Bahrain is to prosecute Iran’s most prominent financial institutions on charges related to money laundering of US$1.3 billion via the now defunct Bahrain-based Future Bank. This is the largest such case in the Gulf state’s history.
Prosecutors say Future Bank – established jointly in the Gulf state in 2004 by Bahrain-based Ahli United Bank and two Iranian state-owned banks, Bank Melli and Bank Saderat – enabled Iran’s central bank, the Iranian Revolutionary Guard and Hezbollah amongst others to cheat sanctions.
Otherwise known as the Export Bank of Iran, Bank Saderat specialises in the financing of international trade while Bank Melli, otherwise known as the National Bank of Iran provides commercial and retail services.
The prosecutions follow others related to money laundering and sanctions violations at the bank. Bahrain’s courts have already issued several prison sentences to officials – some Bahraini, some Iranian.
Over US$367 million dollars has been confiscated, and all of those accused so far have been convicted, imprisoned and fined over US$900 million.
Bahrain is now prosecuting the Central Bank of Iran and 12 other Iranian banks.
Prosecutors say Bank Melli and Bank Saderat used Future Bank to transfer US$1.3 billion, using an alternative system that was not licensed by Bahraini authorities and was not subject to them.
They allege these funds were kept, settled and laundered in order to evade international sanctions against Iranian entities and personalities.
This case began in April 2015 when the Central Bank of Bahrain responded to suspicions and allegations of money laundering and sanctions violations by ordering the closure of Future Bank and the confiscation of all its records.
Reports from unnamed prosecution sources suggest that as well as involvement in money laundering, Future Bank was used to finance several terrorist entities and that investigations in the case are continuing to determine further criminal conduct and more individuals are likely to be prosecuted.
TBML and Iran
Trade-based money laundering (TBML) bypassing conventional banking systems has been employed by Iranian entities, particularly after EU sanctions imposed in 2012 led to the prohibition of SWIFT transfers for Iranian banks.
Some of Iran’s oil traders nevertheless managed to continue operations by using, establishing or in some cases acquiring banks in other countries using shell companies.
Traders could then transfer money into those banks and in some instances convert this money into gold that could subsequently be smuggled into Iran.
Categories: Trade Based Financial crimes News