CYPRUS: FATF STATEMENT ON IRAN

UNCLAS NICOSIA 000880 SIPDIS SENSITIVE SIPDIS STATE FOR ISN/CPI AND T TREASURY FOR TFFC E.O. 12958: N/A TAGS: PARM PREL MNUC KNP EFIN CY SUBJECT: CYPRUS: FATF STATEMENT ON IRAN REF: A. STATE 149648 ¶B. STATE 148605 ¶C. NICOSIA 859 ¶1. (SBU) Per Ref A, on October 31 we met with Eva Papakyriakou the Director of the Attorney General's Unit for Combating Money Laundering (MOKAS, Cyprus' Financial Intelligence Unit,) and Michael Styliannou, Senior Officer at the Central Bank of Cyprus for Bank Supervision and Regulation. They both advised us that they were aware of the recent FATF actions and would this week issue a circular to Cypriot financial institutions noting the deficiencies in Iran's AML/CFT regime and the need to undertake "more detailed due diligence and scrutiny" when an Iranian counterparty is involved. The circular "will be similar to" the one prepared by U.S. Treasury's FinCen which was received by the GoC last week. ¶2. (SBU) Styliannou noted that Cyprus had previously issued circulars regarding dealing with Iranian entities based on UNSC Resolutions 1737 and 1747. Papakyriakou advised us that next week she will issue a directive that her office be advised of any dealings with the Iranian entities and individuals mentioned in ref B. She would then seek to freeze any assets identified using UNSC 1737 and 1747 as a legal basis although this would be subject to a court ruling. Papakyriakou advised that courts in Cyprus would be more likely to agree to a freeze if the names had been submitted to the UNSC, even if the UNSC had yet to take action. ¶3. (SBU) Bilateral trade between Cyprus and Iran is minimal. In 2006, Cyprus exported US$5.4 million to Iran and imported US$3.9 million of which about 67% was pistachio nuts. The Central Bank told us that while some Cypriot banks maintain correspondent relationships with Iranian banks, there are very few transactions. SCHLICHER