VZCZCXYZ0003
PP RUEHWEB

DE RUEHBUL #3229/01 2870946
ZNR UUUUU ZZH
P 140946Z OCT 09
FM AMEMBASSY KABUL
TO RUEHC/SECSTATE WASHDC PRIORITY 2131
RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY 0903

UNCLAS KABUL 003229 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR SRAP, SCA/FO, SCA/RA, AND SCA/A 
DEPT PASS AID/ASIA BUREAU 
CENTCOM FOR CSTC-A, USFOR-A 
 
E.O. 12958 N/A 
TAGS: EFIN EAID PGOV ETTC AF
SUBJECT: Moving Ahead in Fighting Money Laundering and Terrorist 
Financing in Afghanistan - The Need to Act on Past Assessments 
 
¶1. (SBU) SUMMARY:  Between November 2006 and March 2009, three USG 
assessment teams traveled to Afghanistan to identify training and 
technical assistance needs in anti-money laundering (AML)/combating 
the financing of terrorism (CFT); a number of recommendations for 
technical assistance from those visits remain to be implemented.  In 
November 2006, Treasury's Office of Technical Assistance (OTA) sent 
an advisor to assess potential interfaces between the Central Bank's 
Financial Intelligence Unit (FIU) and the Afghan Law Enforcement 
Community.  In March, 2008, Treasury led an inter-agency needs 
assessment to Afghanistan to examine the main features of 
Afghanistan's AML/CFT regime and to identify technical assistance 
gaps.  Finally, in March 2009, the Department's Office of the 
Coordinator for Counterterrorism (S/CT) led an interagency (State, 
Treasury, Department of Justice, and Department of Defense) 
Financial Sector Assessment Team (FSAT) to identify technical 
assistance and training needs.  The Embassy's review of these 
reports finds similarities in many of their recommendations and that 
a number of the systemic vulnerabilities they found remain.  Embassy 
requests Washington agencies review and look to act on the 
outstanding recommendations for targeted technical assistance 
contained in those reports.  End Summary. 
 
¶2.  (SBU) Three interagency USG assessment teams - one led by 
Treasury's Office of Technical Assistance in November 2006, another 
Treasury-led group in examine the main features of Afghanistan's 
AML/CFT regime to identify technical assistance gaps in March 2008, 
and a third led by S/CT in March 2009 - have identified a number of 
areas where Afghan authorities need outside assistance.  This cable 
contains the Embassy's review of the concerns identified in the 
reports and our understanding of where the teams' recommendations 
for assistance stand. 
 
STRENGTHEN THE CENTRAL BANK'S AML/CFT 
SUPERVISION DIVISION: 
------------------------------------- 
 
Need:  Provide Anti-Money Laundering/Counter Finance Terrorist 
(AML/CFT) training for the Central Bank's Supervision Department. 
(Recommended by Treasury's Office of Technical Assistance in 2006; 
Treasury Interagency Team in 2008; and FSAT Interagency Team in 
2009.) 
 
     --Status:  Banking Supervision staff received training in basic 
analysis of suspicious transactions, counter-terrorism (CT), 
investigative techniques, forensic accounting and typologies from 
their in-house USAID advisors.  However, these USAID advisors are 
not AML/CFT experts.  As a result, Treasury's Office of Technical 
Assistance (OTA) is planning to send a resident advisor to work with 
the Banking Supervision Department on AML/CFT issues in 
January/February 2010.  This advisor would compliment the current 
USAID contract. 
 
Need:  Provide training on International Financial Action Task Force 
(FATF) Standards.  (Recommended by Treasury Interagency Team in 
2008; and FSAT Interagency Team in 2009.) 
 
     --Status:  In April, 2006, OTA advisors worked jointly with 
World Bank and Afghan Central Bank to train Central Bank 
supervisors, money service providers (hawaladars), microfinance 
banks, commercial banks, lawyers, real estate dealers, and jewelry 
and precious metal dealers on international best-practices.  Note: 
We expect more work in this area following completion of the IMF 
AML/CFT mutual evaluation of Afghanistan in November. 
 
IMPROVE THE EFFECTIVENESS OF FINTRACA: 
-------------------------------------- 
 
Need:  Provide basic Financial Investigative Techniques course. 
(Recommended by Treasury's Office of Technical Assistance in 2009; 
Treasury Interagency Team in 2008; and FSAT interagency Team in 
2009.) 
 
