VZCZCXRO0770
OO RUEHAST RUEHBI RUEHCI RUEHDBU RUEHLH RUEHNEH RUEHPW
DE RUEHNE #1049/01 1421111
ZNR UUUUU ZZH
O 221111Z MAY 09
FM AMEMBASSY NEW DELHI
TO RUEHC/SECSTATE WASHDC IMMEDIATE 6698
INFO RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING 7688
RUEHLO/AMEMBASSY LONDON 6413
RUEHMO/AMEMBASSY MOSCOW 3428
RUEHKO/AMEMBASSY TOKYO 6345
RHMCSUU/FBI WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHDC
RHEFDIA/DIA WASHDC
RUEHGV/USMISSION GENEVA 8331
RHEHAAA/WHITE HOUSE WASHDC
RUEAIIA/CIA WASHDC
RHEHNSC/NSC WASHDC
RUEIDN/DNI WASHINGTON DC
RUCNDT/USMISSION USUN NEW YORK 8064
RHMCSUU/HQ USCENTCOM MACDILL AFB FL
RHHMUNA/HQ USPACOM HONOLULU HI
RUEKJCS/JOINT STAFF WASHDC

UNCLAS SECTION 01 OF 06 NEW DELHI 001049 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV PREL PTER KCRM EFIN PK IN
SUBJECT: JOINT US TREASURY AND DOD SOUTH ASIA REGIONAL 
CONFERNCE ON COUNTERING TERRORIST FINANCING IN THE 
CHARITIABLE SECTOR, APRIL 14-16 
 
¶1. (SBU) Summary: U.S. Pacific Command (PACOM) and the U.S. 
Department of the Treasury hosted a successful regional 
conference on Countering Terrorist Financing in the 
Charitable Sector from April 14-16 in New Delhi, India, with 
assistance from U.S. Central Command (CENTCOM) as well. 
Interagency delegations from Afghanistan, Pakistan, India, 
Bangladesh, Nepal, Sri Lanka, and Maldives attended the 
conference representing central banks and financial 
intelligence units, law enforcement and intelligence 
agencies, as well as home ministries and charity regulatory 
offices. The conference placed special emphasis on 
international standards (specifically, FATF SRVIII) in 
preventing abuse of charities (to include government 
oversight, enforcement actions, private sector outreach, and 
international engagement). USG experts from Treasury, State, 
Justice, and DOD as well as a representative from the Asia 
Pacific Group on Money Laundering (APG) delivered 
presentations on these areas. The participant list for the 
conference is included in paragraph 15. For additional 
details on the agenda and content of the workshop or other 
questions, please contact Katherine Leahy 
(Katherine.Leahy@do.treas.gov) and Tim Dorsett 
(Timothy.Dorsett@do.treas.gov) in U.S. Treasury. 
 
¶2. (SBU) The conference represented the first USG CT-related 
technical assistance program in India since the November 2008 
Mumbai terrorist attacks and the first program on terrorist 
abuse of charities in the region to include all of the 
participating countries and based on the comprehensive 
international standard approach. Feedback on the conference 
was extremely positive and helpful for informing future 
AML/CFT-related programming. The South Asian delegations 
expressed their appreciation for the subject matter and 
expertise on hand, as most participating countries are still 
in an early stage of addressing the use of charities to 
raise, move, and use illicit funds. Indian officials 
emphasized the value of the presentations by neighboring 
countries in fostering regional understanding and 
cooperation, as well as the obvious networking benefit of 
having this diverse and highly competent group assembled in 
one place. Embassy New Delhi's observation of the conference 
supports this assertion: most of the officials present were 
meeting for the first time and U.S. delegates to the 
conference reported a wide range of substantive discussions 
on CT and illicit finance-related issues throughout the 
event. We note the Indian government's support for the 
conference and especially in facilitating Pakistan's 
attendance as an important indicator of India's changing 
attitude towards U.S.-sponsored regional technical 
assistance. Following the success of this conference, 
Treasury plans to conduct additional AML/CFT programs to 
India and neighboring countries with the aim towards 
establishing more regular bilateral and regional dialogue on 
a variety of critical AML/CFT issues in South Asia. END 
SUMMARY. 
 
