Statement by the FATF dated 16 October 2008 regarding Uzbekistan and Iran

Circulars 8/2007 (GW) and 4/2008 (GW)

The circulars 8/2007 (GW) and 4/2008 (GW) informed you about the statements made by the Financial Action Task Force on Money Laundering (FATF), dated 11 October 2007, and 28 February 2008 respectively, regarding deficiencies in the fight against money laundering as well as terrorist financing in Uzbekistan and Iran, and asked you to observe the recommendations of the FATF.

At its plenary meeting on 15-17 October 2008, the FATF re-examined the situation in Uzbekistan and Iran, and ascertained that there has been no significant reduction in the country risk of either country. Please refer to the FATF statement on Uzbekistan and Iran:

Business activities and transactions to and from Uzbekistan and Iran may pose a high risk in terms of money laundering and terrorist financing; the following steps are to be taken to mitigate this risk:

1.

a) Enhanced customer due diligence in business relations and financial transactions by or with natural or legal persons or companies registered in Uzbekistan or Iran, or with a bank account in these countries.

Enhanced customer due diligence requirements are to be put in place with immediate effect regarding business relations and financial transactions by or with natural or legal persons or companies registered in Uzbekistan or Iran, or settled via a bank account held in one of these countries. These include the following requirements in particular:

- In the case of existing business or account relationships with persons, including legal persons and companies, registered in Uzbekistan or Iran, these are to be reviewed again. A joint decision must be made in consultation with the next highest management level on whether the business relationship should be maintained or terminated. The result of this review and the decision made are to be documented.

- Decisions regarding new business relationships are also to be made in consultation with the next highest management level and are to be documented.

- The institution or insurance company must be certain of the origin of the assets it utilises.

- Higher requirements are to be placed on determination of the beneficial owner in accordance with section 1 (6) in conjunction with section 3 (1) no. 3 of the German Money Laundering Act (Geldwäschegesetz – GwG), particularly regarding legal persons and companies. They are to be subject to identification by means of identity documents.

- In case of doubt regarding the customer’s identity, the origin of assets or the identity of the beneficial owner, no business relationship may be established or continued.

b) Enhanced customer due diligence requirements concerning business relations or financial transactions by or with financial institutions registered in Uzbekistan or Iran

Effective immediately, enhanced customer due diligence requirements are to be placed on business relations (particularly correspondent bank relations) and financial transactions by or with financial institutions registered in Uzbekistan or Iran.

I consider it particularly essential to review existing correspondent bank relationships with banks in Uzbekistan and Iran. A joint decision must be made with the next highest management level on whether the business relationship should be maintained or terminated. The result of this review and the decision made are to be documented.

Decisions regarding new correspondent bank relationships with banks in Uzbekistan and Iran are also to be made in consultation with the next highest management level and documented.

Moreover, to prevent banks from Uzbekistan or Iran using correspondent bank relationships with other banks instead, I also consider it necessary to review whether other banks with which a correspondent bank relationship exists maintain a correspondent bank relationship with a bank in Uzbekistan or Iran. If necessary, a decision at a higher level of decision-making on whether to maintain the correspondence bank relationship with the institutions in question is also to be made in consultation with the next highest management level on this matter.

c) Enhanced reporting requirements regarding control and suspicious financial transactions to/from Uzbekistan or Iran

Financial transactions to/from Uzbekistan or Iran

· in which the information on the payer within the meaning of Art. 4 of the Regulation (EC) No 1781/2006 of the European Parliament and of the Council of 15 November 2006 on information on the payer accompanying transfers of funds (name, address and account number) are not included, or

· in which the information on the payer in the wire transfer within the meaning of the Regulation 1781/2006 is incomplete or has been filled out with recognisable boilerplate phrases (e.g. “one of our clients”) or

· an amount of €15,000 or more is shown

are to be thoroughly reviewed. A decision should be made in consultation with the next highest management level as regards reporting a suspicious transaction in accordance with section 11 GwG.

If any information in the above stated cases indicates that money laundering has occurred in a transaction or that it serves to finance terrorism, a suspicious transaction report pursuant to section 11 GwG must always be made.

The results of the review, the measures taken including the decision to report a suspicious transaction in accordance with section 11 GwG, as well as the suspicious transaction report submitted are to be documented.

2. It must be ensured that the above-mentioned measures are also taken by branches and subsidiaries of German institutions and insurance companies abroad.