     --Status:  OTA held a Financial Investigative Techniques course 
in late November 2008 for members of various law enforcement 
agencies and the Financial Transactions and Reports Analysis Center 
of Afghanistan (FinTRACA) analysts.  (Note: FinTRACA is 
Afghanistan's Financial Intelligence Unit and is responsible for 
collecting, analyzing, and reporting financial information to law 
enforcement.  End Note.)  A separate two day introductory course was 
provided 24 judges.  INL and USAID co-sponsored both courses. 
Individuals trained in the November 2008 course are now involved in 
active financial investigations.  A second Financial Investigative 
Techniques course is tentatively scheduled for delivery in the first 
quarter of 2010. 
 
Need: Provide I2 (financial analysis) software training to analysts. 
 (Recommended by FSAT Interagency Team in 2009.) 
 
 
     --Status: Treasury's OTA will give a Financial Analytical 
Techniques Course (FATC) to FinTRACA analysts October 12-24.  The 
seminar is a two-week combination of training and follow-on 
mentoring.  The follow-on mentoring will include real time 
application of techniques learned in class to open Afghan cases and 
will include training in the I2 Analysts Notebook software. 
 
Need:  United States' Financial Intelligence Unit (FinCEN) to lead 
efforts to prepare FinTRACA for membership in the Egmont Group. 
(Recommended by FSAT Interagency Team in 2009.) 
 
     --Status:  FinCEN provided support to FinTRACA and urged they 
be admitted as members of the Egmont Group at the first available 
opportunity.  The next Egmont Group Plenary takes place in May 2010. 
 To move the process forward, FinCEN will carry out an on-site 
assessment in January 2010.  For FinTRACA to be admitted to the 
Egmont Group, they must be able to show that they are a fully 
operational financial intelligence unit that receives, analyzes and 
disseminates data to law enforcement.  FinTRACA is receiving more 
quality data in 2009, but has not sent any cases forward to law 
enforcement for action.  Treasury's OTA has taken over all technical 
assistance and training responsibilities for FinTRACA and will 
deliver a Financial Analytical Techniques Course (FATC) to its 
analysts October 12-24.  Moreover, OTA maintains a resident advisor 
at FinTRACA to help with day-to-day development of the FIU.  A 
resident advisor supported by the UK Serious Organized Crime Agency 
(SOCA) also helps in this work. 
 
Need:  Promote interagency cooperation by having detailees from 
other domestic law enforcement and regulatory agencies assigned to 
FinTRACA.  (Recommended by Treasury Interagency Team in 2008.) 
 
     --Status:  Not started.  As part of Afghanistan's forthcoming 
IMF AML/CFT mutual evaluation, FinTRACA organized several 
national-level working group meetings.  Through this process, 
FinTRACA improved relations with law enforcement entities and is 
better positioned to execute the recommendation.  Furthermore, 
FinTRACA is considering detailing someone to the Major Crimes Task 
Force (MCTF), a positive step that would connect the FIU directly to 
law enforcement. 
 
Need:  Provide training on how to process Suspicious Transaction 
Reports (STR's) within FinTRACA.  (Recommended by Treasury 
Interagency Team in 2008; and FSAT Interagency Team in 2009.) 
 
     --Status:  The OTA training for FinTRACA analysts October 12-24 
will focus on prioritizing, targeting, processing and analysis of 
Suspicious Transaction Reports. 
 
Need:  Providing a FinCEN advisor to lead efforts in the development 
of the financial intelligence unit.  (Recommended by FSAT 
Interagency Team in 2009.) 
 
     --Status:  FinCEN is deploying a member of its staff to the 
Afghan Threat Finance Cell (ATFC) in October 2009.  Besides 
providing direct analytical support to ATFC investigations, the 
FinCEN advisor will serve a conduit through which U.S. law 
enforcement will access FinTRACA's financial intelligence while 
abiding by Afghan law and international best practices. 
 
Need:  Continue Hawala registration and oversight efforts outside 
Kabul.  (Recommended by Treasury Interagency Team in 2008; and FSAT 
Interagency Team in 2009.) 
 
