VZCZCXRO4974
OO RUEHCD RUEHGA RUEHGD RUEHHA RUEHHO RUEHMC RUEHQU RUEHTM RUEHVC
DE RUEHBU #0725/01 1491254
ZNR UUUUU ZZH
O 281254Z MAY 08
FM AMEMBASSY BUENOS AIRES
TO RUEATRS/DEPT OF TREASURY WASHINGTON DC IMMEDIATE
RUEHC/SECSTATE WASHDC IMMEDIATE 1171
INFO RUCNMRC/WESTERN HEMISPHERIC AFFAIRS DIPL POSTS IMMEDIATE
RUEHSO/AMCONSUL SAO PAULO IMMEDIATE 3709
RUCPDOC/USDOC WASHINGTON DC IMMEDIATE
RUEAIIA/CIA WASHINGTON DC IMMEDIATE
RUEABND/DEA HQS WASHINGTON DC IMMEDIATE
RHMFIUU/DEPT OF HOMELAND SECURITY WASHINGTON DC IMMEDIATE
RHMFIUU/DEPT OF JUSTICE WASHINGTON DC IMMEDIATE
UNCLAS SECTION 01 OF 02 BUENOS AIRES 000725
SENSITIVE
SIPDIS
TRESAURY FOR OTA (LMCDONALD, CCORREA)
TREASURY FOR TFFS, OFAC, FINCEN
DHS FOR ICE
JUSTICE FOR OIA AND AFMLS
E.O. 12958: N/A
TAGS: KTFN EFIN PREL AR
SUBJECT: ARGENTINE CENTRAL BANK PRESIDENT COMMENTS ON
TREASURY OTA'S PROPOSED COUNTER-TERRORISM FINANCE TECHNICAL
ASSISTANCE PROGRAM
REF: A. BUENOS AIRES 549
B. 2007 BUENOS AIRES 1417
C. BUENOS AIRES 575
D. BUENOS AIRES 589
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Summary
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1. (SBU) Ambassador informed Argentine Central Bank (BCRA)
President Martin Redrado May 19 that Treasury's Office of
Technical Assistance had nearly completed a technical
assistance agreement on terrorism finance for the BCRA and
GOA regulatory agencies. The question now is how to fund it,
and Redrado agreed to investigate funding alternatives,
particularly with the IDB. He noted that he was already
discussing with IDB President Moreno a region-wide project to
develop common bank supervision standards related to money
laundering and terrorism finance. His goal is to increase
Argentine financial institutions' credibility with
risk-averse U.S. banks. Redrado also suggested adding this
topic to the agenda of the next high-level bilateral
framework meeting headed by State and the Foreign Affairs
Ministry. End Summary.
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USG Technical Assistance on Terrorism Finance
---------------------------------------------
2. (SBU) The Ambassador informed Redrado that Treasury's
Office of Technical Assistance (OTA) had almost completed the
re-write of a broad technical assistance program on terrorism
finance. (This initiative originated with a request from
Redrado to the Ambassador, following the entry into effect in
July 2007 of Argentina's counter-terrorism finance law. See
Ref A.) EconOff added that OTA had developed the project in
concert with the BCRA's Banking Supervision Department and
also with the GOA's securities and insurance sector
regulators. He added that representatives from both sides
had made final edits to the project documents (technical
assessment and work plan) during OTA's April 28-30 visit to
Buenos Aires. EconOff estimated that OTA would within weeks
present a final agreement for approval and signature that
would be acceptable to the Argenine side and feasible from
OTA's perspective.
3. (SBU) The Ambassador noted that the question now was how
to fund the program. He commented that during a meeting he
had with IDB President Luis Alberto Moreno in Buenos Aires on
April 21 (Ref B), Moreno had expressed interest in funding
projects related to anti-money laundering and
counter-terrorism finance (AML/CTF). Econoff added that BCRA
counterparts had previously agreed to make inquiries at the
IDB, but it appeared that these contacts had for unclear
reasons not occurred.
4. (SBU) Redrado welcomed the development, and agreed to
explore various options to fund the initiative, including
seeking assistance from the IDB. He noted that the BCRA
itself would likely be able to fund costs associated with
travel, per diem, and materials, particularly for USG
advisors and trainers. However, he thought they might have
more trouble funding the participation of contractors.
Nevertheless, he urged the Ambassador to accelerate the
process with the goal of starting the project this year.
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Adopting Common Standards and Improving Bank Credibility
--------------------------------------------- -----------
5. (SBU) Redrado said that he had already discussed with
Moreno a region-wide project to develop common standards for
bank supervision in the area of AML/CTF. He argued that his
proposal to the IDB was partly motivated by the need to
increase Argentine financial institutions' credibility with
U.S. banks, which are risk averse due to Patriot Act
restrictions and as a consequence have reduced their exposure
BUENOS AIR 00000725 002 OF 002
in Argentina and the rest of Latin America. Redrado lightly
criticized the "counterproductive" aspects of the Patriot
Act, claiming that Latin American financial sector business
was increasingly going to Europe.
6. (SBU) Redrado commented that in his opinion the Patriot
Act was too powerful of a weapon to use against terrorism
finance, as it required a high degree of certainty in a
region where "most banks" think terrorism finance is not a
significant problem. He mused over ways to create better
enforcement and coordination, and suggested that Treasury's
"Latin American Private Sector Dialogue" is a good start, but
not enough. Redrado said that Moreno had agreed for the IDB
to fund a study on the informal sector in Argentine, possibly
expanding it tothe region. He thought that this might help
expose and define the extent of the money
laundering/terrorism finance problem in the region and also
serve as the basis for developing common regulation and
enforcement standards within the region.
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Adding AML/CTF to Bilateral Consultative Dialogue
--------------------------------------------- ----
7. (SBU) Redrado also recommended adding the topic of money
laundering/terrorism finance and related bank supervision to
the agenda of the high-level consultative process that WHA
Assistant Secretary Tom Shannon and GoA Foreign Minister
Taiana agreed to revive (see Refs C and D for background).
WAYNE