Iranian banks illegally shifted billions of dollars through American financial institutions in recent years, and authorities suspect some of the money may have been used to finance Iran’s nuclear and missile programs.
Some of the world’s top banks helped Iran get around international sanctions even as the rogue nation was steering its blood money into the hands of terror groups, prosecutors charged Friday.
Ten international banks including British-based Lloyds laundered “billions of dollars” for Iran through New York banks, Manhattan District Attorney Robert Morgenthau announced Friday. The scheme helped Iran turn its dirty money into greenbacks, which it could then use to buy goods prohibited by international sanctions.
“This is one of the biggest investigations we’ve ever conducted.”
Lloyds admitted it laundered $300 million and agreed to pay a $350 million fine and open its books to investigators. If records show that the bank knew it was helping Iran break international law or foster terrorism, Lloyds could face criminal prosecution, authorities said.
None of the other nine banks was identified because they are working out similar agreements with Morgenthau’s investigators. The CIA will also review the bank records.
In one internal document, Lloyds said transactions from the London branches of Iranian banks should be processed in “the normal way,” which meant removing information that would tie them to Iran, according to the agreement. Lloyds eventually dedicated specific employees to scrubbing the Iranian transactions, the agreement said.
Over 12 years, “about $350 million was allowed to move through the U.S. financial system that at a minimum should have been scrutinized,” Matthew Friedrich, acting assistant attorney general of the Justice Department’s Criminal Division, told reporters yesterday in Washington.
Over the next nine months, Lloyds has agreed to provide financial information on the transactions, Friedrich said. The vast majority of information already has been turned over, the Justice Department said.
“We can look at where did this money go, where was it sent from and we can do the scrutiny that should have been performed in the first place,” he said.
One of the main questions U.S. authorities will focus on is whether any of the money funded terrorism, Friedrich said.
“The consensus view is that Iran is one of if not the most active state sponsors of terrorist groups,” Weber said. “There’s a lot of people [in the U.S. government] thinking about ways to make it much harder for Iran to move money around.”
The laundering began more than 13 years ago and ran through 2007, according to the DA’s probe. Lloyds also washed money for Sudanese banks, even though financial dealings with both governments are prohibited by international sanctions.
In the scheme, first disclosed last March by The News, Iran would deposit huge sums in the international banks, which then converted it into dollars and parceled it out under altered names and routing codes. The money was moved through a series of smaller banks and ultimately drawn on for banned purposes.
“You couldn’t tell where the money was coming from or where it was going to.”
Because the origin of the funds was disguised, the money slipped through computerized filters at New York banks designed to stop any transfers to and from Iranian interests, Morgenthau said.
Much of the money went to Iranian banks, which typically send money to terror groups in the West Bank, Gaza, Lebanon and Afghanistan through front organizations and so-called charities, according to the Treasury Department’s Office of Foreign Assets Control.
U.S. laws bar the transfer of funds from Iran and other sanctioned countries without authorization by the U.S. Treasury Department. Assistant District Attorney Adam Kaufman said the bank’s conduct didn’t necessarily violate laws in the U.K., where Lloyds is based.
Last month, federal prosecutors in the U.S. sued to gain control of a 36-story Manhattan office tower they claim belongs to the Iranian government’s Bank Melli. Farhsid Jahedi, President of the Alavi Foundation that owns a 60 percent stake in the tower, also was arrested for destroying documents.
Picture Courtsey – Halifax