Identifier
Created
Classification
Origin
06BAKU1857
2006-12-22 12:10:00
SECRET
Embassy Baku
Cable title:  

TREASURY VISIT TO AZERBAIJAN - THE IRANIAN THREAT

Tags:  PREL PGOV PINR ECON EFIN PTER IR AJ 
pdf how-to read a cable
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PP RUEHBC RUEHDBU RUEHDE RUEHDIR RUEHKUK
DE RUEHKB #1857/01 3561210
ZNY SSSSS ZZH
P 221210Z DEC 06
FM AMEMBASSY BAKU
TO RUEHC/SECSTATE WASHDC PRIORITY 2037
INFO RUCNCIS/CIS COLLECTIVE PRIORITY
RUCNIRA/IRAN COLLECTIVE PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RHMFISS/CDR USEUCOM VAIHINGEN GE PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RUEKJCS/SECDEF WASHDC PRIORITY
RUEHDIR/IRAN RPO DUBAI PRIORITY
S E C R E T SECTION 01 OF 02 BAKU 001857 

SIPDIS

SIPDIS

TREASURY FOR RACHEL LOEFFLER

E.O. 12958: DECL: 12/17/2016
TAGS: PREL PGOV PINR ECON EFIN PTER IR AJ
SUBJECT: TREASURY VISIT TO AZERBAIJAN - THE IRANIAN THREAT
AND AZERBAIJANI FINANCIAL VULNERABILITIES


BAKU 00001857 001.2 OF 002


Classified By: Charge d'Affaires Jason P. Hyland for reasons 1.4 (b)
and (d).

S E C R E T SECTION 01 OF 02 BAKU 001857

SIPDIS

SIPDIS

TREASURY FOR RACHEL LOEFFLER

E.O. 12958: DECL: 12/17/2016
TAGS: PREL PGOV PINR ECON EFIN PTER IR AJ
SUBJECT: TREASURY VISIT TO AZERBAIJAN - THE IRANIAN THREAT
AND AZERBAIJANI FINANCIAL VULNERABILITIES


BAKU 00001857 001.2 OF 002


Classified By: Charge d'Affaires Jason P. Hyland for reasons 1.4 (b)
and (d).


1. (C) Summary: During a 16-18 November visit by the U.S.
Department of Treasury's Office of Terrorist Finance and
Financial Crimes, GOAJ officials from the National Bank,
Ministry of Finance, Ministry of Foreign Affairs, and
Presidential Apparat reviewed Azerbaijan's anti-terrorism
finance infrastructure. At present, Azerbaijan does not have
a comprehensive law which makes money laundering and/or
terrorist financing illegal; it also does not have a
Financial Intelligence Unit (FIU) or similar body necessary
to investigate suspicious financial activities. While
Azerbaijan passed a bare-bones amendment to its criminal code
making money laundering a crime in April 2006, it has yet to
adopt a comprehensive Anti-Money Laundering (AML) -
Counter-Terrorist Financing (CTF) law necessary to combat
these crimes and comply with international standards. A
draft law addressing these vulnerabilities and an "embryonic"
FIU at the National Bank exist, but Azerbaijan currently
lacks the legal and investigative framework necessary to
effectively combat these crimes. During this visit, we
pressed GOAJ officials on these issues, to encourage
Azerbaijan to quickly address these vulnerabilities to its
financial and banking systems. End Summary.

--------------
Azerbaijani Financial System Vulnerabilities
--------------


2. (C) At present, Azerbaijan does not have a comprehensive
law that makes money laundering and/or terrorist financing
illegal. Further compounding matters, Azerbaijan does not
have a Financial Intelligence Unit (FIU) or any other
comparable body with which to investigate such activities.
While a draft Anti-Money Laundering/Counter-Terrorist
Financing (AML/CTF) law has been created, it has not moved

forward, reportedly stuck in the President's Office.


3. (C) According to Rufat Aslanli, Executive Director of the
Azerbaijani National Bank, Azerbaijan is a Financial Action
Task Force (FATF) associate member (as a Council of Europe
member state) and actively enforces the provisions of UNSCR
1267 (Aslanli even stating that international conventions
supersede national law). The National Bank receives the 1267
lists from three sources - the U.S. Embassy, EU, and the
Ministry of Foreign Affairs via the President's Office. The
National Bank then disseminates the list to its banks with
any necessary warnings.


