LONDON
TO RUEHC/SECSTATE WASHDC IMMEDIATE 8362
INFO RUEATRS/DEPT OF TREASURY WASHDC IMMEDIATE
RHEHNSC/NSC WASHDC IMMEDIATE

C O N F I D E N T I A L LONDON 006059 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EB/ESC/TFS YORKS, EUR/PGI REASOR, EUR/UBI ROY, 
S/CT KUSHNER AND NORMAN, 
TREASURY FOR PONCY AND HEFFERNAN 
NSC FOR HINNEN 
 
E.O. 12958: DECL: 08/13/2016 
TAGS: ETTC KTFN PTER PREL EU UK
SUBJECT: TERRORISM FINANCE: UK REVIEW OF TERRORIST ABUSE OF 
CHARITIES 
 
REF: 8/16 HAAS EMAIL 
 
Classified By: Economic Counselor Sandra Clark for reasons 1.5 (b) and 
(d) 
 
¶1. (U) This is an action request.  Please see paragraph 7. 
 
¶2. (C) Summary.  The Home Office and Her Majesty's Treasury 
are conducting an in-depth review of the UK's regulatory and 
law enforcement structure for combating terrorist financing 
in the charity sector.  Home Office officials are deeply 
critical of the Charity Commission's ability to combat 
terrorism finance, citing the inexperience of their staff, 
complications in sharing intelligence with them, and their 
overall naivete.  Home Office officials have developed dozens 
of possible recommendations for better regulation of the UK 
charity sector.  Officials from the Home Office and HMT would 
like to arrange for an early September visit to Washington to 
learn from our experiences.  They would also appreciate any 
information we can provide regarding the scale of the threat 
from charities involved in terrorism finance.  End Summary. 
 
¶3. (SBU) The UK is currently undertaking a detailed review of 
terrorist abuse of charities.  The review, which is being led 
by the Home Office and Her Majesty's Treasury, is designed to 
identify and remove current vulnerabilities in the charity 
sector to terrorist financing, and to build better ties 
between the various UK agencies involved in the 
identification and investigation of charities linked to 
terrorist financing.  Home Office officials intend to present 
a series of policy recommendations to both the Chancellor and 
the Home Secretary before October 31 (see ref for the terms 
of reference and project concept note of the review). 
 
¶4. (C) According to the Home Office's Stuart Young, one of 
the lead drafters of the review, a primary focus of the final 
report will be the profound shortcomings of the Charity 
Commission.  Young described the Charity Commission as a 
naive organization "completely out of its depth" and beholden 
"to those it regulates rather than to the UK government." 
Specifically, he noted that, while the Charity Commission is 
authorized to use intelligence to aid in the regulation of 
the sector, no one at the Commission has bothered to go 
through the security clearance process.  He added that none 
of their investigators has any financial investigatory 
skills, and said that, even if the Charity Commission 
suspects that a charity is involved in terrorist funding, 
they will have "already trampled the crime scene" by the time 
they report it to law enforcement officials for further 
investigation.  Stuart said that the review would strongly 
recommend that efforts be undertaken to ensure that the 
Charity Commission is staffed with appropriately trained 
individuals, and that they are more completely integrated 
into HMG's overall terrorism finance objectives.  He added 
that, while a member of the UK's Terror Finance Action Group, 
the Charity Commission has not attended any meetings in the 
past six months. 
 
¶5. (C) While primarily critical of the Charity Commission, 
Young said that there were many other recommendations that 
would be put forward to ensure that the overall regulatory 
environment in the UK is "fit for purpose."  He added that 
part of the review will include looking at funding provided 
by the Foreign Office to promote charity regulation 
internationally, and particularly in the Gulf. 
 
¶6. (U) Young said that he would be interested in traveling to 
Washington with colleagues from HMT in early September in 
order to learn more about the U.S. model for charity 
regulation.  He also said that he would be particularly 
interested in learning more about U.S. perceptions on the 
scale of the threat of the use of charities for terrorist 
finance. 
 
¶7. (C) Action Request and recommendation:  Embassy would 
appreciate guidance regarding whether Washington agencies 
would be willing to meet with UK officials in early September 
regarding our approach to combating terrorism finance in the 
charitable sector.  Embassy recommends that we take this 
opportunity to help the UK shore up this weakness in their 
counter-terrorism finance structure. 
 
 
Visit London's Classified Website: 
http://www.state.sgov.gov/p/eur/london/index. cfm 
Caulfield