VZCZCXRO7266
OO RUEHBC RUEHDE RUEHKUK
DE RUEHMK #1550/01 2341021
ZNY CCCCC ZZH
O 221021Z AUG 06
FM AMEMBASSY MANAMA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 5485
INFO RUEHEE/ARAB LEAGUE COLLECTIVE IMMEDIATE
RHMFISS/HQ USCENTCOM MACDILL AFB FL IMMEDIATE
RHBVAKS/COMUSNAVCENT  IMMEDIATE
RUEATRS/DEPT OF TREASURY WASHDC IMMEDIATE

C O N F I D E N T I A L SECTION 01 OF 02 MANAMA 001550 
 
SIPDIS 
 
SIPDIS 
 
PASS TO EB/ESC/TFS FOR BADKINS, S/CT FOR GNOVIS, 
NEA/ARP,IO/PSC FOR BFITZGERALD, INR 
TREASURY FOR DGLASER AND OFAC FOR RWERNER 
 
E.O. 12958: DECL: 08/21/2016 
TAGS: KTFN EFIN PTER BA REGION CTR ECTRD
SUBJECT: FINANCIAL CRIMES LAW ENACTED AMID BOOM IN LEBANON 
FUNDRAISING 
 
REF: A. MANAMA 1513 
     ¶B. MANAMA 1473 
     ¶C. MANAMA 1469 
 
Classified By: CDA Susan L. Ziadeh, reasons 1.4 (b) and (d). 
 
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SUMMARY 
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¶1. (C) The King August 8 signed a financial crimes law that 
crimininalizes money laundering and terror finance, thus 
entering the law into force.  Ministry of Justice Under 
Secretary Shaikh Khalid bin Ali Al Khalifa told EconOff that 
 
SIPDIS 
the law's terrorism definition, which has a cutout for 
"freedom fighters", was superseded by Bahrain's obligations 
as signatory to various international treaties and 
conventions, which are also mentioned in the law.  In the 
context of press reports concerning fundraising for Lebanon, 
he stated that it is illegal for political societies to 
disburse money outside Bahrain's borders.  It is the 
government's duty to monitor fundraising efforts and 
intercede to avoid any violation of law.  A Ministry of 
Social Development official told us his assumption is that 
all monies being raised through informal charities -- on the 
street and in malls, mosques, and matams -- is going to 
Hizballah, but he presented no specific evidence of this. 
End Summary. 
 
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NEW LAW CRIMINALIZES MONEY LAUNDERING 
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¶2. (U) The King August 8 signed a financial crimes law with 
amendments addressing terror finance.  The law, 54 of 2006, 
adopts the Organization of the Islamic Conference's 
definition of terrorism, effectively creating a "freedom 
fighter" exemption (Ref. C).  Law 54 criminalizes the 
undeclared transfer of money across international borders for 
the purpose of money laundering or in support of terrorism. 
Anyone convicted under the law of collecting or contributing 
funds, or otherwise providing financial support to a group or 
people who practice terrorist acts, whether inside or outside 
Bahrain, will be subject to imprisonment for a minimum 
ten-year sentence to a maximum of a life sentence.  The crime 
also carries a fine of between BD 10,000 and BD 500,000 
($26,700 to $1.34 million). 
 
¶3. (SBU) Bahrain Monetary Agency (BMA) Compliance Unit 
Analyst Bushra Al-Haddad told EconOff August 19 that the GOB 
had been eager to pursue passage of Law 54 ahead of the 
upcoming November 13 - 15 MENAFATF Fourth Plenary Meeting in 
Doha.  She said Bahrain's Financial Sector Assessment Program 
(FSAP), along with that of Mauritania, was on the agenda to 
be formally reviewed at the plenary, adding that IMF auditors 
involved in the FSAP were expected to be in attendance. 
Al-Haddad noted that a country's FSAP may be made public at 
its government's discretion and that Bahrain had elected to 
do so in the interest of transparency. 
 
