CHINA'S RESPONSE TO DEMARCHE ON IMPLEMENTATION OF

C O N F I D E N T I A L BEIJING 001252 SIPDIS SIPDIS DEPARTMENT FOR EAP/CM, ISN/CPI, T, NEA E.O. 12958: DECL: 04/02/2018 TAGS: PGOV PREL ECON EFIN ETRD PARM EINV CH IR SUBJECT: CHINA'S RESPONSE TO DEMARCHE ON IMPLEMENTATION OF UNSCR 1803 FINANCIAL PROVISIONS REF: STATE 29096 Classified By: Financial Minister Counselor for Financial Affairs David Loevinger for reasons 1.4 b and d. ¶1. (C) Minister Counselor for Financial Affairs delivered points in reftel March 27 to Tang Xu, Director General of the People's Bank of China (PBOC) Anti-Money Laundering Bureau. Tang responded that over the past two years, the PBOC has increased its attention to interactions between Chinese banks and Iran-related entities. He noted that in October 2007, the PBOC issued an advisory to financial institutions to exercise special due diligence in their transactions with Iranian firms and financial institutions. Tang said the PBOC requires that Chinese financial institutions undertake careful checks on their transactions with Iranian entities, but he pointed out that it is difficult to identify problematic transactions because the structure of businesses and transactions are complex. He explained that when the PBOC receives lists of entities designated by the U.S., it reiterates to Chinese banks the importance of complying with UN and Financial Action Task Force (FATF) resolutions. Specific details on how the PBOC treats entities that are listed by the United States, but not the UN, are best discussed between Treasury Secretary Paulson and PBOC Governor Zhou, he added. Tang noted that the PBOC would welcome technical assistance from the United States to aid PBOC efforts to identify illegal transactions conducted under the guise of international trade. ¶2. (C) POLOFF also presented reftel points March 21 to Xu Wei, Deputy Director of the MFA West Asian and North African Affairs Department's Iran and Turkey Division. Xu said that the Chinese government takes their responsibility on this issue very seriously and seeks to cooperate with other countries to ensure the security of the financial system. He said that China forwards advisories from members of the international community to Chinese banks, and thus all Chinese banks are aware of the concerns of the international community. RANDT