Identifier
Created
Classification
Origin
04AMMAN5989
2004-07-18 04:38:00
SECRET//NOFORN
Embassy Amman
Cable title:  

JORDAN'S CENTRAL BANK GOVERNOR ON ARAB BANK,

Tags:  EFIN ETTC PREL PTER JO IZ SA IS 
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This record is a partial extract of the original cable. The full text of the original cable is not available.
S E C R E T SECTION 01 OF 03 AMMAN 005989 

SIPDIS

NOFORN

E.O. 12958: DECL: 07/14/2024
TAGS: EFIN ETTC PREL PTER JO IZ SA IS
SUBJECT: JORDAN'S CENTRAL BANK GOVERNOR ON ARAB BANK,
TERRORIST FINANCING AND BANK SECRECY

REF: A. STATE 52681

B. AMMAN 1970

C. STATE 55050

D. AMMAN 02069

Classified By: CDA: David Hale, Reasons 1.5 (b) and (d).

S E C R E T SECTION 01 OF 03 AMMAN 005989

SIPDIS

NOFORN

E.O. 12958: DECL: 07/14/2024
TAGS: EFIN ETTC PREL PTER JO IZ SA IS
SUBJECT: JORDAN'S CENTRAL BANK GOVERNOR ON ARAB BANK,
TERRORIST FINANCING AND BANK SECRECY

REF: A. STATE 52681

B. AMMAN 1970

C. STATE 55050

D. AMMAN 02069

Classified By: CDA: David Hale, Reasons 1.5 (b) and (d).


1. (S/NF) SUMMARY: Jordan's Central Bank Governor Touqan
asserted that the legal suit filed against Jordan's Arab Bank
in New York hinges on payment orders issued by Saudi
authorities through Arab Bank to beneficiaries in the West
Bank. Although some of these beneficiaries may inadvertently
be relatives of suicide bombers, he believed the Saudi
program aimed at helping indigent Palestinians. The CBJ
believes that Arab Bank has been fully compliant with all
applicable laws on anti-money laundering and anti-terrorism
financing. Arab Bank has presented proof to the CBJ of
transactions it has canceled because of concerns about
account activity. Although Arab Bank's share prices were
affected immediately after news of the court case broke,
prices have largely recovered and only one small Japanese
bank has suspended transactions with Arab Bank.


2. (S/NF) SUMMARY CONT. Charge passed Touqan information
on alleged Hamas and Iraqi regime figures' accounts in Arab
Bank passed in March to the GOJ through other channels which
Touqan did not recall having seen. Touqan said that if such
accounts are found to exist, the CBJ would discreetly tell
Arab Bank to close them, and promised to inform us of the
results. On the issue of Jordan's bank secrecy laws, Touqan
said releasing account information without a court order or
the approval of the account holder would expose him to
lawsuits. In such cases, he recommended the Embassy ask the
Prime Minister to direct the Ministry of Justice to have a
judge release the information. The Charge reported that the
issue had been raised with the Foreign Minister and that the
Charge would be attending a GOJ inter-agency meeting to
discuss the issue. Finally, Touqan reported that the
proposed anti-money laundering law was facing opposition from
some ministers concerned about guarantees of privacy for

individuals. END SUMMARY.

--------------
Arab Bank Lawsuit
--------------


3. (S/NF) Charge met July 14, 2004 with Central Bank of
Jordan (CBJ) Governor Umayya Touqan to discuss the suit in
New York against Arab Bank alleging involvement in terrorist
financing. Touqan said that Arab Bank was in the process of
locating legal counsel for its defense. The Bank had
approached James Baker who was considering the offer. Touqan
had a copy of the suit, which was filed July 2. He said the
case appeared to be based on one point: that Saudi
authorities had issued numerous, small payment orders to Arab
Bank for beneficiaries in the West Bank. The suit claims
that some are relatives of suicide bombers and that Arab Bank
knowingly effected those payments, thereby supporting
terrorism.


4. (S/NF) Touqan argued that as a bank, Arab Bank effects
payments and that the case involved should really be against
the Saudi government, the source of the funds. Touqan said
that he had seen reports from the Comptroller of the Currency
(OCC),the Financial Services Authority of the U.K., and the
CBJ which had examined Arab Bank and found no problems. At
the request of the OCC, the CBJ had sent a team to New York a
year or more ago to examine Arab Bank's procedures, with
travel expenses covered by Arab Bank; the team had found no
problems. All the evidence available to the CBJ shows that
Arab Bank is compliant with all laws related to anti-money
laundering and anti-terrorist financing. In addition, he
said that the Palestinian Monetary Authority monitors all
transactions over $10,000, as in the U.S. Touqan said that
the CBJ has proof that Arab Bank has regularly closed
accounts when it became suspicious about account activity.
(COMMENT: A senior Arab Bank official earlier made the same
statement, noting that each bank branch manager has the
authority to close such accounts. He said Arab Bank had its
own anti-money laundering procedures in place even before
Jordan's proposed law was drafted. The banker also showed
Ecouns a large sheaf of internal memos directing the closure
of accounts where suspicious transactions had been attempted.
END COMMENT.)


