Identifier
Created
Classification
Origin
04AMMAN8045
2004-09-27 14:07:00
SECRET//NOFORN
Embassy Amman
Cable title:  

TREASURY-LED DELEGATION FINDS DEFICIENCIES IN

Tags:  EFIN ETTC PREL PGOV JO KTRF 
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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 008045 

SIPDIS

NOFORN

TREASURY FOR DEMOPULOS/GLASER/ZARATE

E.O. 12958: DECL: 09/24/2014
TAGS: EFIN ETTC PREL PGOV JO KTRF
SUBJECT: TREASURY-LED DELEGATION FINDS DEFICIENCIES IN
AML/CFT CONTROLS; PUSHES FOR GREATER GOJ AML/CFT COOPERATION

REF: A. 151900Z DIRECTOR 628732 (15 MARCH 2004)

B. 2003 AMMAN 6000

Classified By: Charge d'Affaires David Hale for reasons 1.4 (b),(c),a
nd (d)

S E C R E T SECTION 01 OF 03 AMMAN 008045

SIPDIS

NOFORN

TREASURY FOR DEMOPULOS/GLASER/ZARATE

E.O. 12958: DECL: 09/24/2014
TAGS: EFIN ETTC PREL PGOV JO KTRF
SUBJECT: TREASURY-LED DELEGATION FINDS DEFICIENCIES IN
AML/CFT CONTROLS; PUSHES FOR GREATER GOJ AML/CFT COOPERATION

REF: A. 151900Z DIRECTOR 628732 (15 MARCH 2004)

B. 2003 AMMAN 6000

Classified By: Charge d'Affaires David Hale for reasons 1.4 (b),(c),a
nd (d)


1. (C)SUMMARY: A visit by a Treasury-led team focused on
terrorist financing and anti-money laundering issues, both
with respect to broad structural concerns and specific
bilateral information requests. Regarding the structural
issues, the team found that the Jordanian anti-money
laundering (AML) and combating financing of terror (CFT)
regime suffers from significant deficiencies, including lack
of a financial intelligence unit and a regime of strict bank
secrecy. While a draft AML law that is currently before
Parliament will substantially improve matters, Jordan's
strict bank secrecy laws will continue to represent an
obstacle to effective international cooperation on anything
other than a highly informal level.


2. (S/NF) Regarding specific requests for information, all
cited Jordanian bank secrecy laws as preventing such
cooperation. However, Arab Bank, with the unofficial nod of
the Central Bank, did eventually provide detailed information
on several Hamas and former Iraqi regime-related accounts
(reftel A). The Jordan National Bank (JNB),however, did not
provide information on account transactions concerning U.S.
currency found in Baghdad at the end of the war in Iraq. END
SUMMARY.


3. (U) A delegation composed of personnel from the
Departments of Treasury and State, the New York Federal
Reserve Bank, OFAC, and the IRS held meetings in Amman
September 22-23. The delegation, led by Daniel Glaser,
Director of the Treasury Executive Office for Terrorism
Finance and Financial Crimes, met during that time with GOJ
officials including the Ministers of Finance and Justice, the
Legal Advisor to the Minister of Foreign Affairs, and the
Governor and Deputy Governors of the Central Bank of Jordan
(CBJ). The delegation also met with top executives from the
Arab Bank, Housing Bank, and Jordan National Bank (the three

largest banks in Jordan),and with the Jordanian branch of
Lebanon-based Audi Bank (septel). Charge attended many and
Emboffs accompanied the delegation to all of these meetings.

--------------
JORDAN BEHIND THE AML/CFT CURVE
--------------


4. (SBU) Based on the delegation's meetings with GOJ
officials, the delegation concluded that Jordan's AML/CFT
legal and regulatory framework falls significantly short of
international standards. In particular, Jordan has no
comprehensive law criminalizing AML activities, no financial
intelligence unit (FIU),and maintains strict bank secrecy
that prevents effective international cooperation. While an
AML law has been circulating in draft form within the GOJ for
almost a year, this draft has only just been approved by the
full Cabinet. It will be submitted for the approval of
Parliament when it comes back in session (likely late
November). Embassy received a copy of an earlier draft of
this law, which was initially created in cooperation with the
IMF, and it has passed the draft law to the desk and to
Treasury for review.


5. (U) At present, Jordan bases its AML/CFT safeguards on a
combination of other laws related to financial crime,
terrorism, and financial supervision. While these laws,
including the Banking Law and the Central Bank Law, contain
some positive provisions, including customer identification
requirements, Jordan's bank secrecy law essentially prevents
international information exchange unless the Prosecutor
General has opened a criminal case in Jordanian courts.
According to MFA Legal Advisor Samer Naber, Jordan can also
provide information on accounts related to terrorism, but
only if that account is related to a group or individual
identified by the UNSCR 1267 list or if the Prosecutor
General makes an independent determination that the account
is directly related to terrorist acts.


6. (C) The absence of a comprehensive and effective AML/CFT
regime leaves Jordan well behind the trend of the past
several years among international financial centers including
regional centers such as Bahrain, Saudi Arabia, Lebanon, and
the UAE, and other secrecy jurisdictions such as Switzerland.
GOJ officials appeared surprised to hear that Jordan was
behind international standards and practice in AML/CFT
safeguards. Finance Minister Mohammed Abu Hammour, replied
that he had thought that Jordan was ahead of the region on
this subject. The recently appointed CBJ Deputy Governor
Faris Sharaf, whose remit as Deputy Governor includes banking
supervision, noted his belief that the FATF had certified
Jordan as compliant, only to admit when pressed that all he
was sure of was that Jordan had not been identified by FATF
as non-compliant. In fact, Jordan has never been reviewed by
FATF. Sharaf also noted that the IMF had recently sent a
team to Jordan to, among other things, assess Jordan,s
compliance with overall international AML/CFT standards. The
IMF's assessment, however, did not rate Jordan's AML/CFT
compliance, though Treasury understands that the IMF
identified significant problems.


