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RR RUEHBC RUEHDE RUEHDH RUEHKUK RUEHROV
DE RUEHLB #1353/01 3621520
ZNR UUUUU ZZH
R 281520Z DEC 09
FM AMEMBASSY BEIRUT
TO RUEHC/SECSTATE WASHDC 6252
INFO RUEHEE/ARAB LEAGUE COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS SECTION 01 OF 04 BEIRUT 001353 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EFIN ECON PTER PGOV LE
SUBJECT: MENAFATF NOVEMBER 2009 BEIRUT LEBANON PLENARY 
REPORTING CABLE 
 
¶1. (SBU) Summary: The Middle East and North Africa Financial 
Action Task Force (MENAFATF) held a plenary session (MENAFATF 
X) and working group meetings from November 8-12 at the 
Riviera Hotel in Beirut.  Treasury Terrorist Financing and 
Financial Crimes Director for Global Affairs Brian Grant 
headed the U.S. delegation, and the terror finance reporting 
officer from US Embassy Beirut attended.  During this 
Plenary, the MENAFATF adopted the mutual evaluation (ME) 
report of Lebanon and the follow-up reports of Tunisia, 
Mauritania, Syria, and Morocco; adopted the second MENAFATF 
strategic plan for 2010-2012 and the 2010 work plan; 
discussed concerns related to member countries that are late 
in paying their contributions and appropriate mechanisms to 
address this issue; discussed details for a second 
ministerial meeting; discussed the MENAFATF,s review of the 
Arab Interior Ministers Council,s draft indicative 
anti-money laundering/countering the financing of terrorism 
(AML/CFT) law; adopted the Mutual Evaluation Working Group,s 
(MEWG) revised follow-up process, the updated schedule for 
MENAFATF country mutual evaluations and the revised mutual 
evaluation procedures; adopted the Technical Assistance and 
Typologies Working Group (TATWG) reports and approved the 
proposal to form a MENAFATF Financial Intelligence Unit (FIU) 
Forum; and, discussed the joint MENAFATF-FATF Plenary 
scheduled for February 2010.  End summary. 
 
MUTUAL EVALUATION REPORTS 
------------------------- 
 
¶2. (SBU) The Plenary discussed and adopted the 
MENAFATF-drafted ME of Lebanon.  The evaluation was conducted 
using the FATF 2004 Methodology and summarizes the AML/CFT 
measures in place in Lebanon at the time of the on-site visit 
(February 2009).  Lebanon received a rating of either 
compliant (C) or largely compliant (LC) on 23 out of 49 
Recommendations and received ratings of either partially 
compliant (PC) or non-compliant (NC) on 26 of the 
Recommendations.  During the face-to-face meetings the day 
before the Plenary, Lebanon received upgrades on 
Recommendations 25 (from PC to LC) and 26 (from PC to LC). 
 
 
¶3.    (SBU) During the Plenary discussions, Lebanon argued 
for upgrades on: 
 
Recommendation 23: Lebanon received a PC on Recommendation 23 
(adequate supervision and regulation of financial 
institutions and ensuring that they implement the FATF 
recommendations) because of the failure to adequately monitor 
the insurance sector with regard to money laundering (ML) and 
terrorist financing (TF).  Lebanon explained that the 
insurance sector is subject to AML/CFT supervision by the 
Special Investigation Commission's (SIC (Lebanon's FIU)) 
Compliance Unit; however, there have been no on-site visits 
because the sector is low-risk, constituting less than one 
percent of financial operations in Lebanon.  Though Lebanon 
was unable to provide an official assessment, it noted that 
only 11 out of the 54 insurance firms in Lebanon provide life 
insurance.  The assessment team had not received any 
information related to either the prudential or ML/TF-related 
monitoring of the insurance sector before the Plenary. 
Regardless of the additional information, the team noted that 
given the SIC,s lack of explicit legal authority to 
investigate TF in the financial sector (including insurance), 
the PC grade should remain.  The MENAFATF Plenary agreed, 
however, to support an upgrade from PC to LC on 
Recommendation 23. 
 
Special Recommendation VI: Lebanon received a PC on SR VI 
(licensing and registering alternative remittance providers, 
and subjecting them to the FATF recommendations).  Lebanon 
argued against the assessment team's observation that Lebanon 
lacks effectiveness in implementing SR VI by noting that the 
reason sanctions have not been imposed on this sector is 
because there have been no violations and because the money 
service business sector in Lebanon is very small (9 
authorized companies).  The team explained that the rating 
for SR VI is also related to cross-referencing the ratings on 
the recommendations for preventive measures (4-LC; 5-PC; 
6-NC; 7-NC; 8-NC; 9-PC; 13-PC; 15-PC; 21-NC; 22-PC), which 
affected Lebanon,s PC rating for SR VI.   The Plenary agreed 
to support the assessment team, but to also include a note in 
the margins of the report explaining how the ratings of the 
other recommendations affected the rating for SR VI.  Lebanon 
did not receive an upgrade on this recommendation. 
 
