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Cablegate: Designation of Malaysian Bank and Bank Mellat

O 062104Z NOV 09
FM SECSTATE WASHDC
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UNCLAS STATE 115135


E.O. 12958: N/A
TAGS: KNNP EFIN PARM IR

SUBJECT: DESIGNATION OF MALAYSIAN BANK AND BANK MELLAT
CHAIRMAN UNDER E.O. 13382

1. (U) This is an action request please see paragraph
5.

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

2. (U) The United States on November 5, 2009, designated
First East Export Bank (FEEB), a Malaysia-based subsidiary of
Iran's state-owned Bank Mellat, and Iranian national and
chairman of Bank Mellat, Ali Divandari, under Executive Order
(E.O.) 13382 ("Blocking the Property of Weapons of Mass
Destruction Proliferators and their Supporters"). FEEB was
designated for being owned or controlled by Bank Mellat, and
Divandari was designated for acting on behalf of Bank Mellat.
Bank Mellat has facilitated the movement of millions of
dollars for Iran's nuclear program and was designated under
E.O. 13382 on October 25, 2007. E.O. 13382 freezes the
assets of designated proliferators of weapons of mass
destruction and their supporters and prohibits U.S. persons
from engaging in any transactions with them.

3. (U) These designations are consistent with obligations in
UN Security Council Resolutions (UNSCRs) 1737, 1747 and 1803,
which require Member States to freeze the assets of entities
and individuals designated by the UN Security Council or the
Iran Sanctions Committee as being involved in Iran's nuclear
or missile programs, and freeze the assets of entities acting
on their behalf or at their direction. These designations
are also consistent with obligations in Paragraph 10 of UNSCR
1803, which calls upon all Member States to exercise
vigilance over the activities of financial institutions in
their territories with all banks domiciled in Iran, in
particular with Bank Melli and Bank Saderat, and their
branches and subsidiaries abroad, in order to avoid such
activities contributing to the proliferation of sensitive
nuclear activities, or to the development of nuclear weapon
delivery systems, as referred to in resolution 1737 (2006).

4. (U) We want to notify host governments of the basis and
significance of the designations and convey that any entity
in their jurisdiction found to be conducting business with
First East Export Bank and its affiliates and any other
designated entities, or any entity that is owned or
controlled by, or acting for or on behalf of FEEB and its
affiliates, may be subject to designation under E.O. 13382.

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

5. (SBU) Posts are requested to pursue the following
objectives. In doing so, Posts may draw from the press
statement released by the Treasury Department, which can be
found at www.treasury.gov/press/releases/tg355.htm. The
press statement may be passed to host government officials.

-- Inform host government officials of the U.S. designations
under E.O. 13382 of First East Export Bank (FEEB), and Bank
Mellat's chairman, Ali Divandari.

-- Notify host government officials that these designations
are aimed at implementing USG obligations under UNSCRs 1737,
1747 and 1803 and demonstrate that the United States will
continue to implement our existing laws and sanctions against
Iranian proliferation as long as Iran continues its illicit
activities.

-- Note that these designations highlight the dangers of
doing business with Iranian financial institutions, and
provide information that will help financial institutions in
the U.S. and worldwide protect themselves from Iranian
entities that abuse the international financial system to
support and facilitate proliferation activity.

-- Urge host governments to take steps, in accordance with
the measures adopted in UNSCRs 1737, 1747 and 1803 and their
national authorities, to freeze the assets of this entity and
individual, as well as the assets of persons or entities
acting on their behalf or at their direction, or by entities
owned or controlled by them.

-- Note that firms in the jurisdiction of host governments
risk designation under E.O. 13382 if they act or purport to
act for or on behalf of, directly or indirectly, FEEB, or any
other E.O. 13382 designated entity, and/or if they provide,
or attempt to provide, financial, material, technological, or
other support for, or goods or services in support of any
designated entity.

-- Remind host governments that on February 25, 2009, the
Financial Action Task Force (FATF) issued a statement calling
for jurisdictions to impose countermeasures to protect
against the risks posed to the international financial system
by Iran's AML/CFT deficiencies, and to take these risks into
account when considering requests by Iranian financial
institutions to open branches and subsidiaries in foreign
jurisdictions. The United States urges host government
financial regulators to apply extraordinary scrutiny on the
operations of FEEB and all Iranian financial institutions,
consistent with the UNSCRs on Iran and the FATF's guidance.

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

6. (U) Please report delivery of the demarche and any
response within seven days of receipt of this cable. Please
slug replies for ISN, T, TREASURY, EAP and NEA/IR. Please
use SIPDIS caption on all responses.

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

7. (U) Questions may be directed to ISN/CPI Jennifer
Chalmers, 202-647-9715. chalmersja@state.sgov.gov.

8. (U) Department thanks Posts for their assistance.
CLINTON


NNNN


End Cable Text

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