FOLLOW UP WITH ROKG ON FATF STATEMENT ON IRAN

UNCLAS SEOUL 002278

SIPDIS

STATE FOR ISN, EAP, T, TREASURY, NEA, INR, EEB, S/CT, INL

E.O. 12958: N/A
TAGS: EFIN KNNP PREL PARM KS IR
SUBJECT: FOLLOW UP WITH ROKG ON FATF STATEMENT ON IRAN

REF: A. STATE 121356

B. STATE 115523


1. (U) This is an action request. Please see paragraph 6.


2. (SBU) On November 18 econoff called on Lee Sang Soo,
First Secretary in MOFAT's Disarmament and Nonproliferation
Division, to deliver demarche (Ref A). Lee pledged to
deliver the demarche to KoFIU and was pleased to hear tha
econoff would be meeting with KoFIU directly. Lee added that
he had delivered to Korea's Financial Intelligence Unit
(KoFIU) the previous nonpaper (Ref B) concerning the FATF
statement on Iran's anti-money laundering and
counter-terrorist finance (AML/CFT) regime and 1803
implementation guidance but had received no response. He
noted Korea's interest in working together on Iran but
emphasized KoFIU's and the Ministry of Strategy and Finance's
(MOSF) responsibility for the issue


3. (SBU) Deputy EconCouns and econoff followed up with a
call on KoFIU, visiting Director Lee Young Jick and Deputy
Director Lee Kwi Woong in the Planning & Administration
Office on November 24. Both men were interested in the U.S.
position and listened attentively to the demarche. Director
Lee stated that KoFIU had already taken appropriate measures
in response to the October 16 FATF statement on Iran. KoFIU
had translated the statement and sent it to Korean financial
institutions, asking that they enhance due diligence for the
six countries cited in the statement. Deputy Director Lee
also noted that Korea seeks to implement all FATF guidelines.
He further noted that the ROKG currently has observer status
within FATF and will receive the first draft report on its
potential membership from FATF in February 2009. KoFIU
expects to receive a final decision on its status in June.
Director Lee said that it is KoFIU's principle to comply with
global AML/CFT standards and that MOSF had already sanctioned
Iranian banks in Korea. He noted that this was not a trivial
accomplishment given South Korea's continuing commercial
relationship with Iran.


4. (SBU) Referencing FATF's recent guidance on UNSCR 1803
implementation, Deputy Director Lee disclosed that KoFIU has
limited authority with regard to AML/CFT implementation but
implementation of UNSCR 1803 and proliferation of WMD is
currently beyond KoFIU authority because KoFIU is statutorily
focused on money laundering and counterterror finance.
Consequently, KoFIU is in consultations with MOSF and the
Ministry of Legislation to determine the scope of KoFIU's
authorities and the extent to which it can take action.
Director Lee repeated that KoFIU had acted in response to the
FATF statement on Iran but will consider if there are other
appropriate measures to take. Director Lee raised the
following questions:

-- Does the United States' Finance Center have the authority
with regard to WMD and chemical/biological weapons cases?

-- Given UNSCR 1803 recommendations, why did the U.S. allow
Iran to have a U-turn general license prior to November 6?

-- What specific actions does the USG want Korea to take with
respect to specific Iranian activities?


5. (SBU) Post will pursue the issue with MOSF's Foreign
Exchange Policy Division.


6. (U) ACTION REQUEST: Post requests Department guidance
with respect to the three questions contained in paragraph 4.























STEPHENS