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Is Turkey shielding Iran Sanctions & is an Evasion Facilitator?

by Monte Friesner

21 September 2010

A new threat has emerged to complicate compliance with Iran Sanctions Regulations. Representatives of the United States Treasury Department have stated, on the record, that Turkey is now a country of concern regarding Iran's global efforts to evade US, UN, EU, Canadian and Australian sanctions. Reports that a sanctioned Iranian bank, operating in Turkey, and using local currency to deceive Western compliance officers, is sufficient to raise country risk for Turkey, and to recommend to compliance officers at North American and EU banks that they now take a hard look at all bank clients who trade with Turkey. If your clients sell, ostensibly to Turkish end users, any goods or services which could conceivably be dual-purpose goods, useful in Iran's illegal WMD and ballistic missile programs, you should reduce risk by terminating those relationships. Iranian sanctions compliance just got a lot tougher, ladies and gentlemen. 

Look at the current situation:

  • Turkey voted against the expanded UN sanctions against Iran.
  • Bank Mellat, sanctioned for its proliferation activities, is now reportedly operating a Turkish Lira account at its Istanbul Branch. This local currency trading capability greatly enhances its ability to successfully complete sanctions evasion operations.
  • Cooperation between the Eximbank of Turkey and the [sanctioned] Export Development Bank of Iran has increased.
  • Trade between the two countries is, according to Turkish accounts, up 85% in 2010.
  • Turkey has reportedly opened its ports to trade with Iran, and appears to be replacing the UAE as its preferred trading partner.
  • Turkey is shipping refined petroleum to Iran.
  • There are reports of a $25m payment from the Iranian Government to Turkey.

Unless you have confirmed where your clients' shipments to Turkey end up, through field investigation, you cannot be sure that Iran is the final destination. You should commence Enhanced Due Diligence forthwith on all clients trading with Turkey.

  • The final question: which Turkish companies are now conduits to Iran


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