BSP Circular Letter

December 8, 2003 BSP CIRCULAR LETTER TO : All Banks and Non-Bank Financial Institutions Attached is Resolution No. 299 dated 25 November 2003 issued by the Anti-Money Laundering Council relative to the request of the Government of the United States to freeze the assets of the C OMMUNIST PARTY OF NEPAL (Maoist) [CPN(M)] also known as THE UNITED REVOLUTIONARY PEOPLE'S COUNCIL and as THE PEOPLE'S LIBERATION ARMY OF NEPAL . For your guidance and strict compliance. HcSCED (SGD.) ALBERTO V. REYES Deputy Governor RESOLUTION NO. 299 On November 5, 2003, the Government of the United States, through its Embassy in Manila, sent a letter of even date addressed to the Executive Director, Anti-Money Laundering Council (AMLC), relative to the request to freeze the assets of COMMUNIST PARTY OF NEPAL (MAOIST) (CPN(M)) also known as THE UNITED REVOLUTIONARY PEOPLE'S COUNCIL and as THE PEOPLE'S LIBERATION ARMY OF NEPAL. On October 31, the US government announced the designation of the Communist Party of Nepal (Maoist) under U.S. Executive Order 13224 on terrorist financing, and froze its assets accordingly. The United States government does not contemplate forwarding the name to the UN 1267 Sanctions Committee, as it does not appear that this entity is linked to Usama bin Laden and Al Qaida. However, the provisions of UNSCR 1373 require UN member states to freeze terrorist assets without delay and to prohibit their nationals or persons in their territories from financing terrorism. As a charter member of the United Nations and as part of the international coalition against terrorism, the Philippines, through the Anti-Money Laundering Council, must actively support the actions required under the subject UNSC Resolutions. Pursuant thereto, the Council unanimously resolves, as follows: (1) To provide the Supervising Authorities, the Bangko Sentral ng Pilipinas, the Securities and Exchange Commission, and the Insurance Commission, with a copy of the November 5, 2003 letter from the United States; (2) To request the Supervising Authorities to circularize among all covered institutions under their respective jurisdictions, copy of the subject November 5, 2003 letter from the United States; and (3) To require said Supervising Authorities to direct the covered institutions under their respective jurisdictions to submit directly to the Council reports of covered and suspicious transactions, if any, involving the aforenamed terrorist entity in accordance with Sections 7 and 9 of the AMLA, Rules 5.2, 5.3, and 9.3 of the IRRs of the AMLA and other related or applicable rules, regulations, circulars and operating manuals promulgated by the Supervising Authorities. November 25, 2003, Manila, Philippines. (SGD.) RAFAEL B. BUENAVENTURA Chairman (Governor, Bangko Sentral ng Pilipinas) (SGD.) LILIA R. BAUTISTA (SGD.) EDUARDO T. MALINIS Member Member (Chairperson, Securities and Exchange Commission) (Officer-in-Charge, Insurance Commission) November 5, 2003 Atty. Vicente Aquino Executive Director Anti-Money Laundering Council Room 507, EDPC Building BSP Complex, Roxas Blvd. Dear Attorney Aquino: The United States appreciates your government's efforts in support of the war on terrorism. More specifically, we would appreciate the cooperation of the Government of the Philippines in moving to freeze the assets of the Communist Party of Nepal (Maoist) (CPN(M)), also known as the United Revolutionary People's Council and as the People's Liberation Army of Nepal. Shutting off the flow of funds to the party is a vital step in reducing its ability to carryout additional terrorist activities. On October 31, the US government announced the designation of the Communist Party of Nepal (Maoist) under U.S. Executive Order 13244 on terrorist financing, and froze its assets accordingly. The United States government does not contemplate forwarding the name to the UN 1267 Sanctions Committee, as it does not appear that this entity is linked to Usama bin Laden and Al Qaida. However, the provisions of UNSCR 1373 require UN member states to freeze terrorist assets without delay and to prohibit their nationals or persons in their territories from financing terrorism. We hope your government can undertake swift and immediate measures similar to our own to freeze the assets of the Communist Party of Nepal (Maoist). We ask you to check carefully for offices or other assets of this organization in your country. We hope that you will share with us any actions or blocking of assets that you undertake. In addition, we would welcome any information that you would like to share with us regarding the activities of this entity. Sincerely, (Sgd.) Morton Holbrook Economic Counselor Attachments: Talking Points and Background Paper Talking Points The Communist Party of Nepal (Maoist) (CPN(M)) has systematically committed acts of terrorism in furtherance of its extremist goals, as outlined in the background paper. Shutting off the flow of funds to the CPN(M) is important to reducing its ability to carry out additional terrorist activities. Accordingly, the U.S. Government has designated and frozen the assets of this entity Minder U.S. Executive Order 13224 on terrorist financing. A formal public announcement of this designation was made Friday, October 31. We do not contemplate forwarding the name to the UN 1267 Sanctions Committee for inclusion on its consolidated asset freeze list, as it does not appear that this entity is linked to Usama bin Laden, Al Qaida or the Taliban. However, the provisions of UNSCR 1373 require UN member states to freeze terrorist assets without delay and to prohibit their nationals or persons in their territories from financing terrorism. We hope your government can undertake swift and immediate measures similar to our own to freeze the assets of the Communist Party of Nepal (Maoist). We ask you to check carefully for offices or other assets of this organization in your country. We hope that you will share with us any actions or blocking of assets that you undertake. In addition, we would welcome any information that you would like to share with us regarding the activities of this entity. Background Paper The Communist Party of Nepal (Maoist) (CPN(M)) grew out of a faction of the mainstream communist opposition in Nepal. Abandoning electoral competition, the movement began a violent insurgency in February 1996, with the goal of establishing it one-party communist state. The CPN(M) has systematically committed acts of terrorism in furtherance of its extremist goals. These acts include: (1) abduction, torture and murder of numerous Nepalese citizens, including children; (2) the use of bombs and mines to intimidate and terrorize the populace; (3) the extortion of money from the civilian population to finance CPN(M)'s violent insurgency; (4) the acknowledged murder of two U.S. Embassy Nepalese security guards on separate occasions. The CPN(M) has not credibly responded to efforts by the Government of Nepal to establish dialogue and a political process, with the exception of a three-month cease-fire in 2001 and a seven-month cease-fire in 2003, both of which the CPN(M) unilaterally ended and resumed attacks on government forces and civilians. The CPN(M) is led by Chairman Pushpa Kumar Dahal (a.k.a Prachanda), Baburam Bhattarai, and Rama Bahadur Thapa (a.k.a. Badal). The declared aim of the movement is the overthrow, of the legitimate government and constitutional monarchy of Nepal, the establishment of a "people's democracy," and ultimately a communist state. The CPN(M) publicly espouses violence as a means of attaining this goal, and have engaged in thousands of violent actions over the course of their insurgency. They have repeatedly attacked economic and communications infrastructure, including hydropower plants and electric sub-stations, telephone towers and repeater stations, bridges, facilities for potable water, post offices and postal workers, agriculture and food assistance facilities, and commercial enterprises. These violent attacks have heavily damaged economic development in Nepal, eroded socio-economic gains made through international development assistance, and put many communities in danger of severe food shortages.