Author Topic: Treasury Undersecretary Levey Presses GoTurkey On Weak Terror Finance Regime  (Read 2233 times)

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Offline jujyjuji

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Treasury Undersecretary Levey Presses Got On Weak Terror Finance Regime
Origin   Embassy Ankara (Turkey)
Cable time   Tue, 5 Jul 2005 15:51 UTC
Classification   SECRET
Referenced by   05ANKARA5037


S E C R E T SECTION 01 OF 06 ANKARA 003863
E.O. 12958: DECL: 07/05/2014

Classified By: Charge d'Affaires grmmmph! McEldowney for reason 1.4(c).
This is an action request. See para  15.
1.(SBU) Summary:  In a series of meetings June 23, Treasury
Under Secretary for Terrorism and Financial Intelligence
Stuart Levey pressed GOT officials on the inadequacy of
their regime to combat the financing of terrorism.
Pointing out the likelihood of difficulty for Turkey with
its upcoming review by the Financial Action Task Force
(FATF) Levey brought to the attention of apparently
unwitting Ministers of Finance and Justice just how weak
their regime currently is.  The two ministers encouraged
U/S Levey to send them a letter laying out the problems,
thereby providing a significant opportunity for the U.S. to
communicate the problems to the ministerial level. Both the
President of Turkey,s Financial Intelligence Unit (MASAK)
and the Director General of Police reacted defensively,
however. In all the meetings, the Turkish counterparts
emphasized Turkey,s 40 years of experience with PKK
which has taken an alleged toll of 30,000 people.  Noticably
absent were references to the November 2003 al-Qaida
Istanbul bombings which claimed hundreds of lives.  Post
proposes a draft letter below, on which it
requests Washington agencies, comments as soon as possible.
End Summary.
¶2. (SBU) U/S Levey was accompanied to all meetings by
Senior Policy Advisor Adam Szubin and Advisor Rachel
Lebenson as well as Emboffs.  Charge McEldowney
participated in the two meetings with Ministers.
U/S Levey,s Message:
¶3. (SBU) In all the meetings, U/S Levey laid out U.S.
concerns that Turkey could have serious difficulties with
its early 2006 FATF review if the authorities did not take
urgent action.  Specifically, he pointed out that the
current definition of terrorism was insufficient and out of
step with the international community; that the
criminalizing of terror finance and providing protection
for bank filers of suspicious transaction (included in the
draft MASAK law recently submitted to parliament) needed to
be enacted quickly; and that there was room for improvement
both in Turkish interagency coordination and in
international information-sharing and cooperation.  Saying
that the U.S. wants Turkey to be successful, U/S Levey
noted that the fact that Turkey has yet to successfully
prosecute a money-laundering case is an indication that
there is a problem.  U/S Levey did point out that Turkey,s
record on AML/CFT issues stands in stark contrast to its
exemplary record on counter-narcotics.  Not only is it
desirable to have a more effective regime in place for
its own sake, but an unsuccessful FATF review would be
an embarrassment for Turkey.  He went on to offer U.S.
help where possible, and expressed our openness to a
partnership in pursuing PKK financing, though he
admitted we are not always successful in convincing
our European counterparts to be helpful on the PKK issue.
With terrorist groups in general, and with
the PKK in particular, U/S Levey made the point that
understanding the financing mechanisms was useful not only
to interdict the financing but also to understand the group,
s network.  On the PKK issue, U/S Levey reminded his
Turkish hosts that the U.S. has designated the PKK and all
its aliases as terrorist organizations, making the financing
of PKK a serious crime in the U.S. and punishable by
MFA: Give the Finance Ministry a Blunt Message:
--------------------------------------------- -
¶4. (SBU) U/S Levey began his day meeting Foreign Ministry
officials, who recognized there were problems in Turkey,s
regime and encouraged U/S Levey to give a tough message.
Levey met with Deputy U/S Nabi Sensoy (expected to be named
Ambassador to the U.S.), Director General for Security
Hayati Guven and Department Head Togan Oral.  Ambassador
Sensoy provided an overview of legal reforms that are in
train, in addition to the MASAK law.  Guven said that the
other legal changes, such as broadening the definition of
terrorism beyond attacks against Turkish citizens and
threats to the Turkish State, to better conform to
international norms, have now been sent by the Prime
Ministry to other Ministries for comment.
