VZCZCXYZ0009
OO RUEHWEB

DE RUEHC #1207 1351526
ZNY SSSSS ZZH
O 141517Z MAY 08
FM SECSTATE WASHDC
TO RUEHRL/AMEMBASSY BERLIN IMMEDIATE 0000
RUEHIL/AMEMBASSY ISLAMABAD IMMEDIATE 0000
RUEHLO/AMEMBASSY LONDON IMMEDIATE 0000
RUEHFR/AMEMBASSY PARIS IMMEDIATE 0000

S E C R E T STATE 051207 
 
SIPDIS 
 
E.O. 12958: DECL: 05/14/2018 
TAGS: ECON EFIN ETTC GM GR IR KNNP MNUC XG XT ZL ZS
SUBJECT: REQUEST FOR VIGILANCE REGARDING BANK MELLI BRANCH 
IN PAKISTAN 
 
Classified By: ISN PDAS PATRICIA A. MCNERNEY FOR 
REASONS 1.4(B) AND (D) 
 
¶1.  (U) This is an action request.  Please see paragraph 3. 
 
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SUMMARY/BACKGROUND 
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¶2.  (S) The United States has information that Bank Melli may 
be seeking to establish a branch in Pakistan.  UNSCR 1803 
named Bank Melli as a bank of particular concern and called 
upon all states to exercise vigilance over the activities of 
financial institutions in their territories with all banks 
domiciled in Iran in order to prevent such activities from 
contributing to proliferation sensitive nuclear activities or 
to the development of nuclear weapon delivery systems.  In 
October 2007, the U.S. designated Bank Melli, pursuant to 
Executive Order 13382, for providing support to entities 
designated by the UNSC for their involvement in Iran,s 
nuclear and ballistic missile programs, including Bank Sepah, 
Defense Industries Organization, and Shahid Hemmat Industrial 
Group.  Bank Melli has been complicit in efforts by Iranian 
proliferators to circumvent international sanctions, 
including removing the name of Bank Sepah from financial 
transactions.  One method Iran is exploring to circumvent 
sanctions is to establish new banks or bank branches in 
jurisdictions it perceives as having less restrictive 
financial controls.  Bank Melli may regard Pakistan as a 
jurisdiction where it can set up new and relatively 
unrestricted business relationships.  The Financial Action 
Task Force (FATF) on February 28, 2008, issued a statement on 
Pakistan, noting its recent progress toward adopting 
anti-money laundering (AML) legislation, but warning 
financial institutions to be aware that the remaining 
deficiencies in Pakistan,s anti-money laundering/combating 
the financing of terrorism (AML/CFT) system constitute a 
vulnerability in the international financial system. 
Pakistan is urged to continue its efforts to improve its 
AML/CFT standards. 
 
¶3.  (S) On May 2, 2008, Treasury,s Assistant Secretary for 
Terrorist Financing and Financial Crimes Pat O,Brien met 
with Pakistani Deputy Chief of Mission Muhammad Aslam Khan 
and Pakistani Economic Officer Abdul Wajid Rana to discuss 
among other issues, the risks Pakistan faces in engaging in 
business with Iran.  A/S O,Brien encouraged Pakistan to 
enforce Iran-related UNSCRs and to exercise vigilance over 
its financial transactions with Iranian banks and to prevent 
the establishment of new financial ties.  A/S O,Brien shared 
information with DCM Khan on recent attempts by Bank Melli to 
open a branch in Pakistan.  Rana indicated that Iran has 
previously attempted to open Iranian bank branches two years 
ago and the Pakistani government denied these requests.  The 
Pakistani Embassy officials indicated that they would share 
the information and points made by Treasury with authorities 
in Islamabad. 
 
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OBJECTIVES/ACTION REQUEST 
------------------------- 
 
¶4.  (S) Washington requests Posts deliver the non-paper in 
paragraph 4 to appropriate host government officials in the 
foreign affairs and finance ministries.  Posts should pursue 
the following objectives: 
 
FOR ISLAMABAD: 
 
--  Inform Pakistan of Bank Melli,s interest in establishing 
a branch in Pakistan. 
 
--  Urge Pakistan to not allow Bank Melli to establish a 
branch in Pakistan. 
 
--  Urge Pakistan to continue its efforts to enact and 
implement an anti-money laundering/combating terrorist 
financing (AML/CFT) regime consistent with international 
standards to reduce the chance of proliferation-sensitive, or 
otherwise illicit, transactions. 
 
