IRAN,S USE OF EDBI TO EXPAND ITS WORLDWIDE

S E C R E T SECTION 01 OF 03 STATE 120453 SIPDIS E.O. 12958: DECL: 11/20/2019 TAGS: EFIN ETTC KNNP IR PINR PARM PREL SUBJECT: IRAN,S USE OF EDBI TO EXPAND ITS WORLDWIDE BANKING RELATIONSHIPS REF: A) QUITO 000943 Classified By: Classified by: ISN Acting A/S Vann H. Van Diepen, for reasons 1.4 (b) and (d). ¶1. (U) This is an action request. Please see paragraph 3. -------------- SUMMARY/BACKGROUND -------------- ¶2. (S//REL BRAZIL, ECUADOR, KENYA, SOUTH AFRICA, UGANDA, SINGAPORE, UAE) As responsible countries around the world have decided to reduce their exposure to the proliferation-related activities of Iran and its banks, Iran has sought to find new routes to maintain its access to the international financial system. Iran has used the Export Development Bank of Iran (EDBI) as the driver for this effort. We urge countries that have been contacted by EDBI to resist these overtures and to reduce the threat to their financial systems posed by engaging in relationships with Iran's financial institutions. -------------- OBJECTIVES/ACTION REQUEST -------------- ¶3. (C) This cable is intended to provide specific guidance to address concerns we have regarding EDBI's activities in these jurisdictions. A more robust cable addressing all aspects of our concerns with Iran's nuclear program will be sent to a much larger group in the near term. These messages could be combined in delivery, if appropriate. Washington requests Posts pursue the following objectives: -- Deliver the non-paper in paragraph 4 regarding EDBI's search for new markets. -- Emphasize the risks involved with doing business with EDBI and EDBI-affiliated entities. -- Deliver country-specific points about EDBI's expansion efforts. -- Note UNSCR 1803's call to exercise vigilance against all Iranian financial institutions. -- Emphasize the Financial Action Task Force's (FATF) call for the implementation of countermeasures to protect States from the risk arising from Iran's lack of anti-money laundering/countering the financing of terrorism (AML/CFT) controls. -- Urge host governments to take appropriate actions to resist these overtures and to reduce the threat to their financial systems by ending relationships with Iran's financial institutions. -------------- BACKGROUND AND NONPAPER -------------- ¶4. (S//REL BRAZIL, ECUADOR, KENYA, SOUTH AFRICA, UGANDA, SINGAPORE, UAE) We would like to raise concerns about the activities of the Export Development Bank of Iran (EDBI) in your jurisdiction. -- As responsible countries around the world have decided to reduce their exposure to the proliferation-related activities of Iran and its banks, Iran has sought to find new markets for its transactions. Iran has used EDBI as the driver for this effort. BEGIN POINTS FOR UGANDA ONLY: STATE 00120453 002 OF 003 ¶2009. These statements cautioned that Iran's lack of engagement and failure to address its lack of AML/CFT controls represents a serious threat to the integrity of the international financial system. FATF urged all jurisdictions to advise their financial institutions to give special attention to business relationships and transactions with Iran, including Iranian companies and financial institutions. FATF also called on members to take into account Money Laundering/Financing of Terrorism (ML/FT) risks when considering requests by Iranian financial institutions to open branches and subsidiaries in their jurisdiction. If Iran does not take concrete steps to address FATF's conc erns, FATF will consider calling on its members to strengthen countermeasures in February 2010. -- We are concerned that the establishment of new Iranian-affiliated banks or the expansion of economic ties could open new financial avenues for Iran's proliferation-sensitive transactions. We urge you to halt any negotiations and terminate any agreements for the establishment of Iranian-affiliated banks in your jurisdiction to prevent the facilitation of payments that circumvent UNSCRs 1737, 1747, and 1803. -- We look forward to continuing to work with you on this and other related security and counterproliferation matters, and are prepared to provide additional assistance as appropriate. -------------- REPORTING DEADLINE -------------- STATE 00120453 003 OF 003 ¶5. (U) Post should report results within 14 business days of receipt of this cable. Please slug replies for ISN, T, TREASURY, INR and NEA. Please use the caption SIPDIS in all replies. -------------- POINT OF CONTACT -------------- ¶6. (U) Washington point of contact for follow-up information is Kevin McGeehan, ISN/CPI, (202) 647-5408. ¶7. (U) Department thanks Posts for their assistance. CLINTON