¶4. (C) Al-Haddad said that in compliance with Bahrain's FSAP, 
the GOB was in the process of assembling a 50-person team 
tasked with monitoring charities fundraising.  The team would 
use an IMF-prescribed risk-based monitoring approach and is 
to be stood up in time for the Doha Plenary. 
 
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JUSTICE OFFICIAL SAYS NO FREEDOM FIGHTER EXEMPTION 
--------------------------------------------- ----- 
 
¶5. (C) Ministry of Justice Under Secretary Shaikh Khalid bin 
Ali Al Khalifa told EconOff August 12 that the terrorism 
definition contained in Law 54 had been included to gain the 
acceptance of Islamists in Parliament and win passage of the 
law.  However, he pointed out that the law's definition of 
terrorism ends with the modifier "...in accordance with 
international law."  He said he was confident that Bahrain's 
obligations as signatory to various international treaties 
and conventions, which are also mentioned in the law, would 
effectively supersede any legal effect carried by Law 54's 
terrorism definition.  (Comment: His optimistic assumption 
may not hold up in the event of a legal challenge.  End 
Comment.) 
 
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MANAMA 00001550  002 OF 002 
 
 
SHOW ME THE MONEY 
----------------- 
 
¶6. (C) EconOff asked Shaikh Khalid about a group of Bahraini 
political societies that the press had reported as intending 
to travel to Lebanon to meet with politicians and NGO 
representatives and deliver financial assistance and 
medicines (Refs. B and C).  A spokesman for the delegation 
from Al Waad political society August 7 said publicly that 
the group would deliver funds, but this was contradicted two 
days later by another representative who said the group only 
intended to offer political support.  Shaikh Khalid said he 
had called the Al Waad official to caution him that it would 
be illegal for any political society to raise funds for 
disbursement abroad.  "I told him that regardless of who the 
money was collected from, whether the public at large or the 
members themselves, it would be illegal for the political 
societies to disburse the money outside Bahrain's borders. 
He told me the group would not donate money but would, 
instead, provide moral and political support to Lebanese 
officials."  (Note: A senior Al Waad official told Pol/Econ 
Chief August 21 that Al Waad had raised $50,000 for Lebanon 
through donations from its members.  Following the GOB's 
intervention, however, the group had decided not to talk 
publicly about the financial aspect of the trip.  She said 
the group had probably carried the money to Syria and 
Lebanon, but noted that she had not spoken to any of her 
colleagues since their return.  End Note.) 
 
¶7. (C) Shaikh Khalid opined that political societies claiming 
to collect money for Lebanon actually planned to spend the 
money in funding their campaigns.  "Up until now, I haven't 
seen any evidence that money has illegally crossed our 
borders."  He added that he supported ongoing legitimate 
Lebanese relief efforts.  He concluded by adding that it is 
the government's duty to monitor fundraising efforts and 
intercede to prevent any violation of law. 
 
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OFFICIAL COUNSELS SKEPTICISM OF GOB LINE 
---------------------------------------- 
 
¶8. (C) An official at the Ministry of Social Development, 
which has oversight responsibility for charities, told 
EconOff that, although he did not have first-hand 
information, he assumed that all funds being collected 
informally in shopping malls and on street corners was going 
to Hizballah.  He also charged that the Al Minbar political 
society routinely moves funds into and out of Bahrain in 
contravention of government restrictions. 
 
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COMMENT 
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¶9. (C) The bulk of fundraising activity has been channeled 
through the GOB's High Committee to Aid the Lebanese People, 
but informal mechanisms on the streets and in malls, mosques 
and matams, also are widely available.  Although we have no 
specific information, some of these funds likely find their 
way to Hizballah.  On a policy level, we are encouraged that 
the Ministry of Justice was pro-active in addressing Al 
Waad's plan to deliver funds to Lebanon.  But stopping the 
actual flow of money is more difficult to achieve.  We will 
continue to work with our interlocutors to tighten up 
enforcement of controls on financial movements.  End Comment. 
 
 
********************************************* ******** 
Visit Embassy Manama's Classified Website: 
http://www.state.sgov.gov/p/nea/manama/ 
********************************************* ******** 
ZIADEH