SEOUL RESPONSE/ACTION REQUEST: IRANIAN FINANCIAL

S E C R E T SEOUL 001207 SIPDIS STATE FOR ISN/CPI, T, NEA/IR, IO/PSC, EUR/WE, EAP/K TREASURY FOR OFAC E.O. 12958: DECL: 06/18/2033 TAGS: ECON EFIN IR KNNP PARM PTER KS IS UK CH HK SUBJECT: SEOUL RESPONSE/ACTION REQUEST: IRANIAN FINANCIAL PRACTICES AND BANK MELLAT SEOUL REF: (A) SEOUL 650 (B) STATE 30247 (C) STATE 61123 (D) STATE 63929 Classified By: EMIN ANDREW QUINN FOR REASONS 1.4 (B&D). ¶1. (U) This is an action request. Please see para 4. ¶2. (S) On June 17, Ministry of Foreign Affairs and Trade (MOFAT) Disarmament and Non-proliferation Acting Division Director Lee Sang-soo thanked Econoff for the two demarches (in Refs C&D) outlining Bank Mellat's recent proliferation activities in East Asia. He said the Ministry of Strategy and Finance's (MOSF) Foreign Exchange System Division in concert with the Bank of Korea (BoK) would launch immediate investigations into the cases and convey their results to the USG as soon as possible. ¶3. (S) Lee added that MOSF's Foreign Exchange Division had completed a preliminary investigation into the transactions provided in Ref B but had, to date, found no improprieties. Moreover, a MOSF team had visited Bank Mellat's Seoul branch on May 26 to conduct a "strict on-the-spot review" but found no irregularities. During that visit, the MOSF team had strongly warned the Bank's branch head not to engage in any proliferation-related financial activity. ¶4. (S) ACTION REQUEST: To strengthen the ROKG's investigatory work on Bank Mellat and related issues, Lee welcomed an official proposal from the USG to hold a working-level meeting of ROKG and USG Iranian financial experts in Seoul this summer. Lee said such a proposal was likely to be accepted by MOSF and the BoK, since the exchange could help to sharpen investigatory aims and methodologies. Lee noted, however, that while MOFAT supports the idea of an experts meeting and will advocate it vis-a-vis MOSF and BoK, MOFAT prefers that the USG originate the proposal. We recommend that the USG propose such an experts meeting in late July or August, thereby avoiding potential scheduling conflicts with earlier VIP visits that will draw extensively on Embassy resources through mid-July. End action request. VERSHBOW