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ZNR UUUUU ZZH (CCY ADCED7E4 AMG5188-695)
R 291000Z OCT 09
FM AMEMBASSY BEIJING
TO RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHC/SECSTATE WASHDC 6637
INFO RUEHOO/CHINA POSTS COLLECTIVE
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SUBJECT: CHINA/AML: DAS GLASER'S MEETING WITH PEOPLE,S BANK
OF CHINA ANTI-MONEY LAUNDERING BUREAU DIRECTOR GENERAL TANG
XU
1. (SBU) Summary: The People's Bank of China (PBOC)
Anti-Money Laundering Bureau was willing to consider
formation of an anti-money laundering and illicit finance
working group under the framework of the S, PBOC
Anti-Money Laundering Bureau Director General Tang Xu told
Treasury DAS Glaser on October 20. China was still in the
initial stages of development in the areas of anti-money
laundering and illicit finance and appreciated the training
provided by the United States on these subjects in Thailand.
China was continuing to work diligently and was willing to
enhance cooperation with the United States vis-a-vis a
working group, focused on corruption fund outflows. The PBOC
did not show great interest in using the working group to
discuss Af-Pak illicit finance issues, despite a suggestion
by the Chinese Ministry of Foreign Affairs to DAS Glaser to
this effect. DAS Glaser will draft a proposed agenda for an
early 2010 working group meeting, and the PBOC will review
the agenda. End Summary.
Discussion of Cooperation and Proposal for a Working Group
------------------
2. (SBU) DAS Glaser began the October 20 meeting with
Director General Tang Xu of the Anti-Money Laundering Bureau
of PBOC by expressing his appreciation for the discussions
held during the morning session of the October 20 meetings at
Diaoyutai. DAS Glaser noted that there had been many
opportunities to discuss big issues with the Chinese, such as
North Korea and Iran, but there should be a means to discuss
other areas of cooperation on more regular basis. One way
this regular cooperation could take place would be through
the establishment of a working group under the S
framework. DAS Glaser noted that the July S statement
called for China and the United States to strengthen
cooperation on illicit finance issues. Additionally, during
a meeting with PBOC Director General Xie Duo this past summer
in Washington, the idea of a working group had been raised,
and DG Xie had indicated his support for this idea. DAS
Glaser reminded DG Tang of a letter he sent him with specific
information on a proposal for the establishment of a working
group.
China's Development on Anti-Money Laundering and Illicit
Finance Efforts
-------------------
3. (SBU) DG Tang responded that he was familiar with these
issues, had noted the directive in the July S statement,
and had received a report from DG Xie following his meeting
in Washington with DAS Glaser. China was committed to
addressing the issues of money laundering and illicit
finance, but was still in the initial stage of work on these
issues. During this initial stage, China had established
laws and regulations and improved investigation mechanisms.
DG Tang explained that there had been great progress in
2007-2008, PBOC had referred over 40 cases to law
enforcement, involving 100 billion renminbi. DG Tang also
expressed his appreciation for recent training of Chinese
officials conducted by the United States in Thailand on the
subject of complex financial transactions and anti-money
laundering. This training had been extremely useful to the
Chinese banking staff and had increased their level of
expertise in dealing with such problems.
Brainstorming the Structure and Topics for the New Working
Group
--------------------------------------------- ---
4. (SBU) DAS Glaser acknowledged the great progress which
China had made, but noted that there were still areas for
improvement in the United States and China's systems. Both
countries faced similar problems and so creating a regular
working group would allow for collaboration and cooperation.
The United States was open to China's suggestions for how the
group could be structured and was flexible on the topics
which would be discussed. This would not be a group to talk
about North Korea, and would not replace existing mechanisms
for dealing with sensitive issues. Additionally, the United
States Secret Service was prepared to begin work immediately
with China on the issue of counterfeit currency.
5. (SBU) DG Tang inquired what specific areas of discussion
DAS Glaser proposed for this working group. Would
discussions of illicit finance be in terms of corruption,
organized crime or anti-money laundering? How would the
working group function in terms of information exchanges?
Would there be intelligence sharing? He mentioned that
intelligence sharing was already taking place between the
China Anti-Money Laundering Monitoring and Assessment Center
(CAMLMAC) and other countries. However, since there is no
memorandum of understanding on intelligence sharing in this
area with the U.S., PBOC could not commit to this kind of
intelligence sharing.
PBOC Unwilling to Discuss Af-Pak Issues in the Working Group
------------------------
6. (SBU) DAS Glaser said that during a meeting with the
Chinese Ministry of Foreign Affairs (MFA), the United States
had proposed a variety of possible working group topics. MFA
had suggested that the working group could discuss the issue
of illicit finance for the Taliban in Afghanistan and
Pakistan.
7. (SBU) DG Tang rejected the suggestion of using the working
group mechanism to discuss anything related to Afghanistan
and Pakistan, and suggested that Chinese security bureaus
would be a more appropriate partner for that type of
discussion. The PBOC handled money laundering, but not
Afghanistan and Pakistan, or criminal issues such as drug
trafficking.
PBOC Suggests the Topic of Corruption Funds Outflow
-------------------------
8. (SBU) DG Tang raised the issue of corruption funds outflow
as an issue of extremely high concern for the PBOC. Any
mention of the corruption funds outflow issue to the PBOC or
any other Chinese Ministry would be a welcome topic and would
likely generate significant interest. If the proposed
working group discusses corruption flows and illicit funds
flows, then the PBOC would have an interest in participating.
Next Steps and Moving Forward
-------------------------
9. (SBU) DAS Glaser agreed to the suggestion to discuss
corruption funds outflows and offered to draft an agenda for
review by the PBOC, with the intention of scheduling a first
meeting in early 2010in either Washington or Beijing. DG
Tang responded that he would first need to consult with the
Chinese S Coordination office and his PBOC colleagues
before committing to anything.
11. (SBU) DAS Glaser passed a page of information from the
United States Secret Service detailing the necessary
prerequisite for USSS anti-counterfeit training, such as
sample Chinese Yuan notes. The PBOC response and samples
could be passed via David Dollar or Jean-Paul Duvivier in the
U.S. Treasury attache office in Embassy Beijing.
12. (U) The delegation cleared this message.
HUNTSMAN
HUNTSMAN