Iran used Lloyds and Santander accounts to evade sanctions

News

Iran used two of the UK’s biggest banks to covertly move money around the world as part of a vast sanctions-evasion scheme backed by Tehran’s intelligence services.

Lloyds and Santander UK provided accounts to British front companies secretly owned by a sanctioned Iranian petrochemicals company based near Buckingham Palace, according to documents seen by the Financial Times.

The state-controlled Petrochemical Commercial Company was part of a network that the US accuses of raising hundreds of millions of dollars for the Iranian Revolutionary Guards Quds Force and of working with Russian intelligence agencies to raise money for Iranian proxy militias.

Both PCC and its British subsidiary PCC UK have been under US sanctions since November 2018. 

Documents, emails and accounting records show that during this time PCC’s UK division has continued to operate out of an office in Grosvenor Gardens in Belgravia by using a complex web of front entities in Britain and other countries.

Flow chart showing how Iran uses UK banks to evade western sanctions

Revelations about the Iranian sanctions-evasion operation in the heart of London come after the Royal Air Force recently joined US air strikes against Iranian-backed Houthi rebels in Yemen. This week the UK and US placed under sanctions what they called a “transnational assassinations network” overseen by Iranian intelligence that has targeted activists and dissidents, including British residents.

Documents analysed by the FT show that since being placed under US sanctions PCC has used companies in the UK to receive funds from Iranian front entities in China while concealing their real ownership through “trustee agreements” and nominee directors. 

One of these companies, called Pisco UK, is registered to a detached house in Surrey and used a business account with Santander UK. 

According to the UK corporate registry, Pisco UK is fully owned by a British national called Abdollah-Siauash Fahimi. However, internal documents, some of which have been leaked online by the Iranian opposition website WikiIran, show that Pisco is fully controlled by PCC and that Fahimi signed an agreement to own the company in trust on its behalf. 

Fahimi has used a PCC email address for correspondence with company officials in Tehran. He was a director of PCC UK from April 2021 until February 2022, according to UK corporate filings.

In 2021 Pisco’s Santander account received a transfer from a Chinese company called Black Tulip, which internal PCC records show is another trustee company controlled by a PCC employee. The US Treasury last year accused Iranian petrochemicals companies of using multiple front entities to evade sanctions by routing sales through Asia.

Santander said it was unable to comment on specific client relationships but was “highly focused on sanctions compliance”. A person familiar with the situation said the bank has closed Pisco’s account.

Another PCC front company in the UK is Aria Associates, which has an account with Lloyds. It is officially owned by Mohamed Ali Rejal, who according to internal emails is the deputy chief executive of PCC UK and has regularly communicated with company officials in Tehran.

Emails show that in July 2021 a PCC accounting official in Tehran emailed Rejal about a planned payment from China, telling him, “Please send us the safe account No. For payment.”

Rejal instructed the accounting official to transfer the money into Aria Associates’ Lloyds account, writing: “Please make sure that there should not be any indication of PCC or PCC (UK).” 

PCC UK, Rejal and Fahimi did not respond to requests for comment.

The Grosvenor Gardens home of  the offices of PCC UK in London
The Grosvenor Gardens home of the offices of PCC UK in London © Charlie Bibby/FT

Lloyds Banking Group said it could not comment on individual customers but complied with sanctions laws, adding: “In addition, due to legal restrictions, we cannot comment on the submission of suspicious activity reports to relevant authorities when and if they occur.”

Alicia Kearns, Tory chair of the Commons foreign affairs committee, said: “For years I have repeatedly raised my concerns about our need to shut down cut-outs of the IRGC operating in the UK. This investigation proves once again that more needs to be done.”

Liam Byrne, Labour chair of the Commons business and trade committee, said: “This is, frankly, a shocking failure to act in lockstep with our allies to shut down the financing of a hostile regime. It beggars belief that a business sanctioned by the US is freely trading in London.”

David Asher, a senior fellow at the Hudson Institute and a former US state department official who has worked on sanctions and counter-terrorism operations relating to Iran, said the scheme showed how IRGC-connected entities “continue to use London as a financial centre”.

“For UK banks to continue doing business with them is not only a major risk but is inconsistent with stated policy towards the Iranian regime,” he said.

European banks found to have breached US sanctions on Iran have been hit with large penalties, with Standard Chartered paying more than $1bn and UniCredit $1.3bn in 2019.

Other documents seen by the FT show that as PCC continued to operate in the UK it also entered into contracts for equipment procurement with a Turkish company called ASB, which last year was placed under sanctions by the US government for working with senior IRGC officials.

Audit reports for PCC UK from 2021 seen by the FT also show the company has maintained large trading balances with PCC in Iran since being placed under sanctions by the US, allowing it to continue operating in spite of western banks being blocked from doing business with the company. 

PCC UK’s Belgravia office is also the registered address for NIOC International Affairs (London) Ltd, a division of Iran’s US-sanctioned national oil company, which Washington has for years claimed directly finances the IRGC and Iranian military activity.

Articles You May Like

S.C. Gov. McMaster signs ‘ESG Pension Protection Act’
Mortgage rates shoot to 2-month high after new report shows inflation is still hot
Russian opposition activist Alexei Navalny has died, says prison service
People are moving out of cities with poor air quality — but many end up facing other climate risks
Medical College of Wisconsin to issue bonds for new state crime labs, county morgue