BERMUDA DIRECTS BERMUDA FIRMS TO CEASE DOING BUSINESS WITH

UNCLAS HAMILTON 000014 SIPDIS SENSITIVE INL; SCT; EEB JUSTICE FOR AFMLS,CIA,OPDAT TREASURY FOR FINCEN (BEZEK AND MICHAEL); EUR/WE (MARBURG AND ABBASZEDEH); EUR/PPD (MCMANIS AND PIPKIN); LONDON (HUBER AND M. JOHNSON); E.O. 12958: N/A TAGS: EFIN KTFN KCRM PGOV PREL BD SUBJECT: BERMUDA DIRECTS BERMUDA FIRMS TO CEASE DOING BUSINESS WITH THE ISLAMIC REPUBLIC OF IRAN SHIPPING LINES Summary ¶1. (U) The Government of Bermuda (GOB) has taken expeditious and concrete steps to comply with international sanctions against Iran with the passage of new legislation and directives that strengthen Bermuda's Anti-Money Laundering/Anti-Terrorist Financing (AML/ATF) regime. On January 15, 2010, the Minister of Justice issued an Order specifically prohibiting Bermuda financial firms from doing business with the Bank Mellat and the Islamic Republic of Iran Shipping Lines (IRISL). The Minister stressed that Bermuda is committed to complying with international AML/ATF standards. End summary. ¶2. (SBU) In December the U.S. Treasury Department contacted the Consul General seeking action from Bermuda with respect to business transactions involving the Islamic Republic of Iran Shipping Lines (IRISL). IRISL had obtained insurance through a company legally domiciled in Bermuda - the South of England Protection and Indemnity Association (SEPIA). The Consul General immediately contacted the Bermuda Monetary Authority (BMA) and the National Anti-Money Laundering Committee (NAMLC), who indicated that the GOB was fast-tracking passage of the Anti-Terrorism (Financial and Other Measures) Amendment Act 2009 (Amendment Act),and that implementation was a priority. Minister of Justice Kim Wilson noted that the GOB had been working with the U.K.'s HM Treasury on the legislation. ¶3. (SBU) The GOB passed the Amendment Act on December 19, with effect from January 13, 2010. The Act authorizes the Minister of Justice to restrict financial firms in Bermuda from doing business with entities connected with jurisdictions of concern regarding money laundering, terrorist financing or the proliferation of chemical, biological, radiological and nuclear (CBRN) weapons. On January 15, 2010, in conjunction with that act, which parallels Schedule 7 of the UK Counter Terrorism Act 2009, and at the request of the U.S. Treasury Department, the Minister of Justice issued the "Anti-Terrorism (Financial Restrictions Iran) Order 2010" (Order). Effective immediately, the Order prohibits all AML/ATF-regulated financial institutions or insurers from entering into, or continuing to participate in, any transaction or business relationship with "designated persons," specifically the Bank Mellat, the IRISL, or any branch thereof. Wilson explained to the Consul General that Bank Mellat was not conducting business in Bermuda, but indicated Bermuda would follow the U.K.'s lead and include it in the Order. The Order provides seven days for businesses to wind up existing contracts. ¶4. (U) Minister of Justice and Attorney General Wilson publicly stated on January 15 , "In the past, financial institutions have been prohibited from doing business with certain persons and entities as a result of international sanctions, but this is the first time that we have been able to take this type of action to protect the national interests of Bermuda. Further, this legislation allows us for the first time to specifically take action to address matters relating to the financing of the development of nuclear and other such weaponry for destructive purposes." Speaking on behalf of the BMA, William Kattan remarked, "The action taken by the Attorney General's office to restrict Bermuda based companies from conducting business with Iranian Bank Mellat and the IRISL is a clear demonstration of Bermuda's commitment to follow through on its new anti-money laundering, anti-terrorism financing framework. SHELTON