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Cablegate: Dubai Cites Fatf Iran Statement in Warning To

VZCZCXRO5245
OO RUEHBC RUEHDE RUEHDIR RUEHKUK
DE RUEHC #4230/01 0422133
ZNR UUUUU ZZH
O 112131Z FEB 08
FM SECSTATE WASHDC
TO RUEHDO/AMEMBASSY DOHA IMMEDIATE 8914
RUEHKU/AMEMBASSY KUWAIT IMMEDIATE 2900
RUEHMK/AMEMBASSY MANAMA IMMEDIATE 4017
RUEHMS/AMEMBASSY MUSCAT IMMEDIATE 0246
RUEHRH/AMEMBASSY RIYADH IMMEDIATE 6057
INFO IRAN COLLECTIVE IMMEDIATE
RUEHAD/AMEMBASSY ABU DHABI IMMEDIATE 0034
RUEHRL/AMEMBASSY BERLIN IMMEDIATE 2061
RUEHLO/AMEMBASSY LONDON IMMEDIATE 4915
RUEHFR/AMEMBASSY PARIS IMMEDIATE 7024

UNCLAS SECTION 01 OF 02 STATE 014230

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: KNNP MNUC IR GM UK FR XF ZP AE
SUBJECT: DUBAI CITES FATF IRAN STATEMENT IN WARNING TO
BANKING SECTOR

REF: A. A) ABU DHABI 000028
B. B) ABU DHABI 002026
C. C) STATE 149648

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

------------------
SUMMARY/BACKGROUND
------------------

2. (U) On January 7, 2008, the Dubai Financial Services
Authority (DFSA) issued an advisory to all Senior Executive
Officers of DFSA-regulated firms regarding dealings with
Iran. The U.S. would like to notify the GCC of Dubai's
actions, as well as those by numerous other countries, and
urges other GCC members to issue similar advisories to their
financial institutions.

3. (U) The DFSA advisory was based on the October 11, 2007
Financial Action Task Force (FATF) statement warning of the
risk of doing business with Iranian banks. The FATF
statement cautioned that Iran's lack of comprehensive
anti-money laundering / combating the financing of terrorism
(AML/AFT) regime represents a significant vulnerability
within the international financial system. The FATF advised
that financial institutions should take the risk arising from
the deficiencies in Iran's AML/CFT regime into account for
enhanced due diligence.

4. (U) The DFSA's advisory recommended that firms may need to
review and enhance their existing policies, procedures,
systems, and controls to guard against threats of illicit
activity related to money laundering, terrorist financing and
WMD proliferation financing. The statement specifically
emphasized the need for regulated firms to apply a risk-based
approach to identify high-risk customers, transactions, and
correspondent banking relationships.

5. (SBU) The supervision of the UAE banking and financial
sector falls under the authority of the Central Bank. It
issues licenses to financial institutions and can impose
administrative sanctions for compliance violations. The
Dubai Financial Services Authority (DFSA) on the other hand
has supervisory authority only for financial institutions
operating in the Dubai International Financial Center (DIFC)
a financial free zone exempt from UAE civil, but not criminal
laws. Please note that neither the UAE Central Bank, nor any
other regional central bank, have issued similar statement to
avoid angering Iran or any domestic constituents.

-------------------------
OBJECTIVES/ACTION REQUEST
-------------------------

6. (U) Washington requests Posts approach appropriate host
government officials in the foreign affairs and financial
ministries and pursue the following objectives:

For Embassies Riyadh, Manama, Kuwait City, Muscat, Doha:

-- Notify the members of the GCC that the Dubai Financial
Services Authority is the most recent financial entity to
issue a statement regarding the deficiencies in Iran's
AML/CFT regime, FATF guidance on the implementation of UNSCR
1737, and FATF guidance on the implementation of financial
provisions of UNSCRs on weapons of mass destruction. The
DFSA joins a host of other regulators that have issued
statements in support of the FATF's warning, including those
from Canada, Germany, Japan, and the United Kingdom.

-- Urge other GCC regulators to follow the DFSA's lead and
issue similar warnings to their financial institutions. In
light of the October 2007 FATF statement, states should
exercise due diligence in ensuring that their financial
institutions guard against threats of Iranian illicit
activity related to money laundering, terrorist financing,
and WMD proliferation financing.


STATE 00014230 002 OF 002


FOR EMBASSIES BERLIN, PARIS, LONDON:

-- Provide additional information to the EU3 on the actions
of Dubai in relation to the threat posed by transactions with
Iranian banks.

FOR EMBASSIES PARIS, LONDON

-- Urge the appropriate authorities to issue similar
statements to their banks and financial entities.

------------------
REPORTING DEADLINE
------------------

7. (U) Post should respond within seven business days of
receipt of cable. Please slug replies for ISN, T, TREASURY,
EUR, and NEA. Please include SIPDIS in all replies.

----------------
POINT OF CONTACT
----------------

8. (U) Washington point of contact for follow-up
information is Kevin McGeehan, ISN/CPI, (202) 647-5408,
mcgeehankj@state.sgov.gov.
RICE

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