Delegation: Positioning as a Regional Leader on 
Counterterrorism 
----- 
 
¶3. (SBU) As host nation, India provided the largest 
delegation to the conference (over 20 people). The delegation 
gave well-developed presentations covering India's current 
and pending legal authorities on NPO oversight, NPO abuse 
investigations and prosecutions, India's financial 
intelligence unit, as well as an overview of the February 
2009 amendment to India's law on anti-money laundering and 
counter-financing of terrorism. Indian officials drove many 
of the discussions during the conference and evinced a strong 
interest in the experiences of both their regional neighbors 
and of the United States. The delegation sought to learn more 
about U.S. government outreach efforts to the charitable 
 
NEW DELHI 00001049  002 OF 006 
 
 
sector and later drew parallels between challenges in the 
oversight systems of the United States and India, both of 
which are tiered level of oversight between federal and 
state-level authorities. In response, a representative from 
the U.S. Treasury Department acknowledged the importance of 
regulation and outreach, but emphasized the critical role of 
law enforcement and especially the use of intelligence to 
identify the abuse of charities by terrorists and to take 
effective measures to stop it. Following the conclusion of 
the conference, Indian Ministry of Finance Joint Secretary 
Krishnan indicated that MOF officials were pleased with the 
proceedings of the event and were considering conducting a 
domestic workshop for Indian federal and state-level charity 
regulators that would explore similar themes. 
 
Pakistani Delegation: Focused and Quick to Defend Islamabad's 
Record 
----- 
 
¶4. (SBU) One of the highlights of the conference was the 
active and, on balance, constructive participation of the 
Pakistani delegation. The delegation presented on Pakistan,s 
regulatory framework for overseeing charities and provided 
details on a national database initiative that is unique in 
the region for its comprehensive scope and accessibility. The 
Pakistani government admitted it faces resource and training 
constraints in registering and monitoring over 100,000 active 
non-profit organizations (an area where the UK Charity 
Commission is providing some assistance). Every NPO is 
required to submit annual auditing records pertaining to 
donors, spending, corporate leadership, etc; many of these 
records are available on a publicly accessible website. 
Pakistani officials claimed that very few cases of terrorist 
abuse have been detected in the NPO sector and that resource 
constraints*not opposition from NPOs*are the primary 
hindrance to registration and monitoring efforts. 
 
¶5. (SBU) The delegation also fielded questions on Pakistan's 
implementation of UNSCR 1267 and discussed its challenges in 
freezing the assets of 1267-listed entities due largely to 
the high level of derogatory information needed by its court 
to take domestic freezing actions. Pakistani officials 
underscored the need for strong evidence and adequate 
information-sharing on 1267 designations in order to provide 
Pakistan with adequate legal justification to domestically 
prosecute cases against 1267 entities. In response, U.S. 
Treasury Department representative spent some time clarifying 
the nature of targeted sanctions versus criminal 
prosecutions, and described the necessary legal authorities 
called for by UNSCRs 1267 and 1373 in order to effectively 
implement sanctions domestically. At the end of the workshop, 
the Pakistani delegation suggested that a future regional 
dialogue on targeted sanctions would be beneficial for them 
and likely others in the region*and in particular they are 
interested to learn more about the USG authorities and 
processes for developing and implementing targeted sanctions 
under UNSCRs 1267 and 1373. As follow-up to this charities 
conference, Treasury is developing a proposal to offer a 
future regional workshop on targeted sanctions, likely for 
early 2010. 
 
Afghan Delegation: Newcomers to the Party 
----- 
 
¶6. (SBU) The conference was also notable for the 
participation of officials from Afghanistan, in particular 
from Afghanistan's central bank, Ministry of Economy, and the 
National Director of Security, most of whom were travelling 
outside of Afghanistan for the first time. The delegation 
gave informative presentations on the Ministry of Economy,s 
role in regulating charities, as well as an overview of the 
developing capabilities of Afghanistan,s financial 
 
NEW DELHI 00001049  003 OF 006 
 
 
intelligence unit (the Financial Transactions and Reports 
Analysis Center of Afghanistan, or FinTRACA). The Ministry of 
Economy has a Non-Governmental Organization (NGO) office 
overseeing over 1500 registered domestic and foreign 
organizations that funded over 500 million USD in projects 
during 2008. FinTRACA has 22 employees overseeing 17 
commercial banks and 150 registered hawaladars (an increase 
from 7 in 2006). While the delegation was understandably 
inexperienced in this setting, the senior-most officials from 
the central bank and Ministry of Economy made an excellent 
impression, and many of the other South Asian delegates 
confessed to us during the event that they had been largely 
ignorant of Afghanistan's emerging AML/CFT capabilities prior 
to the conference and benefited immensely from this 
opportunity to interact with them and to learn more about 
what they are doing. 
 
