06MOSCOW12395, TREASURY U/S LEVEY’S MEETING WITH RUSSIA’S FEDERAL

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Reference ID Created Released Classification Origin
06MOSCOW12395 2006-11-09 14:35 2011-08-30 01:44 CONFIDENTIAL Embassy Moscow

VZCZCXYZ0005
PP RUEHWEB

DE RUEHMO #2395/01 3131435
ZNY CCCCC ZZH
P 091435Z NOV 06
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC PRIORITY 5091
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
INFO RHEHNSC/NSC WASHDC PRIORITY

C O N F I D E N T I A L MOSCOW 012395 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR P, E 
STATE FOR EB/ESC/TFS 
STATE FOR FOR EUR/RUS, NEA/FO, EAP/FO 
TREASURY FOR U/S LEVEY, RACHEL LOEFFLER, BAKER AND GAERTNER 
NSC FOR GRAHAM AND MCKIBBEN 
 
E.O. 12958: DECL: 11/09/2016 
TAGS: KTFN EFIN ETTC ECON PTER PREL RS
SUBJECT: TREASURY U/S LEVEY'S MEETING WITH RUSSIA'S FEDERAL 
FINANCIAL MONITORING SERVICE ON NORTH KOREA 
 
Classified By: ECON M/C Pam Quanrud, Reasons 1.4 (b/d). 
 
Summary 
------- 
 
1.  (C) In a meeting on October 24 with Treasury Under 
Secretary Stuart Levey, Federal Financial Monitoring Service 
 
SIPDIS 
(FFMS) Chief Viktor Zubkov said he shared the USG's concern 
about North Korean financial flows.  He recounted how the 
FFMS had investigated information on North Korean entities 
that USG officials had provided in the last year but found no 
evidence of financial relationships with Russian banks. 
Nevertheless, Russia's National Security Council was 
considering the development of a legal basis to freeze 
accounts associated with WMD proliferation.  End Summary. 
 
DPRK Interest in Russian Banks 
------------------------------ 
 
2.  (C) U/S Levey described how the strong action the USG 
took against one of North Korea's favored banks, Banco Delta 
Asia in Macau, had persuaded countries throughout Asia to 
prohibit North Korea's access to their banking sectors.  He 
presented information that indicated North Korean entities 
were trying to use Russian banks to facilitate their illicit 
activities.  U/S Levey observed that fighting proliferation 
financing had been a priority during the 2005 G8 Summit and 
expressed hope that G8 countries would demonstrate leadership 
in cutting North Korea's access to financial markets for 
illicit purposes, regardless of the implementation details 
for UNSC Resolution 1718. 
 
Financial Intelligence Unit 
--------------------------- 
 
3.  (C) Federal Financial Monitoring Service (FFMS, Russia's 
FIU) Chief Zubkov said he was not aware of ongoing financial 
flows going to or coming from North Korea.  He had 
investigated information that Treasury Assistant Secretary 
Danny Glaser provided last year but had discovered no 
accounts or transactions between North Korean entities and 
Russian banks.  Zubkov added that the FFMS receives 
approximately 30,000 mandatory and suspicious transaction 
reports per day.  The scope of the reports is comprehensive, 
covering operations by banks, credit institutions, realtors, 
and foreign exchange houses. 
 
4.  (C) Zubkov said that he shared the USG's concern about 
the origin and destination of North Korean money.  He 
indicated the broader GOR was also interested in the issue, 
and that the National Security Council had been discussing 
forming a legal basis for freezing accounts linked to WMD 
proliferation.  The FFMS could freeze accounts and 
transactions generated by or destined for any of the entities 
on the FFMS-proscribed entities list.  The FFMS had recently 
compiled the 14th edition of its proscribed entities list and 
would publish the 15th edition following the Presidential 
Decree on implementing UNSC Resolution 1718. 
 
5.  (C) Zubkov explained that under any of the following five 
criteria individuals and organizations could be placed on the 
FFMS proscribed entities list. Appearance of an individual or 
organization on a recognized international organization 
designation, such as the UN 1267 Sanctions Committee, 
constitutes the first criteria.  Second, placement on the 
entities list could come as the result of a Russian court 
decision.  Third, the Prosecutor General can identify 
individuals and organizations for inclusion.  Fourth, 
Ministry of Interior investigations serve as a basis for 
inclusion if subsequent court decisions do not dismiss the 
investigation's findings.  Finally, if Russia has a bilateral 
information sharing agreement, with a reciprocity clause, 
then an individual's or organization's presence on the 
counterpart country's FIU list could be sufficient for 
inclusion on the FFMS list.  Zubkov said the FFMS will freeze 
an account associated with a proscribed entity while the 
information is sent to the Prosecutor General for 
investigation.  He noted that the proscribed list stands at 
approximately 4,500 companies, organizations, and individuals. 
 
WMD Proliferators 
----------------- 
 
6.  (C) Zubkov commented that the FFMS has not focused on 
proliferators of WMD, such as the North Korean entities 
 
designated under E.O. 13382.  Apart from the Presidential 
Decree on implementation of UNSC Resolution 1718, freezing 
the financial assets of such entities would most likely be 
undertaken on a case-by-case basis following specific 
information sharing from the U.S.  The current legal 
framework in Russia did not easily lend itself to systematic 
action against these entities.  He expressed hope that U.S. 
and Russian experts could strengthen cooperation on this 
issue and not wait on international decisions before 
determining how to mitigate this threat
. 
 
Comment 
------- 
 
7.  (C) Zubkov appeared genuinely interested in cooperation, 
and acknowledged that information sharing with the USG has 
helped shut down money laundering operations in Russia.  One 
challenge will be to present North Korean account and 
transaction information in suffficient detail to allow the 
FFMS to take action.  We will also urge senior GOR officials 
to make cooperation on the money laundering front a policy 
priority.  End Comment. 
 
8.  (U) This messgae held for Under Secretary Levey's 
clearance. 
BURNS

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