4. (C) With regard to the creation of a FIU, Aslanli
reported that an "embryonic" version of a FIU was already
operational within the National Bank, with four employees
tasked to analyze transactions in the bank's supervisory
department. According to Aslanli, approximately 50
suspicious transactions are reported every month, with the
Ministry of National Security being consulted on potential
terrorism matters and the Prosecutor General's office when
money laundering is suspected. Aslanli noted that the
National Bank has kept a database of suspicious transactions
since 2002 based on its authority to require banks to explain
transactions that do not comport with a customer's profile.
Hopeful that the AML/CTF draft law will be adopted soon,
Aslanli also outlined how he envisioned the operations of the
FIU and prospects for bilateral relationships with individual
FIUs in other countries. (Note: It is still not clear where
the FIU will be located once it is established and fully
operational.)

--------------
Charities Oversight in Azerbaijan
--------------


5. (C) Vaqif Sadiqov, Deputy Foreign Minister, also affirmed
Azerbaijan's support of and cooperation with international
bodies dealing with counter-terrorism and anti-money
laundering efforts. Explaining that one officer at the
Azerbaijani Mission to the United Nations in New York is
dedicated solely to counter-terrorism efforts, Sadiqov
focused primarily on charity activity in Azerbaijan. He
described how, in the early 1990s with a downtrodden economy
and scarce funds, the Azerbaijani government had to accept
virtually whatever sources of international charitable relief

BAKU 00001857 002.2 OF 002


entered the country. The funds predominantly came from Saudi
Arabia, Qatar, Kuwait, and Iran at first to support schools
and provide food. When the Azerbaijani government "started
to notice strange things" about the charitable activities
(namely their dissemination of "propaganda" materials),the
government closed key chapters down, including of the Kuwait-
and Iran-based charities.


6. (C) Today, two bodies oversee charitable activities in
Azerbaijan according to Sadiqov. The State Committee for
Religious Affairs screens all registration applications,
which every religious operation is required by law to submit.
The Committee confirms that the prospectus matches the
outfit's actual activities. The State Committee on Refugees,
chaired by Deputy Prime Minister Ali Hassanov, coordinates
with appropriate members of the interagency to insure that
the requesting charity should indeed have license to operate
in Azerbaijan. Referring to Azerbaijan's "sad experience"
with charities, Sadiqov said that a law governing charity
activities now exists and that the Ministry of Foreign
Affairs and Ministry of National Security are involved in the
screening and vetting of all foreign charities. Sadiqov
confirmed the presence of the Iran-based Imam Khomeini
Foundation and other unnamed Iranian charities, and mentioned
that their activities "needed to be reviewed." In Azerbaijan
since 1992, Sadiqov was not sure what the Imam Khomeini
Foundation was providing now, especially in light of
Azerbaijan's growing energy revenues and the likelihood that
Azerbaijan "should be able to take care of its own citizens
without the help of foreign organizations."

--------------
Treasury Comes to Azerbaijan
--------------


7. (S) These GOAJ meetings took place during a 16-18
November visit by Rachel Loeffler, Deputy Director in
Treasury's Office of Terrorist Finance and Financial Crimes
(Middle East/Africa Division). Loeffler briefed emboffs on
Iran's extensive use of its banking system, Bonyads
(quasi-governmental foundations that also have commercial
enterprises),and front companies in support of terrorist
activities and WMD acquisition. She also outlined Treasury's
efforts to address these concerns through extensive
international outreach and targeted actions.

--------------
Prospects for the Future
--------------


8. (C) Comment - GOAJ officials were quick to point out
their compliance with and interest in supporting
international efforts aimed at combating terrorist financing
and money laundering. Discussing the status of the draft law
with Hasan Mammadzade, Senior Advisor in the President's
Foreign Relations Department, Mammadzade said "we are here
for you and want to support these efforts." However, without
new, rigorous counter-terrorist financing and anti-money
laundering legislation and a FIU, the GOAJ's ability to
support global anti-terrorist finance initiatives will remain
limited. We have pressed senior levels of the GOAJ to move
quickly on all three issues, and will continue to do so. End
Comment.
HYLAND