SEOUL RESPONSE/ACTION REQUEST: CENTRAL BANK OF

S E C R E T SEOUL 001454 SIPDIS STATE FOR ISN/CPI, T, NEA/IR, IO/PSC, EUR/WE, EAP/K TREASURY FOR OFAC E.O. 12958: DECL: 07/23/2033 TAGS: KNNP IR PREL PARM PINR KS EFIN SUBJECT: SEOUL RESPONSE/ACTION REQUEST: CENTRAL BANK OF IRAN SEEKING RELATIONSHIP WITH INDUSTRIAL BANK OF KOREA REF: (A) STATE 69996 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 July 23, Ministry of Foreign Affairs and Trade (MOFAT) Disarmament and Non-proliferation Deputy Division Director Lee Sang-soo thanked Econoff for the reftel demarche expressing USG concerns about the Central Bank of Iran's (Bank Markazi) efforts to conduct business with the Industrial Bank of Korea (IBK). Lee confirmed that IBK had been in negotiations with Bank Markazi to open a local account for Bank Markazi to facilitate Korea's foreign exchange payments for its crude oil imports from Iran (which currently account for about 9 percent of Korea's total oil imports). ¶3. (S) Lee noted that the ROKG had decided on July 10 to halt the IBK's negotiations with Bank Markazi, with no action taken on the account request. ¶4. (S) ACTION REQUEST: While expressing the ROKG's strong, ongoing commitment to cooperate with the U.S. on Iran-related issues, Lee asked for U.S. guidance on whether the ROKG could proceed in some way to open a local bank account for Bank Markazi to help facilitate future oil transactions with Iran. At present, the ROKG is making payments to Bank Markazi via a German bank located in Germany, but the ROKG would prefer to use a local bank account arrangement similar to the one established by the Japanese government. In particular, the ROKG is seeking USG advice on whether it can allow Bank Markazi to open a local account strictly to receive oil payments and for no other purpose. Please advise on appropriate response. END ACTION REQUEST. VERSHBOW