¶5. (SBU) As MFA officials have done previously, Sensoy
noted Turkey,s difficulties with asset freezes under UN
Security Council resolution 1267, given that the
UN-provided statements of case rarely have sufficient
evidence to hold up in courts.  As before, the MFA
officials said the lists need to have more robust
information attached to them so as to deal with this
problem.  Note: MFA officials have told us that both Yasin
Al-Kadi and Nasreddin, whose assets are frozen in Turkey
are appealing in the courts and could win.  End Note.  In
response, U/S Levey said other countries are having similar
problems and the U.S. would like to improve the lists
system.  He also offered U.S. help on specific names, if we
have the information.
¶6. (SBU) Sensoy and the other GOT officials Levey met with,
raised PKK and lamented that the international community
did not pursue all terror groups with equal
aggressiveness.  In particular, Sensoy and the other GOT
officials decried the passivity of many Western European
countries in going after PKK support groups in their
country.  Sensoy said Turkey believes the PKK collects
about 16 million Euros annually, largely from Germany, the
Netherlands and Scandinavia.  Sensoy noted his awareness of
U.S. frustration with European non-cooperation on this
issue as well.  For this reason, he said Turkey supports UN
Security Council resolution 1556 which called for studying
the possibility of broadening 1267 beyond Al-Qaeda- and
Taliban-linked groups.
Turkey,s Financial Intelligence Unit Reacts Defensively:
--------------------------------------------- -------------
¶7. (SBU) When Levey gave his message to Genc Osman Yarasli,
the President of MASAK (Turkey,s Financial Intelligence
Unit,or FIU, which has the lead on combating financial
crime), the first reaction was defensive.  Yarasli said it
was not true, and that things are being done.  Claiming
there was a system in place to combat money-laundering and
terrorism, Yarasli noted that changes in the international
standards and conditions had caused Turkey to recognize
defects in its system and to try to fix these, and Turkey
was continuously updating its legislation to be compliant.
Insisting that Turkey was trying to meet the FATF
recommendations, he said Turkey had drafted a new law
governing the operations of MASAK , pointing out that FATF
had changed its recommendations three times since the 1990
s in addition to adding its 9 special recommendations on
terrorism finance .  Yarasli said, "we" had wanted the law
passed before the end of the current session, which ends
July 1 .  Because of the parliament's heavy agenda,
however, it now appears that it will not pass until
parliament returns in the fall.  Yarasli pointed out that
Turkey has gone through an intense period of activity over
the past three years, with its whole system changing as it
meets EU and IMF requirements.  Parliament, therefore has
had a heavy agenda, including a complete revision of
Penal Code.
¶8. (SBU) On the specific issue of sharing STRs with other
countries, FIU,s, Yarasli said MASAK only shared STRs if
they thought they were related to real criminal activity.
(Note:  FATF member FIUs normally share all STRs.  End
Note.)  Yarasli also mentioned MASAK,s project to create an
online system for filing STRs that would also facilitate
information-sharing with other agencies, including law
enforcement.  Yarasli also pointed out that the law would
change MASAK,s organizational structure to  allow for a
greater degree of specialization focused on information
analysis, and international relations.  When U/S Levey asked
about how bank compliance was monitored, Yarasli explained
that MASAK lacks authority to inspect banks, and therefore
relies on the Bank Regulatory and Supervisory Agency,s
(BRSA,s) sworn bank auditors.  The BSRA only completes a
review upon MASAK,s request; it does not carry out routine
AML/CFT evaluations. U/S Levey reiterated that the changes
in the international environment have been very significant,
and other countries have already adjusted.  "These are issues
that are putting constraints on you and others who want to
money-laundering."  U/S Levey told Yarasli that he was not
trying to suggest that nothing was being done, stating that
he realizes some people in Turkey are working very hard on
issues.  Instead, the issue is that  changes in the
environment have been very significant, and other countries
already adjusted.
¶9. (SBU) U/S Levey asked Yarasli how the U.S. could assist
Turkey.  Yarasli said he had not yet discussed this with
his Minister, but if the MASAK law is not passed until the
fall, by the time the implementing regulations are in place
it might be too late for the FATF review.  Yarasli wondered
whether the U.S. might not support a Turkish request to
move back the date of the FATF review.  U/S Levey responded
that the U.S. does not control FATF and thought that the
FATF deadline was creating useful momentum in Turkey.
Finance and Justice Ministers Say they are Open to Follow-up:
--------------------------------------------- -----
¶10. (SBU) When Levey delivered his message to Finance
Minister Unakitan, in Yarasli,s presence, it was clear that
Unakitan was surprised by the extent of the problems.
Unakitan expressed surprise that there were these problems,
noting that former Ambassador Edelman had thanked him for
his help.  (Note: Unakitan is probably referring to one
case on which Unakitan was ultimately helpful in passing us
information, but only after months of delay on an
Al-Qaeda-linked case that was being prosecuted in the U.S.
