Identifier
Created
Classification
Origin
06AMMAN2527
2006-04-10 14:08:00
CONFIDENTIAL
Embassy Amman
Cable title:  

CENTRAL BANK OF JORDAN RESPONSE TO GUIDANCE ON

Tags:  EFIN KPAL KWBG KTFN ECON JO 
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This record is a partial extract of the original cable. The full text of the original cable is not available.

101408Z Apr 06
C O N F I D E N T I A L SECTION 01 OF 02 AMMAN 002527 

SIPDIS

STATE PLEASE PASS TO USAID
TREASURY PLEASE PASS TO RLOEFFLER

E.O. 12958: DECL: 04/09/2016
TAGS: EFIN KPAL KWBG KTFN ECON JO
SUBJECT: CENTRAL BANK OF JORDAN RESPONSE TO GUIDANCE ON
DEALINGS WITH PRIVATE PALESTINIAN INDIVIDUALS AND
INSTITUTIONS

REF: A. STATE 56324


B. AMMAN 1405

C. JERUSALEM 1383

D. TEL AVIV 1368

Classified By: Ambassador David Hale, Reason 1.4 (d)

C O N F I D E N T I A L SECTION 01 OF 02 AMMAN 002527

SIPDIS

STATE PLEASE PASS TO USAID
TREASURY PLEASE PASS TO RLOEFFLER

E.O. 12958: DECL: 04/09/2016
TAGS: EFIN KPAL KWBG KTFN ECON JO
SUBJECT: CENTRAL BANK OF JORDAN RESPONSE TO GUIDANCE ON
DEALINGS WITH PRIVATE PALESTINIAN INDIVIDUALS AND
INSTITUTIONS

REF: A. STATE 56324


B. AMMAN 1405

C. JERUSALEM 1383

D. TEL AVIV 1368

Classified By: Ambassador David Hale, Reason 1.4 (d)


1. (C) Summary: Post delivered Ref A talking points on the
permissibility of commercial and financial relationships with
private individuals and entities within the Palestinian
territories to Central Bank of Jordan Governor Umayya Toukan
on April 9. Toukan said that Arab Bank is moving to sever
banking relationships with the PA, and speculated on the
future of Palestine Monetary Authority Governor George Abed.
Separately, Arab Bank Chief Banking Officer Shukry Bishara
expressed concern about Arab Bank branches in the Palestinian
territories being subject to Palestine Monetary Authority and
PA Finance Ministry oversight, and requested guidance from
the USG on dealings with entities controlled by the PA Office
of the President. End Summary.


2. (C) On April 9, ECOUNS and TREASATT delivered reftel
talking points to Central Bank of Jordan (CBJ) Governor
Umayya Toukan. ECOUNS also noted that guidance on the USG's
position regarding transactions involving HAMAS-controlled PA
ministries and parastatals will be forthcoming in the near
future. In response, Toukan said that Arab Bank Chairman and
CEO Abdul Hamid Shoman will voluntarily sever banking
relationships with PA ministries and entities under HAMAS
control in order to avoid additional legal exposure in light
of civil litigation currently underway against the bank in
New York. (NOTE: Arab Bank is the defendant in three civil
suits in New York alleging that Arab Bank provided financial
services to HAMAS-affiliated entities and, as a result, aided
and abetted certain acts of terrorism. END NOTE.) Toukan
added that Shoman had requested instructions from the CBJ on
how to proceed (see Ref B). Toukan explained that in
response, he could only counsel Arab Bank to implement
comprehensive anti-money laundering and terrorist finance
compliance measures, and to comply with the laws and
regulations of the jurisdictions in which it operates.
Toukan implied that Shoman was searching for legal cover for
his business decision to terminate PA accounts which the CBJ
could not provide. "I cannot tell them to close the
accounts," stated Toukan.


3. (C) Discussing developments in Arab Bank's commercial
relationship with the PA, Toukan stated that Arab Bank is no
longer granting new credit to the PA and is winding down open
credit facilities. He indicated that PA President Mahmoud
Abbas recently returned from Algeria with a $35 million
donation which will be used to cover some of the PA's
overdrafts with the Arab Bank.


4. (C) In response to TREASATT's inquiry, Toukan speculated
that Palestine Monetary Authority (PMA) Governor George Abed
will be replaced as part of HAMAS' assumption of power, but
his dismissal does not appear to be imminent. Toukan
indicated he does not have any first-hand knowledge of Abed's
fate, but has heard from unidentified sources in the PA that
Abed is not popular with HAMAS officials.


5. (SBU) In a separate phone conversation with ECOUNS, Arab
Bank Chief Banking Officer Shukry Bishara expressed concern
about Arab Bank's branches in the Palestinian territories
being under the regulatory authority of both the PMA and the
PA Finance Ministry, the latter being directly under the
control of a HAMAS minister. He also requested guidance from
the USG on dealings with entities controlled by the Office of
the President, in particular, the Palestine Investment Fund.



6. (C) Comment: Governor Toukan responded positively to
Post's reiteration of the permissibility of transactions with
private individuals and entities in the Palestinian
territories but, like Arab Bank, is primarily concerned with
the U.S. position on dealings with the PA and PA-controlled
entities. His belief that Arab Bank is moving to sever ties
with the PA in order to minimize legal risk in the U.S.
echoes comments made to Post by Arab Bank's Global Head of
Regulatory Compliance, and suggests that the PA may lose its
main banker in the very near future. It also demonstrates
the impact that Arab Bank's legal woes have had on its global
decision-making. Post expects that guidance now being
prepared by Washington agencies will answer Bishara's
question about dealings with entities that are controlled by
the Office of the President, including the Palestine
Investment Fund.
HALE