FOR BERLIN, PARIS, LONDON: 
 
--  Inform Germany, France and the UK of Bank Melli,s 
interest in establishing a branch in Pakistan. 
 
FOR ALL POSTS: 
 
-- Underscore UNSC 1803,s call to all States to exercise 
vigilance over the activities of financial institutions in 
their territories with all banks domiciled in Iran, in 
particular with Bank Melli and Bank Saderat, and their 
branches and subsidiaries abroad. 
 
-- Highlight the deficiencies in Iran,s AML/CTF regime, as 
described in FATF statements.  Emphasize the growing 
international consensus on the risks of engaging in 
Iran-related financial transactions. 
 
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BACKGROUND AND NONPAPER 
----------------------- 
 
¶5.  BEGIN NON-PAPER S//REL PAKISTAN, UK, FRANCE, GERMANY: 
 
-- We would like to share with you information about Iranian 
financial activities of potential concern in Pakistan. 
 
-- In early 2008, a senior Iranian Ministry of Foreign 
Affairs official was seeking information on the formation of 
a Bank Melli Iran branch in Karachi, Pakistan. 
 
-- The official,s interest was supposed to have stemmed from 
queries regarding this issue that had come from both Bank 
Markazi Iran (Central Bank of Iran) and the Iranian Supreme 
Council for National Security (SCNS). 
 
-- As you know, UNSCR 1803 was adopted on March 3, 2008, and 
calls on all States to exercise vigilance over the activities 
of financial institutions in their territories with all banks 
domiciled in Iran, in particular with Bank Melli and Bank 
Saderat, and their branches and subsidiaries abroad, in order 
to avoid activities contributing to proliferation sensitive 
nuclear activities or to the development of nuclear weapon 
delivery systems.  UNSCR 1803 identified Bank Melli as a bank 
of particular concern, by naming it in the resolution. 
 
-- The U.S. designated Bank Melli on October 25, 2007, under 
U.S. Executive Order 13382, an authority aimed at freezing 
the assets of proliferators of weapons of mass destruction 
and their supporters.  Bank Melli was designated for 
providing banking services to entities involved in Iran,s 
nuclear and missile programs, including Bank Sepah, Defense 
Industries Organization, and Shahid Hemmat Industrial Group, 
which are all designated in UNSCRs 1737 and 1747. 
 
-- We are concerned that Iran,s interest in information on 
the formation of a Bank Melli Iran Branch in Karachi, 
Pakistan could be an effort by Iran to circumvent applicable 
UNSC resolutions. 
 
FOR PAKISTAN: 
 
--  We urge you to not allow Bank Melli, identified in UNSCR 
1803 as a bank of particular concern, to establish a branch 
in Pakistan. 
 
FOR THE UK, FRANCE AND GERMANY: 
 
--  We are providing this information in the context of our 
shared interest in combating WMD-related proliferation and to 
underscore the UNSC,s call for all States to exercise 
vigilance over the activities of financial institutions in 
their territories with all banks domiciled in Iran, in 
particular with Bank Melli and Bank Saderat, and their 
branches and subsidiaries abroad.  We hope that this 
vigilance will help to prevent activities contributing to 
proliferation sensitive nuclear activities or to the 
development of nuclear weapon delivery systems. 
 
--  We continue to urge you to ensure that your domestic 
banks and Iranian banks domiciled in your country are not 
allowing Bank Melli to facilitate proliferation activities in 
circumvention of UNSCRs 1737, 1747, and 1803. 
 
FOR ALL RECIPIENTS: 
 
--  We look forward to working with you on this and other 
related security, counterterrorism or counterproliferation 
matters, and are prepared to provide additional assistance as 
appropriate. 
 
END NON-PAPER S/REL PAKISTAN, UK, FRANCE, GERMANY 
 
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REPORTING DEADLINE 
------------------ 
 
¶6.  (U) Post should report results within seven (7) business 
days of receipt of this cable.  Please slug replies for ISN, 
T, TREASURY, EUR, IO, and NEA.  Please include SIPDIS in all 
replies. 
 
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POINT OF CONTACT 
---------------- 
 
¶7.  (U) Washington point of contact for follow-up information 
is John G. Pinto, ISN/CPI, (202) 736-7939, 
Pintojg2@state.sgov.gov. 
 
¶8.  (U) Department thanks Post for its assistance. 
 
Y 
RICE