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IdentifierCreatedClassificationOrigin
08HONGKONG1107 2008-06-18 11:43:00 SECRET Consulate Hong Kong
Cable title:  

IRANIAN DECEPTIVE FINANCIAL PRACTICES - BANK

Tags:   EFIN ECON PARM PTER KNNP HK UK CH 
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1. (S) Economic Unit Chief delivered reftel talking points
to Hong Trade and Industry Department (HKTID) Principal Trade
Officer Billy Au and Hong Kong Monetary Authority (HKMA)
Executive Director of Banking Supervision Arthur Yuen on June
17 and June 18. HKTID's Au was familiar with Hong Kong
company Jetpower Industrial; the company is on the U.S.
Department of Commerce Bureau of Industrial Security (BIS)
unverified list and was previously prosecuted (1993) for
trading in strategic components with Iran. Au promised to
work closely with his counterparts in Hong Kong's Customs and
Excise Department to scrutinize any shipments from Jetpower
Industrial passing through Hong Kong to Iran.



2. (S) HKMA's Yuen noted that his office has been closely
monitoring the activities of Melli Bank, PLC in Hong Kong for
some time and had been communicating with the British
Financial Services Authority (FSA) weekly about Melli Bank
operations in Europe. The announcement June 17 that Europe
would move to restrict Melli Bank's European transactions was
not surprising, said Yuen. HKMA is currently considering its
next steps, but will likely closely follow the lead of the
British authorities, as Melli Bank Hong Kong is a branch of
the British-incorporated bank.



3. (S) Yuen confirmed that HKMA has been conducting regular
inspections of Melli Bank, PLC Hong Kong, officially at
six-month intervals (the shortest period normally allowed
under Hong Kong banking regulations); HKMA has actually been
monitoring Melli Bank's activities even more closely, he
claimed. HKMA officials have noticed a steady decline in
bank assets over the past several months, as scrutiny of
Melli's operations has intensified in Britain and Hong Kong.
We cautioned Yuen to be aware of suspicious companies
possibly moving to other Hong Kong financial institutions as
Melli Bank's activities are restricted.



4. (S) HKMA will follow up on the information provided in
the non-paper and relay any additional information to the
U.S. Consulate in Hong Kong, said Yuen.
Cunningham