Iran seting up nominee banks to get around sanctions

Washington Post:

Iran is secretly trying to set up banks in Muslim countries around the world, including Iraq and Malaysia, using dummy names and opaque ownership structures to skirt sanctions that have increasingly curtailed the Islamic republic's global banking activities, U.S. officials say.

The Treasury Department has blacklisted 16 Iranian banks for allegedly supporting Iran's nuclear program and terrorist activities; other countries have followed suit with their own measures. Tehran's search for new banking avenues is a sign of the growing effectiveness of the sanctions, U.S. officials said.

Still, they think that Iran has had limited success, if any, in secretly setting up banks.

"The Iranians, we believe, are trying to set up operations in a number of places, and it's an indication that they can't do normal banking," a senior administration official said, speaking on the condition of anonymity because he was not authorized to talk publicly. "They want to buy banks and set up banks in various places where they believe they will be able to carry out business without the United States being able to impede it."

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"It has always been a cat-and-mouse game with Iran," said Matthew Levitt, a former Treasury Department official and director of a counterterrorism and intelligence program at the Washington Institute for Near East Policy. He said the banking operations, even if successfully created in other countries, are likely to be small-scale and insufficient to make up for the volume of banking activity Iran has lost.

For years, the United Arab Emirates was an important conduit for Iranian goods and financial transactions. But since the latest U.N. Security Council sanctions were approved in June, the UAE has cracked down on Iranian activities, in part by curtailing financial dealings with Iranian banks blacklisted by Washington. In response, Iran appears to have tried to enlist Malaysia as a new financial hub, but without success, the U.S. official said.

"As the Emirates have begun to take stronger measures, the Iranians are looking for other financial and commercial centers that they can exploit," he said. "It's clear that they have had their eye on Malaysia for a while. It is a constant topic of discussion with Malaysia authorities. "

Malaysia has been a transshipment hub for suspect goods for Iran, making it a logical place for financial transactions. But this year, the Malaysian government announced that it had enacted an export-control law intended to strengthen its ability to curb trade in materiel for weapons of mass destruction.

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Iran has had much practice in trying to get around US and now UN sanctions. Iran is having some inconvenience in its commercial transactions, but it still seems to be able to survive despite the sanctions. Stronger measures will probably be needed.