REMITTANCE FIRMS LAUNDER MONEY FOR IRAN

Middle East Remittance Firms and Iran Sanctions Evasion

FROM A
DIFFERENT POINT OF VIEW by Monte Friesner

26 September 2010

WANTED SA has this morning received reports and has been receiving confirming that money exchange and remittance firms operating in the Middle East are primary actors in Iran sanctions evasions schemes. Our recent article, "Where could Iran Sanctions Evasion Originate?"* has resulted in comments from financial professionals in the region, verifying this reportedly widespread activity, which facilitates sanctions evasion, and is most likely a violation of UN sanctions.

Here's how the evasion program works;

• First, a remittance firm in Iran sends funds to another similar firm in a cooperating Middle Eastern country.(ME#2)
• The remittance firm in ME country #2 then strips off the Iranian information, and send the funds on to ME Country #3.
• Country #3 then strips out the information on Country #2, and send off the funds to...
• ME Country #4, who has no idea of the origin of funds, and the identity of the original remitter.
• #4 send sends funds to the EU or US, to purchase goods & services (dual-purpose goods, perhaps?)

This scheme, with three distinct layers of separation, is extremely difficult to detect. The only known countermeasures are:

• Require an ironclad certificate of origin/beneficial ownership from ME#4, with a penalty clause containing a large number of liquidated damages should a sanctioned entity or individual be discovered. Will #4 sign it, though?
• Check the goods being purchased with these funds, if you can identify them. Are they in high demand in Iran?

Is it not perhaps best to avoid remittance firms in the region altogether, unless they are subsidiaries of banks known and trusted by you? WANTED SA cannot say, but you had better re-examine the risks involved in taking remittance funds from countries known to conduct financial transaction with Iranian NBFIs.

Recently a credible Financiera in the Republic of Panama uncovered the above scheme being used by several remittance firms in Panama with direct connections to Dubai and in Europe and contacted WANTED SA immediately who acted accordingly.

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The facts and opinions stated in this article are those of the author and not those of WANTED SA. WANTED SA does not warrant the accuracy of any facts and opinions stated in this article; does not endorse them, and accepts no responsibility for them.