UPDATE ON GERMAN MEASURES TO HALT BANK SEPAH

S E C R E T BERLIN 000672 SIPDIS SIPDIS DEPARTMENT FOR ISN, EB, EUR AND NEA E.O. 12958: DECL: 03/30/2017 TAGS: EFIN KNNP PARM PREL IR GM SUBJECT: UPDATE ON GERMAN MEASURES TO HALT BANK SEPAH BANKING ACTIVITY REF: A. STATE 40440 ¶B. BERLIN 644 ¶C. STATE 38553 ¶D. 3/29 WOOSTER E-MAIL Classified By: EMIN Robert F. Cekuta for reasons 1.4 (b) and (d) ¶1. (S) Global Affairs Counselor met March 30 with Karl Wendling, Deputy Director General in the German Economic Ministry's Directorate for Foreign Trade Law and Export Control, to review measures Germany has taken to halt banking activity by Bank Sepah and Bank Sepah International (Ref A). Wendling indicated the German Government is aware of the financial institutions located in Germany that may have had dealings with Bank Sepah, and that German authorities are confident that neither Bank Sepah nor Bank Sepah International will be able to transfer funds or assets to any of these institutions. Wendling noted that on March 28 the German Government promulgated the national directive (Ref B) to freeze the assets of Bank Sepah and the other entities listed in UNSCR 1747. The directive (a German-language copy of which was passed to us) expressly prohibits financial transactions of any type and requires all financial institutions operating in Germany to provide immediately any and all information in their possession concerning accounts held or financial transactions carried out or contemplated with any of the listed entities, including Bank Sepah. ¶2. (S) Wendling added, in addition to enacting this directive, the German Government has taken the following additional steps: (1) a representative of the Bundesbank has been posted to the Frankfurt offices of Bank Sepah and tasked with monitoring the bank's operations to ensure that no transactions are carried out; (2) the German Federal Financial Supervisory Authority (BaFin) is assembling data electronically on all recent transactions involving Bank Sepah and other financial institutions known or believed to have had dealings with Bank Sepah; and (3) BaFin is also evaluating written records of the same set of transactions. Wendling said his office will ultimately receive the results from BaFin, but that the work had not yet been completed. ¶3. (S) Per Ref D, GA Counselor also noted our concern that Bank Sepah might be using Bank Markazi to move funds in an attempt to evade UN sanctions. Wendling said the German Government had not seen any indication of such activity and, in any event, is confident that the measures undertaken to freeze Bank Sepah's accounts are sufficient to prevent the Frankfurt branch of Bank Sepah from making such transfers. KOENIG