FOLLOW-UP REPORTS 
----------------- 
 
¶4.    (SBU) Follow-up Report of Tunisia: The Secretariat 
 
BEIRUT 00001353  002 OF 004 
 
 
explained that Tunisia has addressed many of the deficiencies 
highlighted in its 2007 ME through new and amended 
legislation and relevant circulars and resolutions. 
Tunisia,s recently amended AML/CFT law accomplishes the 
following: 1) extends the scope of persons subject to the 
law; 2) imposes specific obligations on non-banking 
institutions related to updating data and obtaining 
information on the purpose and nature of a business 
relationship; 3) imposes explicit obligations with regards to 
politically exposed persons (PEP); 4) imposes obligations on 
all institutions regarding the application of customer due 
diligence (CDD) measures; 5) extends the definition and 
identifies obligations related to verifying the identity of 
beneficial owners; 6) distinguishes between unusual and 
suspicious transactions and creates a new obligation to 
report attempts to perform suspicious transactions; 7) 
ensures that CTAF employees (Tunisia,s FIU) work 
independently from their original departments/agencies; and, 
8) establishes measures and procedures to freeze funds in 
implementation of relevant United Nations Security Council 
Resolutions (UNSCR). 
 
¶5.    (SBU) The Secretariat highlighted that there continue 
to be some deficiencies in Tunisia,s AML/CFT regime. 
Namely, Tunisia has not yet established a system for mutual 
legal assistance related to confiscating and freezing funds 
of criminals, Tunisia has not fully ensured the independence 
and autonomy of the CTAF, and it has not regulated financial 
institutions with regards to identifying the source of funds 
that are electronically transferred.  Given the Plenary,s 
interest in a detailed analysis of the recently amended 
AML/CFT law and subsequent implementation, it was decided 
that Tunisia would submit a second follow-up report in two 
years.  The report was adopted. 
 
¶6.    (SBU) Second Follow-up Report of Mauritania: Mauritania 
had submitted its first follow-up report in May 2009, which 
had indicated that major gaps remained in Mauritania,s 
AML/CFT regime since its 2005 ME, including: 1) failure to 
criminalize TF attempts; 2) no guidance with regards to 
transactions with residents of countries that do not 
implement the FATF recommendations; 3) no obligation for 
designated non-financial businesses and professions (DNFBP) 
to implement CDD measures or keep records; 4) no system to 
freeze and confiscate assets of individuals and entities 
listed under relevant UNSCRs; 5) no instructions to the 
moneychanger and insurance sectors on how to implement 
AML/CFT controls; 6) no instructions related to using third 
parties; 7) no requirement for CDD procedures for PEPs; 8) no 
guidance related to obtaining information for wire transfers; 
9) no monitoring of alternative remittance providers or the 
non-profit sector in the context of AML/CFT. 
 
The Secretariat noted that these deficiencies remain. 
Mauritania explained that it is currently working on issuing 
guidance/rules and relevant legislation related to enhanced 
CDD, PEPs, correspondent banking and unusual transactions, 
alternative remittance providers, and wire transfers.  Given 
the remaining deficiencies and Maurtania,s ongoing progress, 
the Plenary decided that Mauritania would submit another 
report to the May 2010 Plenary.  The Plenary also urged 
Mauritania to expedite the issuance of relevant legislation 
and regulations.  The report was adopted. 
 
¶7.    (SBU) Follow-up report of Syria: Syria had submitted 
its first follow-up report in May 2009, which had indicated 
that major gaps remained in Syria,s AML/CFT regime since its 
2006 ME, including: 1) deficiencies regarding the ML and TF 
offenses; 2) deficiencies regarding suspicious transaction 
reporting related to ML and TF; 3) no legislation obligating 
financial institutions to apply CDD; 4) failure to obligate 
DNFBPs to implement AML/CFT controls; and, 5) no official 
declaration/disclosure system for cross-border currency and 
the movement of negotiable instruments. 
 
