by Reuters and Israel Hayom staff
At least $1 billion in cash has been smuggled into Iran as it seeks to avoid Western sanctions, a bigger figure than previously reported, Iranian officials and Western intelligence and diplomatic sources say.
Sanctions imposed by the West over Iran's
nuclear program have shut Iran out of the global banking system, making
it hard to obtain the U.S. dollars it needs for international
transactions.
In December, the U.S. Treasury said the
Iranian government had obtained hundreds of millions of dollars in bank
notes using front companies.
Interviews by Reuters with Iranian officials
and Western diplomatic and intelligence sources show a bigger smuggling
effort by Iran, as well as the routes and methods used -- details not
previously reported. These sources said at least $1 billion in U.S. bank
notes had been smuggled into Iran in recent months, with the Iranian
central bank playing an important role.
Three Western diplomatic sources and three
Iranian government officials, who all declined to be identified citing
the sensitivity of the issue, said Iran had been working on ways to
obtain dollars since March last year.
The sources said the cash was hand-carried by couriers on flights from Dubai or Turkey, or brought across the Iraq-Iran border.
Before it reached Iran, the cash was passed
through money changers and front companies in Dubai, in the United Arab
Emirates, and Iraq, they added.
A Western diplomat who follows Iranian affairs said the central bank was a driving force in efforts to obtain dollars.
Western and Iranian sources said Iran's
central bank had in recent months worked with other entities, including
other sanctioned Iranian companies, to find ways to obtain U.S. dollars,
including using front companies and their networks. They said the
central bank had given the orders to the front companies abroad to buy
dollars.
The Central Bank of Iran declined comment, as
did government officials in Turkey. Authorities in the United Arab
Emirates made no immediate comment when contacted, while the UAE central
bank declined comment.
The extent of the smuggling has emerged as
Iran is in talks with world powers about its nuclear program, seeking a
deal to lift the sanctions that have halved its oil exports and hammered
its economy.
An Iranian government official with knowledge
of how the dollars were obtained said front companies had "mushroomed"
in Dubai to facilitate payments to Iran.
The use of multiple front companies, which
bought dollars from currency traders in Dubai and Iraq, was preferred as
it concealed the overall size of the dollar purchasing operation, the
Iranian and Western sources said. Front companies operate at arm's
length from the Iranian government or state-backed organizations, the
sources said.
Suitcases full of dollars were carried to Iran
from Dubai, and sometimes Turkey, the Iranian government official said.
Groups of three or four couriers would usually fly first or business
class, the official said.
In return for dollars, the front companies
were paid in United Arab Emirates dirhams or oil, the Iranian and
Western sources said.
A report last year by the U.N. Security
Council's Panel of Experts on Iran said Iran had used cash and money
changers to help get around banking restrictions.
"The Panel continues to receive information
from states and financial institutions that Iranian companies could
operate through trading companies or shell companies in neighboring
states," the U.N. report said.
U.S. Executive Order 13622, which came into
effect in 2012, prohibits the purchase or acquisition of U.S. bank notes
by the government of Iran.
Jonathan Schanzer, a former terrorism finance analyst at the U.S. Treasury, said Iran had been starved of dollars and euros.
"It has been a constant battle behind the
scenes for Iran to get their hands on these hard currencies," said
Schanzer, now with Washington think tank the Foundation for Defense of
Democracies.
Iran says the sanctions are illegal and has vowed to sidestep them.
Iranian and Western diplomatic sources said as much as $500 million in cash was funneled to Iran through traders in Iraq.
An Iraqi government financial adviser told
Reuters that Iraq was a major source of dollars for Iran, but the Iraqi
government had this year begun to restrict the central bank's dollar
sales to private banks and traders in an attempt to control the flow of
dollars out of the country.
The Iranian and Western sources said another
$500 million was obtained for Iran by two Dubai-based front companies
that have been sanctioned by the U.S. Treasury. The amount is in line
with ballpark figures published by the Treasury in December.
One company was Sima General Trading Company,
sanctioned in 2013 for acting as an Iranian government front company.
The other was Belfast General Trading, a Dubai commodities company
sanctioned last year.
The Treasury said Belfast General Trading had converted over $250 million, which was hand carried to Iran.
The Treasury also said other individuals had
delivered hundreds of millions of dollars in U.S. bank notes to Iran's
government in breach of sanctions. It did not give an overall total.
Sima and Belfast General Trading did not respond to requests for comment.
Reuters and Israel Hayom staff
Source: http://www.israelhayom.com/site/newsletter_article.php?id=23753
Copyright - Original materials copyright (c) by the authors.
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