US embassy cable - 04AMMAN8401

C O N F I D E N T I A L SECTION 01 OF 02 AMMAN 008401 
 
SIPDIS 
 
E.O. 12958: DECL: 10/06/2019 
TAGS: EFIN, KTFN, KCRM, KFRD, JO, IZ 
SUBJECT: JORDAN'S CENTRAL BANK CONCERNED ABOUT POSSIBLE 
IRAQI MONEY LAUNDERING/TAX EVASION 
 
REF: 10/05/04 JBROUGHNER EMAIL 
 
Classified By: CHARGE D'AFFAIRES, A.I., DAVID HALE, REASON: 1.4 (B & D) 
 
1.  (C)  SUMMARY:  The Jordanian Central Bank and several 
Jordanian and foreign banks here have reported over recent 
weeks attempted cash deposits of large dollar amounts by 
individuals who claim to be operating on behalf of Iraqi 
government entities or contractors operating in Iraq.  The 
CBJ Deputy Governor asked Embassy Amman to investigate 
whether there was official sanction in Baghdad for such flows 
of funds. He was concerned about the potential for illegal 
activity.  He and several bankers reported that no such 
deposits had been allowed.  We have encouraged Jordanian 
officials to be in direct contact with Iraqi authorities, 
while keeping us informed on these potential fraud/money 
laundering cases.  END SUMMARY. 
 
2.  (C)  During the visit of a Treasury delegation in 
mid-September, officials from the Jordanian branch of the 
Lebanese Bank Audi requested a meeting with the delegation. 
The bank's manager said the bank had seen a 
number of individuals attempting to deposit large sums of 
cash in the bank, mainly dollars in large denominations. 
Some of the individuals claimed they are dealing with the USG 
in Iraq.  Both the magnitude and frequency of the attempted 
deposits varied.  The manager said the bank refused to accept 
the deposits, in accordance with the Central Bank of Jordan's 
Know-Your-Client (KYC) guidelines. 
 
3.  (C)  The manager added that he had received a request to 
consider a Letter of Credit for $60 million to pay for 
imports of lentils and milk to Iraq.  He was confident about 
this proposal because it included documentation 
issued by the Iraqi Ministry of Trade and that the Central 
Bank of Iraq had agreed to the proposal.  As confirmed by ref 
e-mail, a proposal was being considered by the CBI and the 
Iraqi Ministry of Trade involving $60 million 
for urgently needed foodstuffs.  Although a shipment of cash 
was considered as one of the possible payment options, the 
transaction never occurred.  On September 29, the CBI 
confirmed to Embassy Baghdad that cash shipments are not 
currently planned (ref).  On October 6 in Amman, visiting 
Iraqi Deputy Minister of Trade Dr. Rashan Fakhri told 
Ambassador Robin Raphel (visiting from NEA/IR) and emboff 
that his ministry had authorized no cash transfers since 
April of this year. 
 
4.  (C)  In late September, Deputy CBJ Governor Mohammad 
Shahin called ECOUNS to ask for guidance in these cases.  He 
said he was regularly receiving inquiries from banks asking 
how to handle these attempted cash deposits.  He 
said those attempting the deposits were Iraqis who claimed to 
be involved with contracts with either the CPA (sic) or the 
Iraqi government.  He, too, was very suspicious of the 
activity and had been telling the banks to continue to apply 
KYC provisions and to accept no cash in large sums without 
clear documentation. 
 
5.    (C)  In one case, Embassy discovered that the CEO of 
Jordan National Bank (JNB) reported that his bank was 
approached within the past ten days by a representative of an 
Iraqi trading company (the Al-Sayeb Company) based in 
Baghdad.  The would-be depositor submitted two six-month old 
letters (shown to emboffs by the banker) on what purported to 
be official U.S. Army stationary, vouching for the company 
and stating that it specialized in constructions, water 
treatment, food products, and serves as an agent for several 
consumer electronic companies.  The letter's masthead read 
"Alpha Company, Second Battalion, 32nd Armored Battalion." 
 
6.  (C)  The would-be depositor asked to set up an account 
with $3 million in cash and provided a September 2004 
letter to the Deputy Director of the CBI signed by the Deputy 
Minister of Defense Brusha Shways, stating that his company 
does business with the IIG, and is authorized to take large 
sums of cash out of the country and deposit it overseas. 
JNB's CEO said that he refused to accept the deposit because 
it did not meet the bank's KYC 
requirements. The CEO was evasive on whether he would have 
accepted the deposit had he known the depositor. 
 
7.  (C)  In a subsequent meeting, the Executive Manager of 
Jordan's Housing Bank related a similar story: at the 
beginning of September, a Housing Bank branch manager was 
approached by an individual claiming to be a contractor to 
the Iraqi Ministry of Defense.  The individual wished to open 
an account at the branch, deposit $3.5 million in cash in the 
account and remit the money out of that account to a bank in 
Eastern Europe.  The branch manager called the Housing Bank 
front office for advice and was told not to open the account. 
 
8.  (C)  ECOUNS subsequently contacted CBJ Deputy Governor 
Shahin to pass him the information provided by Embassy 
Baghdad on the proposed, but not executed, foodstuffs 
arrangement.  ECOUNS told Shahin that the CBI had confirmed 
that no cash shipments were planned at this point and that 
the CBJ would receive official notification should such an 
arrangement ever become necessary.  He urged Shahin to 
coordinate closely with the CBI on these cases, and to pass 
to the Embassy any future cases as well.  Shahin agreed that 
he would instruct Jordanian banks that when they receive a 
potential client wishing to deposit large funds related to 
Iraq that they must first present detailed information, 
including a signed contract specifying the means of payment 
and coordinate with the CBJ before taking action. 
 
9.  (C)  COMMENT:  The CBJ and Jordanian banking officials 
seem to be taking all the right steps with respect to the 
attempted cash deposits we have heard about.  As far as we 
are aware, Jordanian banks are applying the CBJ's 
Know-Your-Client guidelines, with the strong support of the 
CBJ itself.  CBJ Deputy Governor Shahin is clearly concerned 
about these cases and would prefer that any fund transfers 
from Iraq sanctioned by the Iraqi government take place 
through normal wire transfers, if at all possible.  Although 
the CBJ would be willing to consider a cash transfer on an 
emergency, one-off basis, it would require clear sanction and 
documentation from the IIG to fit in the CBJ's comfort zone. 
Since we have been pressing Jordan hard on bank secrecy and 
information-sharing on combating terrorist financing, it 
would be best to keep such cases to a minimum. 
 
10.  (C)  COMMENT (cont.):  In addition, the CBJ Deputy 
Governor's request to the Embassy illustrates that 
communication between the CBJ and the CBI needs to be 
improved.  We will continue to urge the CBJ to enhance its 
direct links with the CBI, while continuing to keep the USG 
briefed.  There may be merit in developing programs organized 
by the Treasury Department or the Federal Reserve Bank to 
promote greater communication and cooperation between Iraqi 
financial authorities and those of Jordan and of other 
neighboring countries. 
 
11.  (U) Baghdad minimize considered. 
HALE