5. (S/NF) Touqan reported that Arab Bank has one month to
prepare its legal submission for review by a judge. Touqan
said that he had recommended to Arab Bank that it not
consider any possible out-of-court settlement as it would be
seen as an admission of guilt. He said that the transaction
amounts in question were small: $100 or $125 in monthly
payments, provided by the Saudi government. He did not know
how Saudi authorities chose those names but believed there
was some existing mechanism between the Saudis and the
Palestinian Authority to select them. He believed it was the
PA that suggested the names of the individuals in need.
Touqan did wonder why the Saudis would not pay the funds
directly to Palestinian Finance Minister Salaam Fayyad, a
system which would be more transparent. He surmised that it
might be that the Saudis feared the funds might be siphoned
off by Arafat and disbursed instead to his friends.


6. (C) Arab Bank's share price had been hit hard right
after news of the suit broke but had since recovered. More
importantly, there had been no wave of account withdrawals
from the Bank, Touqan said. Only one small Japanese bank had
suspended its transactions with Arab Bank. Many of Arab
Bank's other correspondent banks in Europe and North America
had instead called Arab Bank to offer liquidity and other
support if needed.


7. (S/NF) Charge raised the issue of alleged Hamas and
Iraqi regime accounts in Arab Bank. Touqan said if any such
accounts were covered by UN resolutions, the accounts would
be frozen. Charge passed Touqan account information which
had been passed in March to the GOJ through other channels
(Ref D). Touqan said that these accounts were often in
fictitious or incomplete names, or names of Afghan or
Pakistani origin. He also believed some were small zakat
accounts, for the equivalent of Islamic tithing. (NOTE: On
July 15, Ecouns passed Touqan the list of Iraqi regime
accounts passed through other channels February 16. Noting
accounts in Geneva, Cannes and Morocco, Touqan commented that
dealing with such accounts would, of course, require
cooperation with the central banks of those countries as
well. END NOTE.).


8. (S/NF) Touqan said that if the CBJ were to find that any
Hamas account existed in Arab Bank, the CBJ would discreetly
tell Arab Bank's Chairman to close the account. He said he
was aware of one such account alleged to have Hamas links,
one owned by Gaza University, in which the USG also deposited
monthly payments, apparently part of an aid program.


9. (S/NF) Touqan asserted his belief that Arab Bank is keen
to close any suspicious account in order to protect its
business. For his part, Touqan said the CBJ will cooperate
fully in seeking to stop the flow of such funds and that the
CBJ is working hard to comply with all international
guidelines.

--------------
Arab Bank License Application in Iraq
--------------


10. (S/NF) On the issue of the Arab Bank's earlier
application for a license to do business in Iraq, Touqan said
he believed Ahmed Chalabi had been behind the resistance to
Arab Bank's request. The Charge said that if the CBJ locates
accounts connected to the former Iraqi regime and responds to
other questions posed in March, the CBJ should pass this
information on to the Embassy so it can be reported, a move
which could help to clear Arab Bank's name. In addition,
even a report that no accounts were found should also be
passed to the Embassy. Touqan said that the GOJ is
discussing frozen assets with the Iraqi government and is
also discussing the $1.3 billion in CBJ claims against Iraq.
Touqan hopes the two sides can agree to some type of
repayment scheme for the $1.3 billion, perhaps over a five
year period.

--------------
Bank Secrecy
--------------


11. (S/NF) When queried about Jordan's bank secrecy laws,
Touqan said that in the past, these laws had forced the CBJ
to respond to U.S. inquiries on suspect accounts only on an
informal basis. Otherwise, he would have run the risk of
being sued. According to Jordan's secrecy laws, account
information can only be released with the account owner's
approval or through a court order. (COMMENT: Touqan later
told Ecouns that the CBJ had released such information to the
U.S. last year before and after the war but that those had
been "extraordinary times," which had demanded suspension of
normal procedures to support the war effort. END COMMENT.)

12. (C) The Charge passed Touqan several outstanding CJAN
requests for information that involved bank account
information. The Charge explained that informal responses to
such requests could not be submitted in a court of law.
Touqan asserted that the U.S. must face similar problems with
other nations with bank secrecy laws, such as Lebanon and
Switzerland. He said he simply cannot release the requested
information without exposing himself to lawsuits but said
that obtaining a court order might be one option. Deputy
Governor Mohammed Shahin, who had joined the meeting in
progress, suggested developing a channel to do this through
the Ministry of Justice. The Prime Minister could direct the
Justice Minister to order a judge to release the information.
The Charge explained that the issue had been raised with the
Foreign Minister and that it had been agreed that the Charge
would attend a GOJ inter-agency meeting to discuss developing
just such a channel, building upon the work of a June visit
of a team from the U.S. Department of Justice's Criminal
Division.

--------------
Financial Intelligence Unit
--------------


13. (C) Touqan said that he needed to wait until passage of
the draft Anti-Money Laundering law before he could establish
a Financial Intelligence Unit. He noted that the draft law
was not popular with some ministers who think its infringes
upon an individual's right to privacy. Touqan said that he
had told those ministers that the draft could be amended to
address their concerns. He also noted that the draft had
been passed to the IMF for feedback. Charge reiterated U.S.
readiness to help with training and technical assistance for
the FIU.
BAGHDAD MINIMIZE CONSIDERED




HALE