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The U.S. Department of the Treasury today finalized its proposed rule against the Commercial Bank of Syria (CBS), along with its subsidiary, the Syrian Lebanese Commercial Bank, requiring U.S. financial institutions to terminate all correspondent accounts involving CBS.
The Commercial Bank of Syria is owned and controlled by the Syrian government, a designated State Sponsor of Terrorism since 1979. The Bank has been used by terrorists to move funds and has acted as a conduit for the laundering of proceeds generated from the illicit sale of Iraqi oil.
"The Commercial Bank of Syria has been used by terrorists to move their money and it continues to afford direct opportunities for the Syrian government to facilitate international terrorist activity and money laundering," said Stuart Levey, the Treasury's Under Secretary for Terrorism and Financial Intelligence (TFI). "Today's action is aimed at protecting our financial system against abuse by this arm of a state-sponsor of terrorism."
The Treasury's Financial Crimes Enforcement Network (FinCEN) today sent to the Federal Register the final rule that prohibits any U.S. bank, broker-dealer, futures commission merchant, introducing broker or mutual fund from opening or maintaining a correspondent account for or on behalf of CBS.
In May 2004, the Treasury found CBS to be of "primary money laundering concern" pursuant to Section 311 of the USA PATRIOT Act, and FinCEN issued a notice of proposed rulemaking. No one disputed the grounds for the finding or the need for protective measures.
"As a state-owned entity with inadequate money laundering and terrorist financing controls, the Commercial Bank of Syria poses a significant risk of being used to further the Syrian Government's continuing support for international terrorist groups," Levey added. "The serious risks posed by CBS have not been adequately mitigated by the Syrian Government's limited efforts to address deficiencies in Syria's financial system."
The Syrian Government continues to provide political and material support to Lebanese Hizballah and Palestinian terrorist groups. HAMAS, Palestinian Islamic Jihad (PIJ), and the Popular Front for the Liberation of Palestine (PFLP), among others, continue to maintain headquarters and offices in Damascus, from which their officers issue guidance and direct affairs. In January 2006, the Syrian Government hosted a meeting in Damascus between Iranian government officials and several designated terrorist leaders, including Abdullah Ramadan Shallah of PIJ, Ahmed Jibril of PFLP-General Command, Hassan Nasrallah of Lebanese Hizballah, and Khaled Mishal of HAMAS. The Syrian Government also continues to permit Iran to use Damascus as a transshipment point for re-supplying Lebanese Hizballah in Lebanon.
For more information on the Treasury's May 2004 designation of CBS as a "primary money laundering concern," please visit: http://www.treasury.gov/press/releases/js1538.htm