|08VIENNA1717||2008-11-24 12:31:00||SECRET||Embassy Vienna|
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S E C R E T SECTION 01 OF 03 VIENNA 001717
1. (S) SUMMARY. Embassy followed up again with GOA and
Raiffeisen officials to press for strong implementation of
Iran recommendations. GOA reps say Austria already
virtually all of the measures in Ref A demarche. Raiffeisen
us recent data they believe support their assertion that the
bank's Iran business is modest and shrinking. Raiffeisen
signaled its reluctance to take any additional measures. END
2. (S) Following ref B meetings, Econ Chief met with MFA
Head Dr. Marcus Bergmann to review GOA implementation of FATF
recommendations and the measures advocated in Ref A demarche.
Speaking also for the Austrian MinFin, Bergmann detailed how
GOA has implemented each measures on its own or via EU
regulations adopted at the November 10 GAERC.
GOA REPLIES KEYED TO REF A DEMARCHE:
A) Require financial institutions (FIs) to identify
and beneficial owners (...)
GOA REPLY: Already in place via Federal Banking Law article
B) Require FIs to review, and if necessary, terminate
existing correspondent account relationships based upon a
risk assessment (...)
GOA REPLY: Already in place via Federal Banking Law articles
C) Enhance reporting requirements for financial
transactions involving Iran, including requiring systematic
reporting of transactions (...)
GOA REPLY: Now in place via EU regulations implementing that
August 2008 Common Position
D) Restrict financial transactions with Iran or persons
GOA REPLY: Same as C)
E) Deny any requests by Iranian banks to establish a
subsidiary, branch, or representative office in the host
GOA REPLY: There is no such presence in Austria and the FMA
exercises stringent oversight before issuing any license,
it "highly unlikely" that Iranian banks could establish a
presence in Austria.
F) Deny requests by Iranian FIs to enter into joint
ventures with or purchase a controlling stake in any host
financial institution (...)
GOA REPLY: Same as E)
G) Warn those commercial sectors with significant
ties with Iran that transactions with individuals or entities
from Iran have a heightened risk of money laundering or
GOA REPLY: Austrian authorities sent written warnings to
and commercial associations in March and October 2008,
instructing them to warn member firms of the risks in dealing
with Iranian customers. The FMA has also made informal
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representations as banking supervisor.
H) Place existing Iranian branches and subsidiaries in
UK, France, Germany and Rome under the control of relevant
competent authorities (...)
GOA REPLY: n/a
3. (S) On Raiffeisen's Iran business, Bergmann said the GOA
contacted RZB following ref A demarche, advising them to be
forthcoming with US authorities. Bergmann opined that a
dialogue between USG and Raiffeisen continues to be the
Raiffeisen: We're Small Fry / Iran Business Shrinking
4. (S) On November 14, Ambassador, DCM, and Econ Unit Chief
with Raiffeisen Zentralbank (RZB) General Counsel Friedrich
Sommer (a regular interlocutor) at the Embassy to reiterate
concerns and seek updated data on Raiffeisen's Iran business.
The Ambassador emphasized that the USG remains very concerned
about that business, and that RZB continues to run serious
5. (S) Sommer presented a data table (PROVIDED TO TREASURY/J.
BURKE) on RZB's recent business with Iran, stating that "we
to convince you that RZB is not a big player" with Iranian
and that recent controls are showing effects. RZB's Iran
financing business has declined considerably, Sommer said.
November 7 only EUR 153 million was outstanding (NOTE: in
RZB issued a total of EUR 692 million in import/export
credit/collections for Iran-related business). Its
financing is tiny: EUR 9 million as of November 7. In
2007, RZB handled payment transactions of about EUR 200
Sommer stated that this represented a decrease from recent
months, but could not say how much. Embassy reps asked
whether RZB could provide more detailed data on its
payments/correspondent business (such as a comparative time
series), as this was a key element of USG concerns. Sommer
the request under advisement.
6. (S) Sommer distinguished between RZB's payments business
its money market accounts for Iranian customers, saying that
latter should not elicit controversy. Like others, Iranian
seek good returns on their Euro-denominated assets so their
account balances fluctuate based on market conditions.
Particularly given the financial crisis, RZB is not inclined
turn away legitimate depositors seeking a market rate of
With respect to other lines of business, however, Sommer said
would like to hear our remaining concerns, if any.
7. (S) Sommer reviewed RZB's record of engagement with the
and expressed confidence that the bank's internal measures
implemented this past summer would continue to keep its Iran
business in check. The bank had signaled to its Iranian
customers that it would not become their sole partner in
for payments and is exercising extreme scrutiny.
Raiffeisen to Lobby GOA
8. (S) In a follow-up conversation with DCM, Sommer indicated
that RZB is likely to stay its current course. He said that
Raiffeisen International CEO Herbert Stepic would soon engage
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Austrian MFA and FinMin on the recent USG demarche. In
to DCM's question, Sommer stated that Raiffeisen would
providing more detailed payments data (para 5), as "this
a violation of Austrian bank secrecy laws."
9. (S) COMMENT: Stepic, a heavyweight in the Austrian
world, will undoubtedly convey Raiffeisen's "frustration"
U.S. pressure and seek GOA support in pushing back against
requests. END COMMENT.