US embassy cable - 05AMMAN4391

C O N F I D E N T I A L SECTION 01 OF 02 AMMAN 004391 
 
SIPDIS 
 
STATE FOR NEA FRONT OFFICE 
STATE ALSO FOR NEA/ELA - BARON/WILLIAMS 
TREASURY FOR GLASER/ZARATE/QUARLES 
TREASURY ALSO FOR OASIA - LOEVINGER/MILLS/DEMOPOULOS 
NSC FOR ABRAMS 
 
E.O. 12958: DECL: 06/15/2015 
TAGS: EFIN, KTFN, ETTC, PGOV, PREL, JO 
SUBJECT: A/S WAYNE,S MEETING WITH JORDAN CENTRAL BANK 
GOVERNOR TOUQAN 
 
 
Classified By: A/DCM Christopher Henzel for Reasons 1.4 (b), (d) 
 
1.  (C)  SUMMARY:  In meetings on the margins of the BMENA 
Trade and Investment Finance Conference held in Amman May 18, 
EB Assistant Secretary E. Anthony Wayne raised with Jordan 
Central Bank Governor Umayya Touqan counter terrorism 
financing and anti-money laundering issues, including the 
Arab Bank case.  At Wayne,s request, Touqan provided an 
update on the CBJ,s requirements that Arab Bank improve its 
procedures.  Wayne then urged Touqan to set a clear deadline 
for the Arab Bank,s compliance.  The CBJ Governor noted the 
importance that the CBJ places on AML/CFT controls and 
expressed his hope that an anti-money laundering law 
currently before Jordan's Parliament would give the GOJ a 
powerful CT tool.  He said that the GOJ is pressing for the 
AML bill's passage and that it is one of the government,s 
"top priorities."  Touqan also gave a broad assessment of the 
Jordanian economy, noting generally good progress with the 
exception of a widening budget deficit.  He remarked that a 
more flexible foreign exchange currency basket was in 
Jordan,s interest but noted it would take some preparation. 
END SUMMARY. 
 
2. (U)  Accompanying A/S Wayne was Charge David Hale, Econ/C 
Richard Eason and Econoffs (notetakers). 
 
CBJ Governor:  Taking the Side of OCC, 
-------------------------------------- 
 
3.  (C)  A/S  Wayne began the meeting with CBJ Gov. Touqan by 
noting that he would be testifying soon on the subjects of 
AML/CFT activity and specifically on the Arab Bank (AB).  He 
noted that he had seen CBJ's correspondence with Treasury on 
AB's worldwide AML controls. 
 
4.  (C) Touqan said that he had been trying to work with 
Treasury and had sent (CBJ Dep. Gov.) Faris Sharaf to 
Washington twice to try to open a channel of communication to 
ensure that efforts of Treasury/US regulators and CBJ were 
coordinated.  Touqan observed that the NBC TV report appeared 
biased and riddled with errors and said that AB was planning 
to sue NBC over it.  He pointed out the difference between 
"taking the initiative" to finance terrorist organizations 
and making transfers to non-blacklisted organizations at the 
request of non-blacklisted account holders (e.g., Saudi and 
multilateral funds). 
 
5.  (C) A/S Wayne noted that much of the congressional 
committee's criticism of AB was that it didn't meet required 
standards for AML CFT compliance in the United States. 
 
6.  (C) Touqan said this was also OCC's criticism; CBJ backed 
it to the hilt.  "AB was complaining that we were taking the 
side of the OCC against them," he said, noting that the CBJ 
was after all a regulator.  AB/NYC's problem was that they 
were not filing enough suspicious action reports (SARs); this 
was because the manager of the NYC branch had taken the 
decision, on his own authority, to limit the number of SARs 
filed.  He shouldn't have had the authority to make a 
decision like that without consulting Arab Bank HQ, Touqan 
opined.  CBJ advised AB to hire a firm to advise them on how 
to keep all branches up to standard and AB has done so, he 
noted.  CBJ would give AB a period of time to upgrade and see 
at the end of that period how they have done. 
 
7.  (C)  A/S Wayne asked if the CBJ had given AB a deadline 
to implement these changes; Touqan said that they had not but 
that this was a good idea.  Wayne reiterated that CBJ should 
do so.  He noted that the continuing civil suits against AB 
would be a continuing source of bad publicity for the bank 
and by extension Jordan's banking sector.  The GOJ needs to 
show its seriousness in cleaning up bank practices. 
 
AML Law one of GOJ,s "Top Priorities" 
------------------------------------- 
 
8.  (C)  Wayne inquired about the pending anti-money 
laundering (AML) law.  Touqan noted that it had taken nearly 
two years to convince even the Cabinet to approve it, as some 
ministers paradoxically thought it would reduce investment 
flows.  Now the GOJ would need to lobby hard with Parliament 
to get it passed.  It would be tough, but it was one of the 
GOJ,s "top priorities", he noted.  Touqan had already heard 
from Parliamentarians the same wrongheaded objections to the 
law on investment grounds; Parliament also thought it would 
violate human rights.  Touqan added that the AML was needed, 
as there was not currently any criminal liability in Jordan's 
legal code for participating in money laundering - only 
administrative penalties. 
 
Economic Priorities 
------------------- 
 
9.  (C) A/S Wayne asked for Touqan's views on Jordan's 
macroeconomic situation.  Touqan noted that in general the 
economy looked good except for the GOJ budget deficit.  CBJ 
had consulted with Minister of Finance Bassem Awadallah on 
this and had come up with three priorities: (1) the GOJ 
needed to reduce staffing - while this is hard to do for 
political reasons, it is necessary, as the vast majority of 
GOJ expenditures go to keep these people employed; (2) 
increase revenues - income tax take is minimal because of 
collection problems; the solution might be a flat tax at a 
reasonable level such that avoidance wouldn't be worth the 
trouble and risk; (3) speed up privatization - recent 
privatizations have taken three years but shouldn't take more 
than three months, he noted. 
 
10.  (C)  In general, the economy seemed to be going well, he 
noted.  CBJ's priority was price stability, of which people 
were now beginning to feel the benefits.  The U.S. should 
take credit for this, he observed. 
 
11.  (C)  Charge inquired about current CBJ thinking on 
exchange rate policy.  Touqan replied that he thought that 
going to a more flexible policy was in the interests of 
Jordan, but that it would require some preparation, as the 
market is very sensitive to perceived weakness in the JD. 
Touqan didn't want to repeat the experience of the Egyptians 
who floated their pound and saw it immediately lose 40 
percent of its value. 
 
12.  (U) A/S Wayne cleared this cable. 
HALE