     --Status:  This is the first year (since Taliban rule) hawalas 
in the provinces have been successfully licensed.  To date, 159 
hawalas are licensed in Kabul, 29 in Jalalabad, 43 in Kunduz and 67 
in Mazar-e Sharif.  More work is needed in Herat, Kandahar, and 
Mazar-e Sharif.  Placing an AML/CFT Advisor in the Central Bank's 
Financial Supervision Department will help these efforts.  In the 
interim, the Treasury Attache office is moving this work forward 
through regular outreach to the Central Bank at the highest levels. 
 
 
Need:  Establish a separate hawala regulatory division in the 
Central Bank's Financial Supervision Department.  (Recommended by 
Treasury Interagency Team in 2008.) 
 
     --Status:  At OTA's urging (including a written recommendation 
from OTA's Regional Advisor and meeting with the Central Bank Deputy 
Governor) the Central Bank established a separate AML/CFT section in 
the Financial Supervision Department in late 2008.  This section is 
responsible for hawala regulation and oversight of the formal 
financial sector in this area.  While establishing this section is a 
positive step, it is understaffed and needs additional training. 
 
IMPROVE BORDER ENFORCEMENT AND 
OPERATIONAL EFFICIENCY: 
------------------------------ 
 
Need:  Training the Finance Ministry's Customs Revenue Department to 
augment mobile verification capacity, training in auditing and 
development of a Customs Institute to professionalize personnel. 
(Recommended by Treasury Interagency Team in 2008; and FSAT 
interagency Team in 2009.) 
 
     --Status:  The Finance Ministry's Customs and Revenue 
department is beginning to implement a number of initiatives to 
professionalize its staff and to extend connectivity and operations 
from Kabul into the provinces.  The Ministry of Finance recently 
signed an agreement to open an Afghan Custom's Academy, which will 
begin operations in January 2010. 
 
Need:  Provide training to combat bulk cash smuggling.  (Recommended 
by Treasury Interagency Team in 2008; and FSAT Interagency Team in 
2009.) 
 
     --Status:  In May 2009, OTA's resident advisor provided Bulk 
Cash Smuggling and Trade Based Money Laundering (TBML) training in 
Herat province part of a DOJ training session.  Another TBML/BCS 
training is being coordinated and planned for December 6-9 in Kabul, 
sponsored by DHS/CBP/ICE. 
 
ADDRESS WEAKNESSES IN NGO SUPERVISION 
AT THE MINISTRY OF ECONOMY: 
------------------------------------- 
 
 
Need:  Inventory Afghan charities/NGOs and existing oversight 
mechanisms; identify consolidation methods for more effective 
regulatory compliance and enforcement.  (Recommended by Treasury 
Interagency Team in 2008; and FSAT Interagency Team in 2009.) 
 
     --Status:  Not started.  Charities and NGO's pose an illicit 
finance threat to Afghanistan and some NGOs may negotiate with the 
Taliban in operate in areas of low security.  Due to insufficient 
technology and a lack of capacity, the Ministry of Economy's NGO 
division is unable to identify, license, and effectively monitor all 
NGO projects in Afghanistan.  Earlier this year, PACOM and Treasury 
sponsored a South Asia charity workshop in New Delhi, which included 
the participation of seven Afghan officials.  While this training 
provided general awareness, we need to develop and deploy a number 
of focused training initiatives that will assist the Ministry of 
Economy and its NGO division in fulfilling its roles and 
responsibilities.  Treasury plans to send a policy advisor from its 
office of Terrorism and Financial Intelligence (TFFC) to Afghanistan 
to map radical support networks, explore alternative opportunities, 
and work to assess (and develop recommendations) current NGO 
registration and supervision efforts.  Training and/or technical 
assistance may be the appropriate follow-up step.  In June, S/CT 
proposed sending an assessment team to Afghanistan, but we have not 
heard further on its status. 
 
IMPROVING AFGHANISTAN'S LEGAL FRAMEWORK: 
---------------------------------------- 
 
Need:  Expand the DOJ Task Force/Anti-Corruption Unit in the 
Attorney General's Office to include financial investigation. 
(Recommended by Treasury's Office of Technical Assistance in 2006; 
Treasury Interagency Team in 2008; and FSAT Interagency Team in 
2009.) 
 
