TERRORISM FINANCE: MALAYSIAN QUESTIONS

UNCLAS STATE 135198

SIPDIS

SIPDIS

E.O. 12958: N/A
TAGS: EFIN KTFN PTER PREL MY
SUBJECT: TERRORISM FINANCE: MALAYSIAN QUESTIONS

REF: KUALA LUMPUR 1399


1. Washington agencies appreciate post's dialogue with the
Malaysian FIU and provide the following response keyed to
questions raised by FIU head Jeremy Lee.


2. Post may relay the following response to the GOM:

(1) If a designee,s assets are frozen and he believes his
designation was in error, what legal recourse does he have?

The procedures for requesting de-listing from the U.N. 1267
Committee are explained in section 8 of the 1267 Committee,s
guidelines (most recently updated February 12, 2007 and
available on the Committee,s website,
http://www.un.org/sc/committees/1267). The 1267 Committee
has also published a fact sheet on delisting, which is also
available on the Committee's website.

(2) If a government, i.e. Malaysia, has taken action to
freeze assets pursuant to UNSCR 1267 designation and the
designee challenges the action in a Malaysian court, what
legal basis does the Malaysian government have to support its
action when it does not have access to the intelligence upon
which the designation was made?

This issue would turn on Malaysian law. However, one legal
basis that would support such an action by Malaysia is
Chapter VII of the U.N. Charter, which, as you know, requires
UN Member States to take the necessary measures to carry out
the decisions of the UN Security Council adopted under UNSCR
1267 and related resolutions. We would also encourage you to
seek clarification or additional information from the Member
State that proposed the designation.

(3) What is done with insurance policies which are paid in
full? Does a government interfere with the contractual
relationship between parties?

Paragraph 1 of UNSCR 1735 (2006) requires Member States to
freeze "funds and other financial assets or economic
resources" of designees, "including funds derived from
property owned or controlled, directly or indirectly, by them
or by persons acting on their behalf or at their direction"
and to "ensure that neither these nor any other funds,
financial assets or economic resources are made available,
directly or indirectly, for such persons, benefit, by their
nationals or by any persons within their territory."
Accordingly, UN Member States should block access to any
insurance policy in which a designee has a property interest,
regardless of whether it has been paid in full, and prohibit
payment of claims made on such an insurance policy either
directly or indirectly, or for the benefit of, such
designees.

(4) If a designee falls behind in his mortgage payments due
to the freezing of his assets, does the bank foreclose on his
house? It is possible that the very bank that has frozen his
assets also might hold his now-delinquent mortgage.

UNSCR 1452 permits Member States to notify the 1267 Committee
of their intent to authorize access to frozen assets in order
to cover basic expenses (including mortgage payments). The
procedures for making such a request are explained in section
9 of the Committee,s guidelines (most recently updated
February 12, 2007).

(5) What if a designee is de-listed at a later date?

If a designee is de-listed by the 1267 Committee, the
sanctions required by UNSCR 1267 and related resolutions
would no longer apply to that designee.

(6) If a designee dies, are the funds transferred to his
estate?

UN Member States are required to continue to freeze the
assets of a designee until the designee has been de-listed by
either the Security Council or the 1267 Committee. Death of
a designee does not result in automatic delisting. Only
after the designee has been de-listed would the sanctions
required by UNSCR 1267 and related resolutions cease to
apply. Disposition of the assets would then proceed in
accordance with domestic law.
RICE