7. (U) The delegation welcomed the news that both Minister of
Finance Mohammed Abu Hammour and CBJ Deputy Governor Faris
Sharaf will attend the inaugural MENA-FATF conference in
Bahrain in November.

-------------- --------------
AN INFORMAL WILLINGNESS TO HELP; MIXED PERFORMANCE IN PRACTICE
-------------- --------------


8. (S/NF) In practice, at least on this visit, players
expressed their willingness to bend the rules for us. While
most interlocutors expressed a desire to share information
with the U.S., they cited bank secrecy as tying their hands.
The CBJ, however, when pressed, eventually agreed to advise
banks informally that they could provide information directly
to the delegation if the banks so chose. Based on a call
from the Central Bank Governor to this effect, Arab Bank met
for a second time with the delegation and provided account
information that the Embassy had originally requested from
the GID in February and March and from the CBJ in July.
Operations Division Chief Fawzan Shukri gave the delegation
information on the accounts, dates of opening and closing
and the account balances at the time when the accounts were
closed (or, in some cases, seized or frozen ) Embassy will
report all of the information passed at this meeting septel).
He also promised to deliver transaction records on these
accounts to the USG within a week. Arab Bank noted that they
had passed information on these accounts to the CBJ on
several occasions. CBJ had not informed the Embassy, despite
frequent requests for a response, including to the Prime
Minister.


9. (C) Jordan National Bank (JNB),was engaged by the
delegation on two subjects of concern to the USG. The first
request made by the delegation was for information on the
party or parties who purchased from JNB hundreds of millions
of dollars in new U.S. bank notes originating at the New York
Federal Reserve Bank, purchased by JNB, and found as part of
$700 million in a palace in Baghdad in April 2003. The
second request was for transaction records of specific
accounts at JNB that the USG believes may have been used by
the former Iraqi regime to receive illegal kickbacks and
other moneys from Oil-for-Food (OFF) program suppliers.
(These two requests were also made of the Housing Bank.)
Acting JNB CEO Rashid Daoudi replied that while he would be
willing to turn over the information on currency purchases if
he received an oral approval from the CBJ, he would require
an official request from the CBJ before he would turn over
account information. (Despite the CBJ's earlier promise to
call JNB to provide an informal green light, JNB maintained
that it had received no such call by the time of the
meeting.) He refused to accept a proffered diskette with
information on the currency purchases without clearance from
the CBJ.


10. (C) The Housing Bank for Savings and Investment, with
which the delegation met prior to its meeting with the CBJ,
had yet another standard for information it was willing to
share. Executive Manager Ahmed Abdel-Fattah, when asked
about the measures that the bank had taken in order to ensure
that no money laundering was taking place within the bank,
spoke at length on general principles, and repeatedly made
reference to a compliance manual that all bank employees were
made to read. When asked for a copy, however, he told
Emboffs that he would need CBJ permission to hand over such
information. When engaged by the delegation on the same
requests made of JNB, he again said that he would need CBJ
clearance to release such information.
--------------
ATMOSPHERICS
--------------


11. (C) While most interlocutors expressed a desire to
cooperate, CBJ Governor Toukan reacted defensively to
requests for information, particularly with regard to Arab
Bank, affirming his strong belief that the banks could not
have been involved in any illegal activity. He reiterated
several themes that are by now familiar to us: the closeness
of the Jordanian relationship to the United States, the
strictness of the Arab Bank in its relations with account
holders, the importance of the Arab Bank,s health to the
Jordanian economy as a whole, the reasons why any terrorist
would avoid the banking sector entirely as a method of cash
transfer in favor of less-regulated financial sectors, and
the unfairness of holding a bank responsible for the sins of
its clients.


12. (C) Toukan also repeatedly made clear his unwillingness
to make any formal requests for information to any bank
without an order from the Prosecutor General, noting in
passing the September 2003 political turbulence that the CBJ
had endured the leaking of an order CBJ had sent to Jordanian
banks to freeze accounts of several Hamas-related entities
and individuals (reftel B). Several times, he made the point
that the CBJ is &a technical body, not a political one.8
Nonetheless, after considerable discourse, Toukan agreed to
call the relevant officials at the Arab Bank, Housing Bank,
and JNB and give his oral consent to those banks, sharing of
account information with the delegation upon its request.
This resulted in direct cooperation from the Arab Bank.

--------------
COMMENT
--------------


13. (C) Jordan's lack of an FIU and its strict bank secrecy
result in the CBJ and the Jordanian banks being unwilling to
provide AML/CFT-related financial information without
political cover. The CBJ is being squeezed between strong
U.S. pressure to cooperate in investigating terrorism finance
and Iraqi regime accounts and its own inability to action in
violation of the law. A strong U.S. push at the political
level for legislative and regulatory changes, combined with
the technical support necessary to help the GOJ implement
such arrangements, could provide the necessary impetus to put
these mechanisms in place. Simultaneously, the Justice
Minister is working with the Embasssy on improved procedures
for overall bilateral law enforcement cooperation, to include
AML/CFT issues. Governor Touqan said he had encouraged this
approach.


14. (U) Daniel Glaser cleared this cable prior to departure.
HALE