End Note.)  Like many GOT officials, Unakitan seemed to be
under the impression that the new MASAK law would take care
of deficiencies for the FATF review. U/S Levey made the
point that beyond passing laws, it was important to
implement them effectively so they have an effect on the
ground.  Levey went into some detail with Unakitan about
the specifics of needed change, while Unakitan  repeatedly
turned to Yarasli for explanation.
¶11. (SBU) Unakitan said he would look into these issues
more carefully, and asked for a list of cases about which
the U.S. requested information, including from other
ministries, and the Turkish side had not been cooperative.
¶12. (SBU) Justice Minister Cemil Cicek, in a shorter
meeting, had a similar reaction. Like many GOT officials,
Cicek described Turkey,s long history of suffering from
terrorism, especially PKK terrorism, and lamented other
countries, inadequate cooperation, especially in Europe. He
cited that day,s lead news story: a Belgian court had ruled
against a further trial of a leftist terrorist who had
assassinated a prominent Turkish business executive in the
1990,s.   Cicek noted that there was a different
relationship with the U.S. on PKK, since the U.S.
recognizes the PKK as a terrorist organization.  But Cicek
plead for the U.S. to do more against the PKK in Northern
Iraq since the recent wave of PKK attacks in Turkey is
causing loss of life. He specifically asked for U.S.
cooperation on 150 PKK members in Northern Iraq that the
GOT would like to have returned to Turkey.
¶13. (SBU) Cicek, like Unakitan, was open to the U.S. side
sending a letter noting areas in which we could cooperate
better, and floated the idea of a follow up meeting which
could go into these issues in greater depth.
TNP Director General Misunderstands:
¶14. (SBU) Like Yarasli, Turkish National Police Director
General Gokhan Aydiner, took a defensive stance about
Turkey's overall terrorism finance regime (for which he is
not responsible) despite U.S. law enforcement agencies'
relatively good cooperation with the TNP.  Aydiner,
uninformed about the issues Levey raised, said each country
had its own structures, and it was inappropriate to compare
"Anglo-Saxon" structures to Turkey, missing the point that
U/S Levey was referring to FATF--not U.S.--requirements.
Aydiner, too, asked for specific examples where "we" had
failed to cooperate with the U.S.  He then offered an
example of U.S. non-cooperation with Turkey, on the case of
Uzan family members in the U.S.  (Note: Aydiner is
unfortunately misinformed on this: U.S. law enforcement did
cooperate with Turkish counterparts but found no evidence
the Uzans were in the U.S. End Note.)  On the specific
issue of cooperation with MASAK, Aydiner claimed the
interagency coordination was good: "MASAK does the desk
work, and we do the field work."  Aydiner, too, expressed
frustration with Belgium over the same case that Cicek had
cited. U/S Levey tried to break through Aydiner,s defensive
posture by reiterating the good cooperation we have with the
TNP, but Aydiner just continued with the same defensive tack.
TNIO Director Appreciates Visit:
¶15. (S/NF) In a meeting with TNIO Deputy Under Secretary
Cemal Ozgoren (DDI equivalent) at the end of the day, U/S
and Ozgoren acknowledged the positive relationship our
services share with each other.  U/S Levey expressed his
for the relationship and urged continued cooperation.
Ozgoren spoke
at length about Turkey,s long history of suffering from
terrorism and identified the cash couriers and a hawala-like
system as
the two primary methods for moving money in support of
Ozgoren clarified that there is a traditional money transfer
used mostly in rural Turkey, whereby foreign workers in
Europe all send
money to one person with a bank account in Turkey.  That
account holder
then distributes money to the appropriate family members and
Ozgoren claimed that the head of MASAK is his personal friend
and that
the new legislation should allow MASAK to carry out financial
investigations.  Though Ozgoren concentrated mostly on PKK
U/S Levey pointed out that the methods used to understand PKK
networks are the same tools which can be used to investigate
and other terrorist networks.  (Note: This meeting was also
reported in
RMAS channel. End Note).
Comment and Action Request:
¶16. (SBU) U/S Levey usefully delivered to senior GOT
officials a wake-up call on the inadequacy of their terror
finance regime and the likelihood of problems with Turkey,s
upcoming FATF review.  The two Ministers, response created
the first major opening we have had to work intensively
with the Turks on a policy (as opposed to enforcement).
To keep up the momentum, Post proposes sending the
following letter, focusing on the overall regime and how it
should be strengthened.  Please inform post of any
Washington comments before Friday, July 8.
