Iran’s Dirty Banking: How the Islamic Republic Skirts
International Financial Sanctions
By Avi Jorisch
INTRODUCTION
Halting Iran’s progress toward nuclear weapons
appears to be high on the agenda of leaders in the
United States, Europe, and the rest of the international
community. Yet few governments fully grasp how
best to implement sanctions, which are one of the
most powerful tools available if applied correctly.
This is particularly true when it comes to stopping the
flow of illicit funds through the banking sector—an
area in which sanctions can be most effective.
The objective of Iran’s Dirty Bank’s: How the Islamic
Republic is Skirting International Financial Sanctions
is to provide several key pieces of information
regarding Iran’s ability to circumvent UN and U.S.
sanctions via the international financial system:
•
•
A brief description of the sanctions regime
currently in place against the Iranian banking
sector.
A detailed “map” of all Iranian banks, including
those designated by the UN and Washington. The
locations of Iranian banks around the globe are
indicated, along with the currencies they provide
to their clients. Also included is a list of the
international banks that provide correspondent
services to Iranian banks, along with the
currencies used in their transactions. In all of these
cases, bank account information, Society for
Worldwide
Interbank
Financial
Telecommunication (SWIFT) data, and Bank
Identification Codes (BICs) are provided in
detailed charts—in other words, all of the nutsand-bolts identifier information needed to ensure
that banks cease doing business with Iran.
•
A list of U.S. banks that provide services to the
international banks.
UN SANCTIONS
To date, the United Nations Security Council has
passed three resolutions (UNSCRs) targeting Iran’s
nuclear activities: UNSCR 1737 in December 2006,
UNSCR 1747 in March 2007, and UNSCR 1803 in
March 2008. All have expressed “serious concern”
over International Atomic Energy Agency (IAEA)
reports regarding the regime’s nuclear program.
Two of the three resolutions have also made reference
to Iranian financial institutions. UNSCR 1747 enacted
sanctions against Bank Sepah and Bank Sepah
International. The most recent resolution, 1803, called
on all countries to “exercise vigilance” over any
institutions dealing with Iranian banks and their
foreign subsidiaries, in particular Bank Melli and
Bank Saderat. Although the UN did not officially
sanction Melli and Saderat, both banks have been
implicated in illicit international activity.
CURRENT STATUS OF U.S. SANCTIONS
The United States first targeted the Iranian financial
sector in earnest on June 29, 2005, when President
Bush signed Executive Order (EO) 13382. President
Obama has used this order to target additional
Iranian banks. With this measure, Washington has
sought to curb the spread of weapons of mass
destruction by freezing the assets of proliferators and
their supporters, and by barring them from the U.S.
financial and commercial systems. In addition, the
Treasury Department has warned foreign banks and
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companies doing business with Iran that they, too,
could lose access to U.S. markets if they deal with
entities connected to terrorism or the nuclear industry.
U.S. sanctions have had an impact on the Iranian
banking
system—specifically,
by
prohibiting
American institutions from dealing with suspect
Iranian banks, and by convincing international
institutions to sever ties as well. To date, over 80
financial institutions around the globe have either
completely cut off or significantly reduced their
relationship with Iran. Unfortunately, as this report
will make abundantly clear, many institutions
continue to do business with the Islamic Republic,
essentially undermining the overall sanctions effort.
DESIGNATED IRANIAN BANKS
To date, the Treasury Department has designated 14
Iranian banks per EO 13382, charging them with the
use of deceptive financial practices to support terrorist
groups and the nuclear program:
• Bank Sepah (Iran)
• Bank Saderat (Iran)
• Bank Melli (Iran)
• Bank Melli Iran ZAO (Russia)
• Melli Bank PLC (United Kingdom)
• Bank Mellat (Iran)
• Mellat Bank SB CJSC (Armenia)
• Persia International Bank PLC (United Kingdom)
• Kargoshaee Bank (Iran)
• Arian Bank (Afghanistan)
• Futurebank BSC (Bahrain)
• First East Export Bank (Malaysia)
• Export Development Bank of Iran (Iran)
• Banco Internacional de Desarrollo CA
(Venezuela)
U.S. LEGAL AUTHORITIES
The powers needed to take specific action against
designated banks, their affiliates, and their assets are
largely enshrined in the 2001 USA PATRIOT Act.
