UAE Central Bank on Afghanistan, Iran

S E C R E T ABU DHABI 000029

NOFORN
SIPDIS

E.O. 12958: DECL: 2035/01/24
TAGS: PGOV PREL PTER EFIN AF AE IR YM
SUBJECT: UAE Central Bank on Afghanistan, Iran

REF: 09 ABU DHABI 783

CLASSIFIED BY: Richard Olson, Ambassador, State Department, Embassy
Abu Dhabi; REASON: 1.4(B),(D)

STATE FOR S/SRAP, SCA, AND NEA/ARP

TREASURY FOR U/S LEVEY, A/S COHEN



AMB DCM POL ECON USLO DAO POLM




1. (S/NF) Summary. On 12 January 2010, Treasury Department
Assistant Secretary David Cohen met with UAE Central Bank Governor
Sultan bin Nasser al Suweidi. Governor Suweidi and Cohen discussed
options for additional cash movement controls with respect to
Afghanistan and Pakistan and the status of sanctions targeting
Iran. End Summary.




2. (S/NF) Cohen identified the UAE's lack of outbound cash
declaration regulations as a strategic gap in the UAE's ability to
detect and disrupt illicit finance activity, including possible
funds moving from the UAE to the Taliban in South Asia. Governor
Suweidi agreed that the UAE needs to do something on outbound cash
and said that the Central Bank had "done its work," suggesting that
the ultimate decision making authority on the issue rests outside
his institution. The Governor offered to raise the issue with UAE
Foreign Minister Shiekh Abdullah bin Zayed al Nahyan and encouraged
Cohen to do the same (NOTE: In an earlier meeting Cohen and SRAP
Holbrooke raised the issue with Shiekh Abdullah. END NOTE.)




3. (S/NF) Cohen asked Governor Suweidi about UAE-based money
service businesses (MSBs) that transfer money to or from
Afghanistan. The Governor explained that some UAE-based MSBs
maintain offices in Afghanistan. He said that in the UAE, these
MSBs usually employ Afghan nationals to service the local Afghan
labor and merchant community. He said that the UAE Central Bank is
interested in mapping out the UAE MSBs servicing Afghanistan.




4. (S/NF) Governor Suweidi expressed concern that there is a lack
of controls on MSBs in Afghanistan and suggested that the U.S. and
the UAE work with the Afghans to improve their regulatory oversight
of MSBs. He recommended that the UAE, with U.S. support, bring some
Afghan regulators to the UAE for training and capacity building. He
suggested a process where the UAE and Afghanistan could match MSB
reporting records and then jointly implement controls. Governor
Suweidi requested that Cohen propose a work plan describing how the
U.S., UAE and Afghanistan can work together to improve controls on
MSBs transferring funds to and from Afghanistan.




5. (S/NF) Cohen inquired about the status of Persia International
Bank (PIB),an Iranian financial institution resident in the Dubai
International Financial Center (DIFC). Governor Suweidi said that
the UK authorities want to get rid of PIB's UK headquarters and
asked the bank to secretly move its entire operation and assets to
the DIFC. The Governor shared that he warned the DIFC not to fall
for the "trick of BCCI." (NOTE: According to the Governor, in 1990
the UK encouraged the UAE to take in BCCI prior to the collapse of
infamously toxic financial institution. END NOTE.)




6. (S/NF) Governor Suweidi said that the UAE rejected any transfer
of assets or records from PIB's UK headquarters. He said that when
the UK pulls the plug, so will the DIFC, adding "the day of
slaughtering PIB has come very close." He said if the UK does not
act, the UAE will continue to resist transactions, but the UAE will
otherwise be restricted in what it can do.


7. (S/NF) With respect to Bank Melli and Bank Saderat branches in
the UAE, Governor Suweidi said that the Central Bank is monitoring
all transactions over a certain limit, with inspectors ensuring
that the banks are in compliance with international sanctions.




8. (S/NF) Governor Suweidi said that Emirates NBD's exposure to
Iranian accounts was being reduced. He stated that the accounts
that Emirates NBD maintained were for non-sanctioned Iranian banks.
The Governor said he emphasized with the bank concerns regarding
IRISL, but noted to Cohen that letter of credit activity for IRISL
shipments remained a complicated issue as the UAE facilitates much
legitimate trade with Iran, such as food, medicine and consumer
products. He expressed concern over U.S. preference for wholesale
bans against IRISL ships and letters of credit. He encouraged the
U.S. to be realistic with its allies and be reasonable with respect
to the treatment of IRISL ships.




9. (S/NF) The Governor pointed to several situations where the UAE
has taken aggressive unilateral measures, and been left stranded
and exposed after the U.S. and the international community lost
interest. He specifically mentioned the frozen accounts of the
Somali Barakat exchange company, the frozen accounts of Dina Khan
(relative of AQ Khan) and a captured ship currently held in Khor
Fakkan, UAE.
OLSON