Identifier
Created
Classification
Origin
06BEIJING15109
2006-07-20 06:02:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Beijing
Cable title:  

EB/ESC DAS SIMONS MEETING WITH CHINA CENTRAL BANK

Tags:  PREL EFIN PTER ETTC CH 
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VZCZCXRO5814
RR RUEHCN RUEHGH
DE RUEHBJ #5109/01 2010602
ZNR UUUUU ZZH
R 200602Z JUL 06
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC 2007
INFO RHEHNSC/NSC WASHDC
RUCNDT/USMISSION USUN NEW YORK 1414
RUEHGV/USMISSION GENEVA 1228
RUEATRS/DEPT OF TREASURY WASHDC
RUEHOO/CHINA POSTS COLLECTIVE
UNCLAS SECTION 01 OF 02 BEIJING 015109 

SIPDIS

SIPDIS

SENSITIVE

DEPT FOR EB/ESC/TFS, S/CT, IO/PHO AND EAP/CM
NSC FOR VCHA
TREASURY FOR U/S LEVEY, A/S ZARATE, DAS GLASER, OASIA/ISA
FOR DOHNER/KOEPKE, OCC HOPKINS

E.O. 12958: N/A
TAGS: PREL EFIN PTER ETTC CH
SUBJECT: EB/ESC DAS SIMONS MEETING WITH CHINA CENTRAL BANK

REF: BEIJING 11712

UNCLAS SECTION 01 OF 02 BEIJING 015109

SIPDIS

SIPDIS

SENSITIVE

DEPT FOR EB/ESC/TFS, S/CT, IO/PHO AND EAP/CM
NSC FOR VCHA
TREASURY FOR U/S LEVEY, A/S ZARATE, DAS GLASER, OASIA/ISA
FOR DOHNER/KOEPKE, OCC HOPKINS

E.O. 12958: N/A
TAGS: PREL EFIN PTER ETTC CH
SUBJECT: EB/ESC DAS SIMONS MEETING WITH CHINA CENTRAL BANK

REF: BEIJING 11712


1. (SBU) On July 12, 2006, EB/ESC DAS Paul Simons and ECON
MinCouns Robert Luke met with Director General Liu Liange
of the Anti-Money Laundering Bureau at the People?s Bank of
China (PBOC). The meeting focused on anti-money laundering
(AML),counterterrorism financing (CTF),Financial Action
Task Force (FATF) membership, UN 1267 support, the expanded
use of credit, and the use of the Society for Worldwide
Interbank Financial Telecommunication (SWIFT) systems
internationally for monitoring terrorist financing.

--------------
AML Law proceeding smoothly
--------------


2. (SBU) DG Liu stated that the issues holding up the
draft AML law that he mentioned during Treasury DAS Daniel
Glaser?s June visit (reftel) have since been resolved. He
expects the AML law to pass its third reading smoothly in
August, and subsequently to be promulgated in October. He
said that PBOC intends to schedule the FATF mutual
evaluation soon after the passing of the law in September.
DAS Simons welcomed China?s efforts to speed the passage of
the AML and to move forward with the next step in the
process to join FATF.


3. (SBU) DAS Simons asked about China?s progress in moving
towards a credit-based economy. DG Liu replied that PBOC
supports a transition towards a credit-based economy to
enhance the effectiveness of monitoring AML activity.
However, the National People?s Congress (NPC) raised
opposing opinions to provisions in the draft AML that
encouraged transitioning towards credit. China?s deeply
ingrained cultural affinity to using cash may be one reason
that opposition to the transition has been raised, he said.
DAS Simons noted that other countries that have made such a
transition and suggested that China seek out the experience
of other jurisdictions through its upcoming FATF mutual
evaluation.

--------------
Seeking China?s support in UN 1267 Committee
--------------


4. (SBU) DAS Simons raised concerns over China?s support
of adding discussion of the FATF 40 plus 9 recommendations
to the UN Counterterrorism Committee?s (UNCTC) agenda. He
said that the United States understands from Treasury Das
Glaser?s visit that both the Ministry of Foreign Affairs
(MFA) and PBOC support this motion, but noted that similar
support from China?s UN representative has not been
forthcoming. DG Liu assured DAS Simons that China clearly
supports the motion and that MFA has communicated this to
its UN mission, but promised to check on the issue.


5. (SBU) DAS Simons also expressed hope that China will
support the United States? position in the UN 1267
Committee to increase transparency and fairness in the
process of designating terrorists. DG Liu stated that he
will coordinate with MFA, and emphasized China?s resolve to
adhere to its international commitments.

-------------- --------------
Chinese concerns over disclosure of SWIFT monitoring
-------------- --------------


6. (SBU) DG Liu expressed concern with the recent
disclosure that the U.S. government has been monitoring
terrorism finances through the SWIFT system. He worried
that terrorists will now shift away from formal financial
channels and instead turn to the usage of informal, less
traceable mechanisms for moving funds to finance their
operations. DG Liu also raised concerns that government
authorities could violate confidentiality by abusing access
privileges.


7. (SBU) DAS Simons responded that disclosure of
government use of SWIFT to monitor was a great concern of
the U.S. government, and that the President has already
issued formal statements denouncing the disclosure as a
setback on the war on terror. He further noted that the

BEIJING 00015109 002 OF 002


monitoring of informal cash flows through charities, cash
couriers, and hawalas was very much the centerpiece of
recent international cooperation on terrorist financing,
and that China?s closer coordination with FATF and the FATF
regional style bodies would be important steps toward
deeper Chinese engagement on these issues.


8. (SBU) EB/ESC DAS Simons cleared this report.

RANDT