Particularly important powers regarding Iran’s
banking network can be found in the “long arm
provision” for asset forfeiture. The U.S. government
has the legal authority to freeze any funds deposited in
any foreign financial institution on behalf of
designated Iranian banks, as long as the foreign bank
in question has U.S. operations or maintains a
correspondent relationship with an American bank.
The PATRIOT Act gives the government jurisdiction
over money laundering cases in several instances,
including (1) when the offense took place wholly or
partly within the United States, and (2) when the case
involves a foreign bank that maintains an account at a
U.S. bank. In addition, the PATRIOT Act amends the
U.S. Code’s asset forfeiture statute (18 USC 981),
creating a new section on “interbank accounts”
(another term for correspondent accounts) that
describes the government’s powers as follows:
If funds are deposited into an account at a foreign
bank, and that foreign bank has an interbank account
in the United States…the funds shall be deemed to
have been deposited into the interbank account in the
United States, and any restraining order, seizure
warrant, or arrest warrant in rem regarding the funds
may be served on the covered financial institution,
and funds in the interbank account, up to the value of
the funds deposited into the account at the foreign
bank, may be restrained, seized, or arrested.
Finally, the PATRIOT ACT also empowers the
government to seize funds in a correspondent account
“up to the value of the funds deposited into the
account at the foreign bank.” Authorities do not need
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to prove that the seized funds are directly traceable to
the funds deposited into the foreign bank.
INTERNATIONAL BANKS PROVIDING
SERVICES TO U.S.-DESIGNATED BANKS
1. Ameriabank CJSC (Armenia)
2. Australia and New Zealand Banking Group
Limited (Australia)
3. Raiffeisen Zentralbank Österreich AG (Austria)
4. UniCredit Bank Austria AG (Austria)
5. Alubaf Arab International Bank BSC (Bahrain)
6. Future Bank BSC (Bahrain)
7. Sonali Bank Limited (Bangladesh)
8. Fortis Bank SA/NV (Belgium)
9. Danske Bank A/S (Denmark)
10. Société Générale (France)
11. BHF-BANK Aktiengesellschaft (Germany)
12. Commerzbank AG (Germany)
13. Deutsche Bank AG (Germany)
14. Landesbank Baden-Württemberg (Germany)
15. UniCredit Bank AG(Germany)
16. ING NV (Holland)
17. Habib Bank Limited (India)
18. State Bank of India (India)
19. United Bank Ltd (India)
20. Bank of the Middle East Iraqi Investment (Iraq)
21. Trade Bank of Iraq (Iraq)
22. Intesa Sanpaolo SpA (Italy)
23. Mizuho Corporate Bank Ltd (Japan)
24. Sumitomo Mitsui Banking Corporation (Japan)
25. The Bank of Tokyo-Mitsubishi UFJ Ltd (Japan)
26. DnB NOR Bank ASA (Norway)
27. Nordea Bank Norge ASA (Norway)
28. BankMuscat SAOG (Oman)
29. Qatar National Bank SAQ (Qatar)
30. VTB Bank (Russia)
31. Riyad Bank (Saudi Arabia)
32. Aresbank SA (Spain)
33. Banco Santander SA (Spain)
34. Banque Marocaine du Commerce Exterieur
International SA (Spain)
35. Bank of Ceylon (Sri Lanka)
36. Nordea Bank AB (Sweden)
37. Skandinaviska Enskilda Banken AB (Sweden)
38. Svenska Handelsbanken AB (Sweden)
39. Banque de Commerce et de Placements SA
(Switerland)
40. United Bank AG (Switzerland)
41. Zürcher Kantonalbank (Switzerland)
42. Türkiye Halk Bankasi AS (Turkey)
43. TÜRKiYE iS BANKASI AS (Turkey)
44. Dubai Islamic Bank PJSC
45. Emirates NBD Bank PJSC
U.S. BANKS CONDUCTING BUSINESS WITH
INTERNATIONAL BANKS THAT SERVICE
DESIGNATED IRANIAN BANKS
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
Bank of America NA
The Bank of New York Mellon
The Bank of Tokyo-Mitsubishi UFJ Ltd
Citibank
Commerzbank AG
Credit Suisee AG
Deutsche Bank Trust Company Americas
Habib American Bank
HSBC Bank USA NA
Intesa Sanpaolo SpA
JPMorgan Chase Bank NA
MashreqBank PSC
Mizuho Corporate Bank USA
Société Générale
Standard Chartered Bank
State Bank of India
Sumitomo Mitsui Banking Corporation
Wells Fargo Bank NA
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