MALAYSIA DEFENSIVE REGARDING SHARING OF FINANCIAL

C O N F I D E N T I A L KUALA LUMPUR 000947 SIPDIS SENSITIVE SIPDIS TREASURY FOR HECHT E.O. 12958: DECL: 05/31/2017 TAGS: EFIN ETTC PREL PTER KFTN UN IR MY SUBJECT: MALAYSIA DEFENSIVE REGARDING SHARING OF FINANCIAL INTELLIGENCE ON IRAN Classified By: Deputy Chief of Mission David B. Shear ¶1. (U) Summary. Treasury Under Secretary for Terrorism and Financial Intelligence Stuart Levey visited Kuala Lumpur May 11 to meet with GOM officials and local financial institutions to discuss implementation of U.N. Security Council Resolutions (UNSCR) 1737 and 1747 and the risks of doing business with Iran. Malaysian interlocutors assured Levey of the effectiveness of the country's anti-money laundering regime. End Summary. ¶2. (U) Under Secretary of Treasury for Terrorism and Financial Intelligence Stuart Levey met May 11 with Central Bank Deputy Governor Zamani, Financial Intelligence Unit Director Jeremy Lee and their respective teams to discuss implementation of U.N. sanctions and U.S. financial measures against Iran. U/S Levey also met with senior management of several Malaysian banks including CIMB, Bank Muamalat, and Hong Leong Bank. Malaysia,s largest bank, Maybank, indicated its senior officials were too busy to receive him that day. ¶3. (SBU) U/S Levey described the risks inherent in business dealings with Iran and provided examples of deceptive practices Iran has been employing in its attempt to evade sanctions. He provided a list of Islamic Revolutionary Guard Corps (IRGC) front companies and copies of a recent newspaper advertisement inviting bids from an affilliate of the Atomic Energy Organization of Iran (AEOI),an entity designated under UNSCR 1737, to build two nuclear power plants with a light water reactor. The advertisement requested bidders to pay 15,000 Euros, and provided an account number at Creditanstalt in Austria. Levey explained that, when he contacted Creditanstalt, they reported that the account had been opened by the Iranian Ministry of Foreign Affairs in Vienna on behalf of their mission to the International Atomic Energy Agency. ¶4. (SBU) Bank Muamalat, a local Islamic Bank, responded by describing Malaysia's Anti-Money Laundering Act (AMLA) and assuring the U.S. delegation of the effectiveness of Malaysia's regulatory framework. Deputy Governor Zamani reacted similiarly; he also responded by describing Malaysia's anti-money laundering regime, pointing out that in February, Malaysia had undergone a Mutual Evaluation by the Financial Action Task Force Asia Pacific Group and had been ranked as more in compliance with international standards than the United States. Zamani also suggested that the delegation should have sought permission from the Central Bank before meeting with Malaysian Banks. (The embassy later learned that Bank Muamalat had complained to the Central Bank about the U.S. request for a meeting.) Zamani also wanted to know why the U.S. delegation was focusing on Iran, as did Bank Muamalat. Every one of the private banks asked whether the Under Secretary was meeting with the Central Bank's Financial Intelligence Unit, pointing out that this would be the appropriate body to which to bring any U.S. concerns. ¶5. (U) Neither the Ministry of Finance nor the Ministry of Foreign Affairs was available to meet the Under Secretary. ¶6. (SBU) Comment: While the Under Secretary's aim was to share intelligence with a partner in the spirit of cooperation, the Malaysians reacted defensively. Nevertheless, his meetings provided an opportunity to highlight our concerns with key officials, who will be more aware of their UN obligations as a result. LAFLEUR