ONGOING PROLIFERATION FINANCE ACTIVITIES BY IRAN

S E C R E T STATE 114443

SIPDIS

SIPDIS

E.O. 12958: DECL: 08/08/2017
TAGS: IR KN KNNP PARM PREL
SUBJECT: ONGOING PROLIFERATION FINANCE ACTIVITIES BY IRAN
AND NORTH KOREA

REF: STATE 072416

Classified By: ISN PDAS Patricia McNerney for reasons 1.4 (b) and (d).


1. (SBU) This is an action request, please see paragraph 2.


2. OBJECTIVES:

-- Alert host government officials about financial
transactions related to entities in their jurisdictions that
have previously been involved in proliferation of
conventional arms and urge appropriate authorities to
investigate such transactions, especially correspondent
relationships, and to take steps to freeze any accounts held
or transactions conducted in support of proliferation
activities.

-- We would also like to urge appropriate authorities to
investigate such transactions, especially correspondent
relationships and to take steps to freeze any accounts held
or transactions conducted in violation of or in order to
circumvent measures imposed in UNSCRs 1718, 1737, or 1747.


3. ACTION REQUEST: Washington requests that addressees
deliver the non-paper in paragraph 4 to appropriate host
government officials, including the Finance Ministry and
Ministry of Foreign Affairs.


4. BACKGROUND/NONPAPER FOR GERMANY AND FRANCE:

-- (S/REL TO GERMANY, FRANCE) Begin text of
background/non-paper:

-- (S/REL GERMANY, FRANCE) In light of our commitment to
share as much information with your government as possible
about financial transactions involving entities designated
under UNSCRs 1737 or 1747, we would like to raise serious
concerns about Iranian and North Korean financial activities
in your jurisdiction.

-- (S/REL GERMANY, FRANCE) It has long been the policy of the
United States to prevent the use of the international
financial system for the purpose of conducting illicit or
proliferation-related financial transactions, and to urge our
international partners to do the same.

-- (S/REL GERMANY, FRANCE) We are concerned that Iranian and
North Korean entities are developing new routes for financial
transactions to circumvent UN sanctions. We suspect they are
also engaging in deceptive financial practices such as the
use of front companies or correspondent accounts that obscure
the origin or end user of funds.

-- (S/REL GERMANY, FRANCE) North Korea's Green Pine
Associated Corporation is an entity that maintains a presence
in Iran and has financial ties to Bank Sepah. As you know
Bank Sepah is subject to UN sanctions under UNSCR 1747.

-- (S/REL GERMANY, FRANCE) (THE FOLLOWING INFORMATION SHOULD
BE DELIVERED VERBATIM.) As of early April 2007, Green Pine
Associated Corporation experienced difficulties with money
transfers out of Iran as a result of Iran's central bank
(Bank Markazi) prohibition on overseas transfers and new
letters of credit. It tried unsuccessfully to move money
through Iran's Bank Sepah, which is subject to sanctions
under UNSCR 1747. But it recently succeeded in routing funds
through a bank on Kish Island.

(S/REL GERMANY) POINTS FOR GERMANY ONLY:

-- (S/REL GERMANY) (THE FOLLOWING INFORMATION SHOULD BE
DELIVERED VERBATIM.) We have further information on the
transaction mentioned above for Germany only that North
Korea's Green Pine Associated Corporation was to receive
almost $4 million in late December and early January 2007.
Iranian banks in Hamburg, Germany, Kish Island and Tehran
facilitated the transaction. We do not have further
information to share regarding the specific bank in Hamburg.
Bank Sepah was also involved in facilitating the transaction.
This payment could be related to North Korea's sale of
military-related goods. Green Pine in Iran received the
payment in an account established in the name of the North
Korean Embassy in Iran, likely in an attempt to conceal its
identity and avoid scrutiny.

- POINTS FOR GERMANY AND FRANCE:

-- (S/REL GERMANY, FRANCE) We are concerned about the
transfers between Iran's Bank Sepah and North Korea's Green
Pine, which have previously been involved in military-related
transactions. These transfers could be in violation of or
designed to circumvent measures imposed in UNSCRs 1737 and

1747. As such, UN Member States may be required under these
resolutions to prevent or prohibit these transfers and/or
freeze any assets involved.

-- (S/REL GERMANY, FRANCE) As you know, the UN Security
Council unanimously adopted Chapter VII sanctions against
both Iran and North Korea under UNSCRs 1737/1747 and 1718,
respectively. These resolutions aim to limit the
proliferation of WMD, their means of delivery and of major
conventional arms to and/or from these countries.

-- (S/REL GERMANY, FRANCE) In the spirit of our continued
non-proliferation cooperation, we urge your government to
investigate North Korea's and Iran's financial transactions
through your jurisdiction and to take steps to prevent
illicit or proliferation-related transactions, including by
freezing any accounts held or transactions conducted in
support of proliferation activities.

-- (S/REL GERMANY, FRANCE) We look forward to working with
you on this and other related security and
counter-proliferation matters, and are prepared to provide
additional assistance as appropriate.

End background/non-paper for Germany and France.


5. REPORTING DEADLINE AND POINT OF CONTACT:(U) Appreciate
Post's assistance. Please report delivery of the U.S.
non-paper and any immediate response within seven (7)
business days of receipt of this cable. Please slug replies
for ISN, T, TREASURY, NEA, EUR and EAP. Questions may be
directed to ISN/CPI, Kevin McGeehan at mcgeehankj@state.gov
or 202-647-5408.
RICE