May 10, 2018 / 5:00 PM / 3 months ago

U.S., UAE crack down on network for smuggling funds to elite Iran group

WASHINGTON (Reuters) - The United States imposed sanctions on Thursday against six individuals and three companies it said were funneling millions of dollars to Iran’s Islamic Revolutionary Guard’s elite Quds Force, just days after President Donald Trump withdrew from the 2015 Iran nuclear deal.

FILE PHOTO: Steven Mnuchin, Secretary, U.S. Department of the Treasury speaks at the Milken Institute 21st Global Conference in Beverly Hills, California, U.S., April 30, 2018. REUTERS/Mike Blake

The Treasury Department, acting with the United Arab Emirates where front companies were located, said it had disrupted the large network’s operations, and accused Iran’s central bank of helping the group access U.S. dollars held in foreign banks to sidestep Western sanctions.

“The Iranian regime and its central bank have abused access to entities in the UAE to acquire U.S. dollars to fund the IRGC-QF’s malign activities, including to fund and arm its regional proxy groups, by concealing the purpose for which the U.S. dollars were acquired,” U.S. Treasury Secretary Steven Mnuchin said in a statement.

The IRGC is by far Iran’s most powerful security entity and has control over large stakes in Iran’s economy and huge influence in its political system. The Quds Force is an elite unit in charge of the IRGC’s overseas operations.

The six individuals and three entities, including front companies for the IRGC-QF and currency traders, were sanctioned under U.S. regulations targeting specially designated global terrorist suspects and Iranian financial activity, the Treasury said.

The UAE said later it had placed the same companies and people on its list of terrorist and terrorist organizations doing business with the IRGC-QF.

The crackdown comes as U.S. Secretary of State Mike Pompeo pushes allies in Europe, Asia and the Middle East to pressure Iran to return to negotiations over its nuclear and missile programs.

Trump’s decision has given grace periods of 90 days to six months for companies to wind down their trade with Iran.

The Treasury Department said one of the companies sanctioned was also involved in retrieving oil revenue from foreign bank accounts held by the Iranian central bank for IRGC-QF activities.

In February 2015, Reuters reported that at least $1 billion in cash had been smuggled into Iran despite sanctions. Before it reached Iran, the cash was passed through money changers and front companies in Dubai, in the United Arab Emirates and Iraq, sources told Reuters.

Before the 2015 nuclear deal was reached, 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.

Reporting by Lesley Wroughton; Additional reporting by David Alexander; Editing by Bernadette Baum and Peter Cooney

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