DEMARCHE DELIVERED: LEVERAGING FATF STATEMENT ON

C O N F I D E N T I A L BUDAPEST 001099

SIPDIS

STATE FOR INS/CPI/MCGEEHAN, EUR/CE/LAMORE, T, NEA, INR,
EEB/ESC COULTER, S/CT, INL

E.O. 12958: DECL: 11/12/2013
TAGS: PARM PREL EFIN KNNP HU
SUBJECT: DEMARCHE DELIVERED: LEVERAGING FATF STATEMENT ON
IRAN INTO NATIONAL ACTION

REF: A. STATE 115523

B. STATE 121356

Classified By: POL/ECON COUNSELOR ERIC GAUDIOSI FOR REASONS 1.4 (B) AND
(D)


1. (SBU) Embassy delivered ref a demarche to Ministry of
Finance Department of International Relations Head of Unit
Dr. Krisztina Kovacs and Ministry of Foreign Affairs European
Legal Department Head of Unit Szilvia Balasz. Both
ministries were aware of the FATF guidance, and noted the
recent EU adoption of Iran Sanctions legislation related to
UNSCR 1803. The Finance Ministry expects that the Financial
Supervisory Authority will take steps along the lines of
those outlined in the FATF guidance and reftel to protect the
Hungarian financial sector from the illicit finance risk
emanating from Iran, but could not offer anything more
specific. The MOF also expects the Supervisory Authority to
inform banks of the FATF guidance, and to publish the FATF
guidance on its website, which it regularly does with FATF
recommendations (english.pszaf.hu). The MOF and MFA promised
to provide information on additional preventative measures
undertaken relating to the implementation of UNSCR 1803.


2. (U) On November 18, Econoff also delivered ref b
information relating to the Treasury Department revocation of
Iran's U-turn general license to the Ministries of Finance
and Foreign Affairs.


3. (C) Comment: Hungary has been a consistent and reliable
partner in the fight against terrorism finance, but much of
the Finance Ministry's attention is understandably focused on
addressing Hungary's ongoing financial crisis and
implementing the IMF stabilization package. Approximately 80
percent of the banking sector in Hungary is made up of
subsidiaries of foreign banks, primarily from Austria, Italy,
Belgium and Germany. Some of the parents of these banks are
among those identified reftel as providing large volumes of
correspondent banking services to Iranian banks. Post has no
information regarding the volume of correspondent banking
services - if any - provided to Iranian banks by Hungarian
subsidiaries of these banks. End comment.
Foley