The Secretariat noted that since its last follow-up report, 
Syria has established a declaration system for liquid funds 
and bearer financial instruments as well as an oversight 
mechanism for money exchangers.  Additionally, Syria issued 
guidance related to brokers and clients and placed AML/CFT 
controls on securities transactions.  Syria also noted that 
it has worked with the IMF and World Bank to draft a new 
decree that would amend the current AML/CFT law and that 
would remedy many of the deficiencies highlighted in Syria,s 
2006 ME.  This law should be passed soon and before the May 
2010 Plenary.  Given the Plenary,s interest in an analysis 
of this law, it was decided that Syria would submit another 
follow-up report to the May 2010 Plenary.  The Plenary also 
urged Syria to expedite the issuance of the draft decree. 
The report was adopted. 
 
BEIRUT 00001353  003 OF 004 
 
 
 
¶8.    (SBU) Follow-up report of Morocco: In its presentation, 
the Secretariat noted that Morocco has addressed some of the 
deficiencies identified in its 2007 ME.  Notably, Morocco 
established an FIU (the UTRF), which began operating in April 
2009 and has issued several decisions/materials.  In 
addition, the Central Bank of Morocco issued a circular 
detailing CDD obligations for credit institutions and 
established cooperative agreements with the Central Bank of 
Tunisia and the Central Bank for Western African Countries. 
The Secretariat noted that Morocco is in the process of 
revising its penal code and has prepared draft legislation 
related to the supervision of capital markets and the 
insurance sector, as well as a draft law amending the current 
AML law. 
 
The Secretariat explained that major deficiencies remain, in 
particular with regard to: 1) obligating financial 
institutions to report ML attempts; 2) establishing 
obligations related to due diligence measures when verifying 
the customers, identity, revoking the limitation of unusual 
and complex transactions to a minimum threshold and doing 
business with PEPs; 3) extending the scope of entities 
subject to the AML law and requiring those entities to 
establish internal AML/CFT controls; 4) forbidding financial 
institutions to establish or continue correspondent 
relationships with shell banks; 5) providing feedback to 
financial and non-financial institutions; 6) reporting 
suspicious transactions; 7) lack of a legal system to freeze 
funds and properties of persons listed in relevant UNSCRs; 8) 
not including DNFBPs in AML/CFT legislation; and, 9) no 
declaration or disclosure system for cross-border currency 
and the movement of financial instruments.  Morocco noted 
that the draft law that would amend the current AML law would 
correct these deficiencies.  Given these deficiencies and 
Morocco,s ongoing work to pass relevant legislation, the 
Plenary decided that Morocco would submit another follow-up 
report to the May 2010 Plenary.  The report was adopted. 
 
MISCELLANEOUS ITEMS 
------------------- 
 
¶9. (SBU) Contributions of Member Countries: The Plenary urged 
MENAFATF member countries that are late in paying their dues 
to immediately do so.  With regards to establishing a system 
to address member countries that are late in paying their 
dues, the Plenary approved the formation of a strategic 
reserve out of the MENAFATF,s budget surplus.  If the 
reserve is not able to accumulate enough funds, the Plenary 
will consider asking member states to add an additional five 
percent of their dues to their annual contributions.  Given 
the number of comments and concerns raised by member 
countries, the Plenary decided to raise this issue again at 
the next Plenary meeting. 
 
¶10. (U) Second Strategic Plan for 2010-2012 and the MENAFATF 
2010 Work Plan: The Plenary decided to adopt the second 
strategic plan for 2010-2012 as well as the MENAFATF 2010 
work plan.  Member countries voiced their concerns about the 
amount of resources the two plans may commit given the 
MENAFATF,s limited budget. 
 
¶11. (SBU) Proposal to hold a Ministerial Meeting:  It was 
agreed that the Secretariat would propose a tentative date 
and prepare a draft agenda for the Ministerial meeting for 
discussion at the Plenary meeting in Tunisia in May 2010. 
The Plenary also decided that each member country would 
confirm the potential participation of its Ministers, Central 
Bank Governors, and Presidents of National AML/CFT Committees. 
 
¶12. (U) MENAFATF Remarks on the Indicative Arab AML/CFT Law: 
The Plenary decided to send the Plenary,s concerns and the 
Secretariat,s comments on the Arab Justice Ministers 
Council,s &Indicative Arab AML/CFT Law8 to the Arab Center 
for Legal and Judicial Research (affiliated with the Arab 
Justice Ministers Council).  This law is meant to serve as 
guidance to MENA countries when establishing or implementing 
their own AML/CFT laws.  The Secretariat,s suggested edits 
to the indicative law help place it in compliance with 
international standards. 
 
¶13. (U) Mutual Evaluation Working Group Items: The Plenary 
adopted and agreed to immediately implement a revised 
follow-up process.  It was also decided that an 
intercessional meeting would be held to finalize the review 
of mutual evaluation procedures for discussion and approval 
at the next Plenary. 
 