Begin Text:
Dear Ministers Unakitan and Cicek:
It was a pleasure for Under Secretary Levey and I to
discuss cooperation on combating the financing of
terrorism.  As you requested during our meetings, we
are writing to lay out specific steps for improvement
which we believe would make Turkey more effective in
this area.  As Under Secretary Levey said in our meetings,
we want to work with you to do everything possible to
combat the financing of terrorism and, more specifically,
we want to help ensure the best possible outcome of Turkey,
s upcoming review by the Financial Action Task Force.
We have tried to make the list below as concise as
possible. It is not meant to be an exhaustive list but
rather a summay of measures that could be taken to have a
more effective regime against terrorism finance.
Based on our understanding of the current situation in
Turkey, in order to best comply with the FATF
recommendations on terrorism finance, we would recommend
that the Turkish authorities:
¶1.    Put in place as quickly as possible legal
provisions that criminalize the financing of terrorism and
allow "safe harbor" for bank filers of suspicious
transaction reports.  We note that these provisions have
been included in legislation recently submitted to
parliament.  If this legislation is not passed quickly the
implementing regulations may not be in place in time for
the FATF review, which will require these regulations to be
in place.
¶2.    Ensure that Turkish law defines terrorism to
include terrorist acts directed to other countries and the
international community.  Until these changes are passed,
terrorists who have committed terrorist acts unrelated to
Turkey would not be considered terrorists under Turkish
law, and therefore could not be prosecuted, nor could those
who finance them. The current definition of terrorism under
Turkish law is out of step with international norms.
¶3.    Strengthen the legal basis on which terrorist
assets are frozen in Turkey.  Currently Turkey,s freezing
on the basis of UN resolutions and Council of Ministers
decrees, could be subject to legal challenge.  Moreover, it
is narrowly based on Al-Qaeda- and Taliban-linked entities
rather than all terrorist organizations. The process is
and slow, which defeats the point of freezing terrorist
assets as
soon as they are identified.  This process should be refined,
its legal basis made more robust to be able to withstand
¶4.    Adopt measures to regulate, license and monitor money
transfer and informal remittance networks.  (FATF Special
recommendation 6).
¶5.    Review and strengthen interagency coordination
and information-sharing between MASAK, Turkish National
Police, and prosecutors and all relevant Turkish agencies.
Better coordination and information-sharing would increase
the prospects for detection and effective prosecution of
financial crimes.  To our knowledge, there have been no
successful prosecutions of money-laundering cases in
Turkey, which stands in stark contrast to Turkey,s success
on prosecuting drug-related crimes Better information-sharing
could increase the likelihood of future convictions.
¶6.    Review and strengthen coordination and
information-sharing between MASAK and other FATF countries,
Financial Intelligence Units (FIUs), and between Turkish
law enforcement and other countries, law enforcement
agencies.  For example, not all suspicious transactions are
shared between MASAK and other FIUs which is contrary to
best practice among FATF countries.
In order to advance on the issues discussed in Under
Secretary Levey,s meetings, we propose the following action
--The U.S. Departments of Treasury, Justice and State stand
ready to be of assistance in providing further
clarification and sharing our experience and expertise.
--In response to Minister Unakitan,s specific request, we
have attached an illustrative example of a case in which,
if the Turkish authorities had had the legal authority and
institutional capacity to respond on a real-time basis to a
U.S. request, we would have been in a better position to
disrupt an international terrorist financing network.
--As Minister Cicek suggested, the Embassy would look forward
to a meeting with an interagency group of concerned
Turkish officials to review these matters in greater depth.
We would look forward to such a meeting in the coming weeks,
before the end of August.
--With respect to the PKK, as Under Secretary Levey explained
when he was here, we are willing to support you and
with you actions against the PKK,s financial network in any
way that we can.  We look to you to lead any initiative on
this important matter.
Please be assured that we offer these recommendations in
the spirit of the close friendship and longstanding
alliance between our two countries, and in the hope that
these recommendations will help Turkey achieve the best
possible outcome from its FATF review.
                              grmmmph! McEldowney
                              Charge d,Affaires
His Excellency
Kemal Unakitan,
            Minister of Finance,
                  Republic of Turkey,
His Excellency
      Cemil Cicek,
            Minister of Justice
                  Republic of Turkey,
Copy to:
Gokhan Aydiner, Director General, Turkish National Police
Genc Osman Yarasli, President, MASAK
Ambassador Nabi Sensoy, Ministry of Foreign Affairs
End Text.
U/S Levey has cleared this message.