Bangladeshi, Nepali, Sri Lankan, and Maldivian Delegations: 
Offering Insightful Perspectives and Helping Defuse Potential 
Tensions 
----- 
 
¶7. (SBU) The participation of Bangladesh, Nepal, Sri Lanka, 
and Maldives was essential in creating an open environment to 
discuss sensitive but important issues, such as the UNSCR 
1267 designation process and opportunities and challenges in 
bolstering regional cooperation to prevent and enforce the 
abuse of charities by terrorists. Some of the most useful 
moments of the conference came during Q&A sessions in which 
these countries added their voice to discussions on the 
implementation of international standards and best practices. 
Nepal and the Maldives are still in a rudimentary stage of 
beginning to address terrorism finance in the charitable 
sector and had excellent questions for USG experts and the 
representative of the APG (the FATF-style regional body for 
much of South and East Asia). In contrast, the Sri Lankan 
delegation had a wealth of knowledge and experience to share 
on Sri Lanka's long history of combating terrorism finance 
activity by charities including the Tamil Relief Organization. 
 
Issues on the Margin of the Conference include Iran Banking 
----- 
 
¶8. (SBU) The conference provided USG delegates with numerous 
opportunities to engage South Asian officials on a variety of 
illicit finance issues that extended beyond the abuse of 
charities. In separate discussions, Treasury officials raised 
Iranian terrorism and proliferation finance activity with a 
bank regulator for Pakistan's central bank, and an official 
with Afghanistan's FIU. In response to our questions on 
Iranian press reports indicating that Iran will soon open a 
bank in Pakistan, they emphasized that no Iranian financial 
institution is "even remotely close" to satisfying Pakistan's 
registration requirements. They acknowledged that banking 
cooperation is sometimes raised within the context of 
top-level bilateral engagements between Pakistan and Iran, 
but professed that the actual effect of these discussions is 
minimal. They underscored that the State Bank of Pakistan has 
ordered Pakistani banks to restrict transactions with U.S. 
and UN designated Iranian banks and suggested that this order 
has led to a general unwillingness by Pakistani banks to deal 
with any Iranian financial institutions. With regards to 
Afghanistan, they stated that Afghanistan's FlU is closely 
monitoring the transaction reports produced by Arian Bank (a 
fully functioning bank in Afghanistan controlled by Iran's 
Bank Melli) and has not detected any significant illicit 
activity. 
 
Follow-Up 
----- 
 
¶9. (SBU) One of the immediate follow-up initiatives coming 
 
NEW DELHI 00001049  004 OF 006 
 
 
out of this conference was the ability to identify gaps in 
South Asian jurisdictions' NPO domestic sector reviews and 
terrorist threat assessments required under FATF SRVIII. The 
APG was in attendance at the workshop and will continue its 
work with these governments to revisit and complete their 
domestic sector reviews and threat assessments, which are 
critical steps toward implementation of the international 
standard to effectively identify and counter the terrorist 
threat in the NPO sector. 
 
¶10. (U) This workshop was a great example of a large 
Treasury-DOD collaboration on CFT across multiple AORs and in 
a region highly in need of this type of counter-terrorism 
dialogue. It was a significant first step towards greater USG 
interagency cooperation on producing more regional CT 
understanding and cooperation by leveraging relevant USG 
agencies' expertise and resources. 
 
¶11. (SBU) Following the success of this regional, interagency 
workshop, Treasury plans to replicate this successful format 
and work with relevant experts in the USG interagency to 
launch additional AML/CFT workshops and initiatives in India 
and the South Asia region with the aim towards establishing 
more regular bilateral and regional dialogue on a variety of 
critical AML/CFT issues in South Asia. 
 
¶12. (SBU) In particular, Treasury is already working with 
State to respond to a specific request from the Government of 
India to provide a workshop in August/September 2009 on the 
FATF Special Recommendations (SRs) on Terrorist Financing 
prior to India's upcoming FATF Mutual Evaluation in November 
¶2009. India would benefit immensely from this type of program 
in order to become more familiar with the FATF SRs and to 
work on strengthening their expertise and implementation of 
these international standards. Treasury will take the lead in 
working with the USG interagency and the FATF APG to provide 
the relevant AML/CFT experts. 
 
¶13. (SBU) In response to specific feedback from the NPO 
workshop, Treasury is also currently working to design and 
implement a regional South Asia workshop in the fall or 
winter 2009 on implementation of FATF SRVI -- countering 
terrorist abuse of hawala and new payment methods. The global 
informal value transfer system, of which hawala is a large 
part, has repeatedly been implicated in funding terrorist 
attacks and other illicit activity, largely due to the 
non-transparent nature of this sector. In India alone, the 
hawala market is estimated to be between 30-40 percent as 
large as the formal banking sector, according to India's 
central bank. Indian media reports indicate that 
Pakistan-based terrorist group Lashkar-e-Tayyiba (LeT) uses 
hawala to support a wide network of operatives in India, 
Bangladesh, and Nepal. In addition, the terrorist and 
organized crime network of Dawood Ibrahim relies extensively 
on hawala, which played a prominent role in funding the 1993 
bombings of the Mumbai stock exchange and a supporting role 
in the November 2008 Mumbai attacks (as one conduit for 
funding from Italy to Pakistan). This regional workshop will 
focus on: (i) promoting international standards and best 
practices for countering terrorist abuse of the informal 
value transfer system through greater understanding and 
implementation of FATF Special Recommendation VI; (ii) 
sharing experiences among participating nations in addressing 
the abuse of informal value transfer systems and identifying 
challenges and opportunities for greater regional cooperation 
on this issue; and (iii) inviting experts from companies 
specializing in new and emerging payment technologies, such 
as mobile banking, to speak to private sector implementation 
of SRVI. 
 