¶14. (U) Timeline of the Mutual Evaluation Process: The 
updated schedule of MENAFATF country mutual evaluations was 
 
BEIRUT 00001353  004 OF 004 
 
 
approved.  The ME of Oman will be postponed (date of on-site 
visit to be determined) and will be presented at the May 2011 
Plenary.  The ME of Kuwait will now be led by the IMF (date 
of on-site visit to be determined) and will also be presented 
at the May 2011 Plenary.  The ME of Saudi Arabia will be 
discussed at the May 2010 Plenary.  Upcoming on-site visits 
include Algeria (December 2009 ) to be presented in October 
2010) and Sudan (June 2010 ) to be presented in May 2011). 
The FATF expressed concern with the new timeline for mutual 
evaluations, given the number of postponed MEs and with the 
timing for discussion of the Saudi ME.  FATF urged the 
Secretariat/Plenary to schedule the discussion for the 
MENAFATF-FATF Joint Plenary in February 2010.  FATF also 
explained to the MENAFATF that should it decide to discuss 
the Saudi ME later than the joint Plenary, formal 
notification to the FATF Secretariat would be required. 
 
¶15. (SBU) Technical Assistance & Typologies Working Group 
(TATWG): With regards to the development of a MENAFATF 
"technical assistance provision mechanism," the Plenary 
agreed that each member country would indicate its TA needs 
for the 2010-2012 period on a matrix.  Member countries will 
receive this matrix from the Secretariat shortly and will 
have three months to send their information.  Once the matrix 
is filled in, the Secretariat will coordinate bilateral 
meetings between member countries and TA providers to discuss 
TA and training opportunities. 
 
¶16. (SBU) Report on the Law Enforcement Agencies (LEA) 
Seminar:  The Plenary adopted the TATWG,s report on the LEAs 
Seminar held in Manama, Bahrain, on May 21, 2009, and decided 
that the MENAFATF should hold regular LEA seminars in order 
to help monitor member countries, improvements in the LEA 
sector and to provide opportunities for member countries to 
discuss their experiences and best practices. 
 
¶17. (U) World Bank/MENAFATF Workshop on "risk-based AML/CFT 
supervision": The Plenary agreed to hold a World 
Bank/MENAFATF workshop on the risk-based approach on the 
margins of the MENAFATF Plenary in Tunisia in May 2010. 
Member countries and observers will be sent an agenda and an 
invitation to attend and to nominate speakers for the 
workshop shortly. 
 
¶18. (U) Typologies: The Plenary agreed to nominate 
individuals to participate in a typologies workshop to be 
held in Qatar from January 10-11 on "ML/TF Trends and 
Indicators."  The Plenary also agreed to have the Secretariat 
organize a second assessors training (date and location to be 
determined). 
 
¶19. (U) Proposal on Forming a MENAFATF FIUs Forum: The 
Plenary agreed to establish a forum in which the FIUs of the 
MENA region could discuss current ML/TF trends, concerns, and 
experiences and how to enhance their roles in their 
respective jurisdictions.  The first of these forums will 
take place on the margins of the MENAFATF Plenary in Tunisia 
in May 2010. 
 
¶20. (SBU) First Private Sector Dialogue (PSD): The MENAFATF 
President and Executive Secretary held the first MENAFATF PSD 
with private sector representatives from MENAFATF Member 
countries the day after the Plenary meeting (November 12). 
Unlike the previous US-MENA PSD, MENAFATF members and 
observers are not invited to participate in this dialogue, 
the goals of which are to raise awareness and exchange ideas 
regarding AML/CFT issues of concern and implementation of 
AML/CFT controls. 
 
¶21. (SBU) Joint MENAFATF-FATF Plenary: It was confirmed that 
there would be a joint MENAFATF-FATF Plenary ("Meeting") in 
Abu Dhabi, UAE, from February 15-19, 2010.  The FATF 
expressed its concerns about the joint Plenary and reminded 
the MENAFATF that it needed to be a joint Plenary and not a 
joint Meeting (the MENAFATF Secretariat continued to use this 
term).  After much deliberation, the MENAFATF agreed that the 
first day would be a joint MENAFATF-FATF Plenary and that the 
remainder of the week would only be a FATF Plenary (based on 
the format for the APG-FATF joint Plenary).  The MENAFATF 
Secretariat will continue to discuss details of the Plenary 
with the FATF Secretariat. 
 
   ¶22. (U) The next MENAFATF Plenary meeting will be held the 
week of May 2-6, 2010, in Tunisia. 
SISON