A number of Chinese, Middle Eastern and western banks that provided banking services to Iran’s energy and industrial sectors helped Tehran circumvent sanctions to keep its economy afloat, the Wall Street Journal reported citing corporate documents.
The services allowed Iran to direct funds toward its economy which has been crippled by sanctions and to resist American pressure aimed at restricting Tehran’s nuclear program.
According to western diplomats, intelligence officials, corporate documents and bank statements, Iran has bank accounts through a range of proxy companies, foreign exchange companies and intermediaries, the WSJ reported.
The amount of money they collectively deal with by engaging in trade that is prohibited under US sanctions is estimated at tens of billions of dollars annually.
Tehran reportedly developed this network as early as 2011 for the purpose of devising a plan that helps it evade sanctions, according to diplomats, officials and senior Iranian officials.
Banks involved in providing services to this network which engaged in trade on behalf of Iranian exporters include HSBC Holdings PLC and Standard Chartered PL, the WSJ reported.
After the nuclear deal with Iran collapsed in 2018, then-President Donald Trump re-imposed sanctions on Tehran, hence banning international banks from managing Iranian companies’ accounts.
However, thanks to its network of front companies and intermediaries, Tehran managed to circumvent sanctions while negotiating to revive the nuclear deal aimed at curbing its nuclear program.
Talks, however, have stalled, and last week, the US imposed sanctions on Iranian petrochemical producers as well as Chinese and Indian brokers in an attempt to increase pressure on Iran and overcome the deadlock in negotiations.
According to the WSJ report, the network set by Iran uses foreign exchange companies to establish front companies and open bank accounts on behalf of Iranian companies, thus allowing the latter to sell their products, such as oil, to foreign buyers.
“Iranian importers then use those funds to pay for goods the country needs to keep the economy afloat. An electronic clearinghouse run by Iran’s central bank settles those currency trades between Iranian exporters and importers,” the report said.
There is, however, no evidence that international banks are complicit in this activity, western intelligence officials said, but “senior bank compliance officers said companies registered outside of Iran that secretly maintain bank accounts for Iranian companies could escape controls meant to catch money laundering.”