VZCZCXRO8247
RR RUEHAG RUEHROV
DE RUEHTH #1453/01 2911408
ZNY CCCCC ZZH
R 171408Z OCT 08
FM AMEMBASSY ATHENS
TO RUEHC/SECSTATE WASHDC 2650
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHTH/AMCONSUL THESSALONIKI 1957
RUEATRS/DEPT OF TREASURY WASHINGTON DC C O N F I D E N T I A L SECTION 01 OF 02 ATHENS 001453 
 
SIPDIS 
 
TREASURY, EUR, NEA, IO, ISN, T 
 
E.O. 12958: DECL: 10/18/2018 
TAGS:              
SUBJECT: EEB DAS HENGEL DISCUSSES BANK SADERAT AND NEW 
AML/TF LAW WITH BANK OF GREECE 
 
REF: A. ATHENS 819 
      B. ATHENS 1109 
 
Classified By: 
Classified By: Deputy Chief of Mission Deborah McCarthy for 1.4 (b) and 
 (d) 
 
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Summary 
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 1. (C) During a meeting with EEB DAS for Energy, Sanctions 
and Commodities Doug Hengel on October, 14, Bank of Greece 
Director of Bank Supervision Panagiotis Kyriakopoulos 
outlined the measures the Bank of Greece is taking against 
Iranian Bank Saderat.  Kyriakopoulos indicated that while the 
Bank of Greece is actively monitoring Bank Saderat,s 
activities in Greece, most are letters of credit that involve 
transactions originating and ending in entities outside of 
Greece.  This makes it difficult to verify if the items 
listed in the transaction recordQQ% !!!QQ!Q!   @! !$o 
emphasized that suspen$!"! Q! ( QQQ$Q!QQQ !!tivities in 
Greece woQQQ Q!QQQQ! Q$!QQQ!$ !!Qaon by the MFA in the 
!"QQ % !  ! QQQ(!QQQQ!!ch of Greek banking laQ !Q$QQ 
Q$ Q  Q(!"Q  Finally, Kyriakopoulos sh!Q$$ (QQ Q!!Q "QQ 
@Q%ece,s new anti-money laund%Q)Q QQQQ!Q)QQ  ) Q"!e law, 
which he thinks )Q QQQQQ !!QQ !  Q!%Q"ut will require 
poliQ(!  QQQ$ Q !!Q Q$!"QQ End Summary. 
 
-------!!!!Q$!!!Q$!!!Q$%!!Q$$!!--------- 
The Monitori !" B   QQQQQQ AQdinues 
-----------------QQ%%QQQ$!$%%!!%%%%!%%%% 
 
 2. (C) Kyriakopoulos Q% !QQ$Q "!Q DAQ QQ"!%  and DepEconCouns 
steQQQ(% QQ! QQAQ%QQ  Q@( has taken to monitor QQ%QQQQ!QQQ!!QQ" BQQQ Qader 
scrutinize all Bank Saderat transactions over 50,000 euros 
(see reftels).  As previously reported, BG staff has found 
nothing questionable in either operation and has judged Bank 
Saderat to be in compliance with Greek laws and regulations. 
In addition, BG currently is mandating that Bank Saderat 
provide daily reports and paperwork on all of its 
transactions to BG examiners.  Kyriakopoulos warned again, 
however, that there are limits to the effectiveness of these 
actions for two reasons.  First, the majority of the 
transactions are export letters of credit from countries like 
China and UAE, as well as some European countries.  He 
emphasized that it is therefore important to make sure that 
countries in which transactions are based (i.e. goods bought 
or sold) also vigorously monitor transactions to ensure that 
the listed goods are actually the ones being bought and sold. 
 To this end, the BG representative to the EU on terror 
finance issues is trying to help develop an information 
sharing process among EU countries in situations like this. 
Second, BG staff often is not able to decipher the products 
listed in the transaction reports. 
 
 3.  (C) In response to DAS Hengel,s question on why Bank 
Saderat chooses to run these transactions through its Greek 
branch, particularly when many of the transactions originate 
or end in UAE or China, Kyriakopoulos stated he is not sure 
whether it is lower fees and costs or some other reason.  He 
added that one factor could be pressure from the U.S. and the 
international community that has squeezed the Bank,s 
operations in Europe.  Kyriakopoulos and a member of his 
staff indicated that they have seen a decrease in Bank 
Saderat transactions in recent months.  While he is not sure 
the intense scrutiny paid to Bank Saderat by BG is the cause, 
Kyriakopoulos believes that this attention has forced the 
Bank to be very careful and ensure that all of its 
transactions are within acceptable Greek banking practices. 
When asked what kind of breach the BG would need to see 
before it took stronger action against the Bank or closed it, 
Kyriakopoulos responded that the BG is monitoring its 
activities, but it is not considering closing it.  Short of 
an MFA decision to take action against the Bank, which is 
highly unlikely, BG staff would have to find an egregious 
violation of Greek banking laws and regulations. 
 
--------------------------------------------- ----------- 
The New AML/TF Law: The Proof will be in Implementation! 
--------------------------------------------- ----------- 
 
 4.  (C) Kyriakopoulos told his U.S. interlocutors that he 
thinks the new law is very good and a sign that the Ministry 
of Finance acted to mitigate the damage to Greece,s 
reputation resulting from its poor showing in the June 2007 
 
ATHENS 00001453  002 OF 002 
 
 
Financial Action Task Force (FATF) report.  He noted it is 
incumbent, however, upon the GoG to make sure the law is 
implemented well.  In his opinion, the new law has already 
brought about improvements at the FIU, both through a change 
in leadership as well as new and better trained staff.  BG 
continues to adopt recommendations made in the FATF report, 
including encouraging banks to introduce new IT systems and 
to create risk management units charged with monitoring, 
among other things, bank compliance with Greek AML/TF legal 
provisions. 
 
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Comment 
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 5. (C) Greece,s central bank appears to be seriously 
monitoring Bank Saderat,s activities in Greece, but will not 
take stronger action against the Bank absent a serious breech 
of Greek banking laws.  Bank Saderat may be feeling the heat 
of the BG,s increased scrutiny and adjusting its activities 
through its Greek branch, however.  Closer cooperation with 
other countries in Europe and elsewhere in which Bank Saderat 
export credits originate and end is required to ensure the 
Greek branch is not facilitating terrorism or 
proliferation-related activities in circumvention of UNSCRs 
1737, 1747, and 1803.  While BG employees are experts in the 
world of bank supervision, they have no comparative advantage 
in the area of proliferation and have asked for Embassy 
assistance to decipher technical product jargon used in Bank 
Saderat,s transactions.  The Embassy will continue to work 
with BG staff closely on this issue and may solicit 
assistance from the Department.  End Comment. 
SPECKHARD