JORDAN'S CENTRAL BANK GOVERNOR ON ARAB BANK,

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