BANK MANDIRI CLOSES DPRK ACCOUNTS

S E C R E T SECTION 01 OF 02 JAKARTA 010189

SIPDIS

SIPDIS

STATE FOR EAP/FO, EAP/K, AND EAP/RSP
STATE ALSO FOR ISN/CPI AND EB/ESC/TFS
TREASURY FOR IA AND TERRORISM FINANCE AMIT SHARMA
TREASURY ALSO FOR U/S LEVEY
BANGKOK FOR USSS KYLE REGO

E.O. 12958: DECL: 07/19/2016
TAGS: EFIN ETTC KFTN PREL PTER PARM MNUC KJUS ID
SUBJECT: BANK MANDIRI CLOSES DPRK ACCOUNTS

REF: STATE 55463

Classified By: Classified by Economic Officer Ruth M. Hall, Reasons 1.4
(b)(c)(d)(e)(g).


1. (S) Summary. After repeated interventions by the Embassy,
Bank Mandiri and Central Bank officials confirmed August 9
and 11 that Bank Mandiri had shut down its relationship with
two North Korean banks in July: Korea Daesong Bank and the
Foreign Trade Bank of the DPRK. Bank Mandiri did not/not
find any correspondent banking relationship with Tanchon
Commercial Bank. Embassy had raised the issue at the
Ambassador and Counselor level in several meetings and
communications with Government of Indonesia and Bank
Indonesia officials, as well as directly with Bank Mandiri.
Embassy encouraged continued scrutiny of DPRK financial
activities in Indonesia in a meeting with BI on August 11.
End Summary.


2. (S) Chairman of the Board of Commissioners at Bank Mandiri
Indonesia, Edwin Gerungan (please protect) told the Embassy
on August 9 that Mandiri had shut down its relationship with
two DPRK banks in July: Korea Daesong Bank and the Foreign
Trade Bank of the DPRK. Gerungan said the account with the
Foreign Trade Bank had been inactive. Bank Mandiri had not
found any past or current relationship with Tanchon
Commercial Bank. Bank Indonesia (BI) officials confirmed
this information on August 11. The Assistant to the Board of
Governors of BI, Boyke W. Suadi, said that Bank Mandiri had
promised a report on its findings and actions to BI Deputy
Governor Maman H. Somantri.


3. (S) Embassy took numerous actions in response to reftel
request in April.

-- Embassy provided reftel information to officials at the
Foreign Ministry, Bank Indonesia, and the Financial
Intelligence Unit, urging an investigation of Tanchon
activities on April 11. Economic Section followed-up with
requests for action.

-- Ambassador, Political Counselor, and Econoffs raised in
meetings and other communications with Presidential Advisors
at the Palace and Foreign Ministry officials, in May, June
and July, providing documentation and following-up with
responses to questions.

-- U.S. Secret Service Agent Kyle Rego met with BI, Police,
PPATK, customs and intelligence officials regarding
counterfeit U.S. currency, probably DPRK-originated
supernotes (high-quality counterfeits) on June 21 in Jakarta.
The 35 $100 supernotes appear to have been issued by Bank
Mandiri to an unwitting Indonesian citizen who exchanged
Indonesian rupiah for U.S. dollars before heading to
Singapore for medical treatment. The counterfeits were
detected in Singapore. At the same meeting Econoff urged
follow-up with BI's investigative unit on Tanchon.

-- Bank Indonesia) Directorate of Legal Affairs officials
told Embassy Econoff on June 26 that it would not take any
action regarding on Bank Mandiri's relationship with DPRK
financial institutions.

-- After receiving talking points releasable to Bank Mandiri
from Department, Economic Counselor raised the issue with
Mandiri Chairman Edwin Gerungan on July 19. Gerungan clearly
understood the importance of the issue both of the DPRK
banking activity and of the counterfeit supernote issue. He
requested further details, which Embassy provided.

-- Acting Economic Section Chief met with BI Deputy Governor
Maman H. Somantri on August 3 to raise the DRPK banks issue.
Econoff provided the text of the July 15 UNSC resolution 1695
on the DPRK, which includes language requiring "all Member

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States, in accordance with their national legal authorities
and legislation and consistent with international law, to
exercise vigilance and prevent missle and missle-related
items, materials, goods and technology from the DPRK, and the
transfer of any financial resources in relation to DPRK's
missile or WMD programs." BI officials appeared
uncomfortable during the meeting but seemed to understand the
importance of the matter.

-- Embassy advised Bank Mandiri's Edwin Gerungan of Mandiri
aliases "Changgwang Credit Bank" and "Korea Changgwang Credit
Bank" on August 10.

-- Acting Economic Section Chief met with BI Boyke W. Suadi
on August 11 to provide further information on DPRK use of
front companies and the Tanchon aliases. Embassy encouraged
continued scrutiny by BI of DPRK financial institutions
activity or attempted activity in Indonesia.

Comment
--------------


4. (S) Post appreciates Department flexibility in providing
cleared talking points for use with Bank Mandiri. In
combination with other interventions, discussions with Bank
Mandiri management seems to have facilitated the most direct
action to close down the DPRK banks. Embassy will follow up
with BI on the aliases for Tanchon and continue to monitor
developments.
PASCOE