¶14. (SBU) Another topic for discussion that Treasury is 
exploring based on feedback from the NPO workshop is a South 
 
NEW DELHI 00001049  005 OF 006 
 
 
Asia regional workshop on effective development and 
implementation of targeted sanctions to better comply with 
international standards (UNSCRs 1373 and 1267 and FATF 
SRIII). The objective of the workshop is for these 
governments to emerge with the necessary tools to (i) 
effectively target Al Qaeda- and Taliban-related threats 
under UNSCR 1267 and other terrorist threats under IJNSCR 
1373; (ii) successfully list these targeted individuals and 
entities at the UN 1267 Sanctions Committee and domestically 
by developing robust and relevant designation proposals; and 
(iii) to apply these tools to increase the use and strengthen 
the integrity of the 1267 international targeted sanctions 
regime. Greater understanding of the process and better 
international coordination would have likely resulted in a 
more immediate and successful listing at the UN. The timing 
for implementation of this regional sanctions workshop is 
estimated at January to March 2010. Treasury will be looking 
for strong interagency expertise and resource support once 
again, in order to replicate effective regional CT workshops. 
 
¶15. Participating institutions: 
 
Afghanistan 
Ministry of Economy, Non-Governmental Organization Dept 
National Director of Security 
DA Afghanistan Bank (Central Bank), Financial Intelligence 
Unit 
 
Bangladesh 
Bangladesh Bank, Anti Money Laundering Dept (Dhaka) 
Bangladesh Bank, Dept of Banking Inspection (Khulna) 
Directorate General of Forces Intelligence 
 
India 
Central Bureau of Investigation 
Ministry of Home Affairs, Internal Security-VI 
Ministry of Home Affairs, Foreigners Office 
Ministry of Home Affairs, Intelligence Bureau 
Ministry of Finance, Revenue Dept 
Ministry of Finance, Revenue Dept, Central Board of Direct 
Taxes 
Ministry of Finance, Revenue Dept, Central Economic 
Intelligence Bureau 
Revenue Dept, FIU-IND 
Ministry of Finance, Revenue Dept, Directorate of Enforcement 
Ministry of Finance, Dept of Economic Affairs 
Ministry of Finance, Dept of Economic Affairs, FATF cell 
Securities and Exchange Board of India 
Ministry of External Affairs, Americas Division 
Ministry of External Affairs, Counterterrorism 
Ministry of Exteranl Affairs, SAARC 
 
Maldives 
National Defence Force 
Maldives Police Service 
Customs Service, Finance and Accounts 
Maldives Monetary Authority,Financial Intelligence Unit, 
Legal Section 
Dept of Immigration and Emigration 
 
Nepal 
Army 
Nepalese Armed Police 
Nepal Central Bank 
Ministry of Home 
 
Pakistan 
Ministry of Foreign Affairs 
State Bank of Pakistan, Banking Policy & Regulations 
Ministry of Religious Affairs, Zakat & Ushr, Research & 
Reference Wing 
Ministry of Social Welfare and Special Education 
 
NEW DELHI 00001049  006 OF 006 
 
 
Federal Investigation Agency 
Financial Monitoring Unit 
Pakistani High Commission in New Delhi 
 
Sri Lanka 
Central Bank, Financial Intelligence Unit 
Ministry of Social Service and Social Welfare, Registrar of 
the National Secretariat for Non-Governmental Organizations 
Deputy Solicitor General 
SIS, Ministry of Defense 
 
USA 
Treasury Dept, Terrorism Finance and Financial Crimes 
State Dept, Economics Bureau 
Treasury Dept, Financial Intelligence Unit 
Treasury Dept, Internal Revenue Service, Criminal 
Investigation 
Pacific Command 
Justice Dept, Office of Overseas Prosecutorial Development, 
Assistance and Training 
Treas Dept Attach, Kabul 
Teasury Dept, Office of Foreign Assets Control 
Office of the Secretary of Defense, Policy 
Treasury Dept, Office of Intelligence Analysis 
Embassy New Delhi 
 
Asia, Pacific Group (APG) Secretariat 
 
Delegation of the European Commission to India, Political 
Affairs Section 
BURLEIGH