     --Status:  The FBI will provide in depth training to those 
working at the Major Crimes Task Force.  As part of this training, 
investigators will receive instruction on how to conduct financial 
investigations.  Other efforts are underway to plan additional 
Financial Investigative Techniques training in to reach those not 
included in the Major Crimes Task Force way ahead. 
 
Need:  Training for the Criminal Justice Task Force, Ministry of 
Interior and the Anti-Corruption Unit the Attorney General's Office 
is forming.  (Recommended by Treasury's Office of Technical 
Assistance in 2006; Treasury Interagency Team in 2008; and FSAT 
Interagency Team in 2009.) 
 
     --Status:  Members of the CJTF, SIU Financial Investigative 
Unit, and ACU participated in the November 2008 OTA-led Financial 
Investigative Techniques course.  Efforts are underway to plan 
additional Financial Investigative Techniques training in 
Afghanistan. 
 
Need:  An advisor to provide basic training to prosecutors and 
judges for one year on how to combat financial crimes.  (Recommended 
 
by the FSAT Interagency Team in 2009.) 
 
     --Status:  The FSAT recommended DOJ place a mentor in 
Afghanistan for one year who would focus on basic training to combat 
financial crimes.  The individual would work closely with the DOJ 
mentors already in place and build on the foundation these mentors 
have already constructed.  The DOJ, however, has not provided such a 
mentor.  Separately, OTA is planning/ recruiting for a resident 
advisor in 2010 to mentor the work of the Major Crimes Task Force 
(MCTF), a joint U.S.-Afghan unit dedicated to the investigation and 
prosecution of serious crimes, to improve further indigenous 
capacity to investigate economic crime cases. 
 
Need:  Provide a basic Financial Investigative Techniques course. 
(Recommended by Treasury's Office of Technical Assistance in 2006; 
Treasury's Interagency Team in 2008; and FSAT Interagency Team in 
2009.) 
 
     --Status:  The OTA held a Financial Investigative Techniques 
course, co-sponsored with INL and USAID, in November 2008 to members 
of various law enforcement agencies and FinTRACA analysts and a 
separate 2 day introductory course for judges.  Individuals trained 
during the November 2008 course are now involved in active financial 
investigations.  A second Financial Investigative Techniques course 
is tentatively scheduled for the first quarter of 2010 [Note: This 
training is also included under "Improve the Effectiveness of 
FinTRACA" above.  End note.] 
 
RE-INSTATE ARTICLE 61 TO GIVE THE MINISTRY 
OF FINANCE OVERVIEW OF INTERNAL AUDIT 
------------------------------------------ 
 
Need:  Provide training and technical assistance to Ministry of 
Finance employees in the Internal Audit Department on audit 
techniques, effective reporting and resolution of identified audit 
weaknesses.  (Recommended by FSAT Interagency Team in 2009.) 
 
     --Status:  Re-instating Article 61 of the Public Finance and 
Expenditure Law of Afghanistan will give the Finance Ministry audit 
authority over all central line ministries.  This step is a key 
benchmark of the World Bank administered Afghan Reconstruction Trust 
Fund (ARTF) incentive program.  Currently, the Internal Audit 
Department employs 99 people in various capacities (i.e., audit, 
information technology, fraud, and administration).  Training is 
needed in audit techniques, as well as in effective reporting and 
resolution of identified audit weaknesses.  Treasury's Office of 
Technical Assistance plans to send an expert resident advisor to 
work with the Internal Audit Department in December 2009. 
 
MOVING FORWARD 
-------------- 
 
¶3.  (SBU) As the above review shows, the three assessment missions 
(performed from 2006-2008) put forth similar recommendations and 
proposals.  Treasury's Office of Technical Assistance (OTA) is 
working to provide capacity building in internal auditing, AML/CFT 
central bank supervision, and the Major Crimes Task Force to help 
with financial investigations.  Both Afghan and international 
officials have noted that the international community must avoid 
short-term fixes regarding enforcement of AML/CFT.  As in other 
areas, building Afghan capacity to fight money laundering and 
terrorists' use of the financial system will require commitment and 
enhanced U.S. coordination (via State, Treasury and others) with 
other providers of technical assistance in Afghanistan, including 
UK/SOCA, World Bank, IMF, and UNODC. 
 
EIKENBERRY