BANK MELLI ATTEMPTS TO PURCHASE A TURKISH BANK TO

S E C R E T BERLIN 002062 SIPDIS SIPDIS, ISN, T, EUR, AND NEA E.O. 12958: DECL: 11/13/2017 TAGS: EFIN KNNP MNUC IR TU GM SUBJECT: BANK MELLI ATTEMPTS TO PURCHASE A TURKISH BANK TO CIRCUMVENT UNSCRS 1737/1747 REF: STATE 153725 Classified By: Global Affairs Counselor Donald R. Shemanski for reasons 1.4 (b) and (d). ¶1. (S) Emboffs delivered reftel nonpaper during the week of November 5 to MFA Iran Desk Officer Deike Potzel, MFA Nonproliferation Division Director Hellmut Hoffman, MFA International Financial Policy Desk Officer Claudia Schuett, and Economics Ministry Foreign Trade Law Division Director Ursina Krumpholz. In a follow-up meeting November 13, Finance Ministry Terrorist Finance and Money Laundering Division Director Michael Findeisen reacted "skeptically" to reftel information. Noting that "most - if not all - of the relevant banks" in Turkey are already foreign-owned, primarily by banks in the UK, United States, and France, Findeisen expressed doubt that Bank Melli would be able to purchase a major Turkish bank. ¶2. (S) Findeisen said Germany has the legal competence to prevent unreliable shareholders from purchasing - or investing in - a German bank. Under Section 2(b) of the German Banking Act, investors are required to prove they are "reliable, fit, and proper" and to demonstrate that the money they plan to invest comes from "clean sources." Findeisen noted that this section of the Banking Act - which was amended seven years ago to implement an EU anti-money laundering directive - is one of the few instances where the burden of proof falls on investors, vice government regulators. Findeisen added that the Banking Act also permits the German Government to prevent such purchases on "political grounds," i.e., if the purchase would have national security implications. ¶3. (S) Turning to the nonpaper itself, Findeisen asked whether there are precise U.S. definitions of the terms "financial conduit" and "on behalf of," both of which are clearly defined in German legal parlance. Specifically, Findeisen said, Finance Ministry experts would like to know whether the USG makes a legal distinction between these two terms, on the one hand, and the term "acting as an intermediary," on the other. According to the German legal understanding, Findeisen explained, acting as a "financial conduit" for or "on behalf of" Bank Sepah would require a former Bank Sepah customer's involvement and express consent in the form of a contract. Findeisen added that German experts consider specific evidence that Bank Melli acted as a "financial conduit" for or "on behalf of" Bank Sepah as a precondition to conclude that Bank Melli had violated UNSCR ¶1737. Findeisen noted, again, that German law places the burden of proof on the German Government in such cases. KOENIG