Posts Tagged ‘sanctions evasion’

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Nuclear smugglers get slap on wrists

November 29, 2013

Germans sentence exporters to 4 years for trading with Iran

What is the penalty for sending nuclear components from Germany through third parties in what is being called “the largest violation of the trade embargo with Iran”?  Four years in prison.

Meanwhile, individuals who have violated international sanctions to places like Cuba and Iraq have faced equally long sentences for sending money or merchandise that is far less dangerous than what these men did.

From JN1 earlier this month:

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Bitcoin helps Iranian business evade sanctions

November 22, 2013

U.S. president on Iranian sanctions

Another loophole has materialized in Pres. Obama’s “toughest sanctions ever.”  Not that it really matters when we’re offering $20 to $50 billion in sanctions relief anyway if Iran agrees to scale back on its nuclear program somewhat.

By the way, if bitcoin can help businesses in Iran to skirt international sanctions, can’t bitcoin help Hezbollah as well?

From CoinDesk on Nov. 5:

Bitcoin helps Iranian shoe store overcome international trade sanctions

Jon Southurst

An interesting e-commerce site that went online just last week is accepting bitcoin only, because most overseas customers cannot pay with anything else.

The business is Persian Shoes, an over 70-year-old business selling handmade footwear. It is located in Isfahan, the third-largest city in Iran.

The owners are happy to ship anywhere, but paying them is a problem. Thanks to the vagaries of international diplomacy and the past few decades of history, the usual e-commerce channels are blocked.

Trade sanctions against the entire country of Iran by the United Nations, United States, European Union and others mean Western Union and major credit card companies will not deal with Iranian businesses, even those in the fashion world.

The only way to pay someone in Iran is with cash carried in your pocket – or some easily transferrable, mostly unregulated, digital currency.

The bitcoin-only store sold four pairs of shoes in its first day of business. “To my standards it is a good sale!” said the CEO, Mor Roghani. The store’s success continued throughout its first week.

“We have sold ten pairs of shoes so far using bitcoin. This is way above our expectations,” he added.

Persian Shoes is currently operated by three brothers, who are keen to expand the business their father started. Roghani’s cousin, who lives in Australia, introduced them to bitcoin and helped them to set up the site.

The site currently offers leather handbags, purses and shoes for women and seven varieties of shoes for men. Prices are all listed in USD and start around US $80.

Its FAQ page explains bitcoin and guides new users to online services like Coinbase, Bitstamp and BitBargain, as well as LocalBitcoins. It also explains the trade situation:

Our business is making and selling leather products. We like to sell our products across the world and the more customers the better. The problem is we operate in Iran and most payment systems either are not willing to serve us at all or impose a huge risk on our business. Before launching this website, our international sale has been limited to a few dedicated customers who knew about the quality of our products and were prepared to go through a lot of trouble to pay us! This of course, may sound incomprehensible for people who have all sorts of electronic payments at their disposal. However, before finding out about bitcoin, receiving our money was the number one obstacle in expanding our business.

As well as international trade restrictions, exchanging bitcoin back into local currency (Iranian Rials) also faces knowledge and technical barriers.

“Exchange is a bit tricky because bitcoin is not common yet. We are planing to hold onto some of the bitcoins and sell some at localbitcoins,” Roghani said. A lack of online shopping culture locally and poor internet connectivity hinders trade with other parts of Iran.

Depending on your country of citizenship or residence, you may not actually be allowed to buy these shoes even with bitcoin. Just as Americans may not spend a weekend in Havana or enjoy real Cuban cigars, they are also forbidden to engage in any trade activity with businesses or individuals located in Iran.

Despite this, Persian Shoes has taken orders from customers in the US and is waiting to see how smoothly the deliveries go before advertising the business more widely (update: all US orders have reached their destinations so far without problems.)

A query sent to United States Customs and Border Protection (part of the Department of Homeland Security) asking specifically about private e-commerce transactions for items of clothing received the following response: “Unfortunately, sanctions against Iran prohibit this”…

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Enforcement action news: recommended reading

October 30, 2013
  • A company in the United Arab Emirates that exported U.S. merchandise to Iran has been caught, fined, and slammed… more>>
  • A new ruling says that the Lebanese bank that funded Hezbollah through an account in New York can be sued by terror victims… more>>
  • The UN casually mentions that the latest addition to their sanctions list may have been involved in the attack in Benghazimore>>
  • Sanctions against Iran have done more damage to the Islamic Republic than anything since its war against Iraq, says a former spymaster… more>>

 

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Anatomy of an embargo buster

September 4, 2013

Step 1:  Let North Korean Air Force Gen. Yi Pyong-chol place an order for MiG-21s with the Castro brothers in Havana.

Step 2:  Hide 25 containers of jet fighter and anti-aircraft missile parts under 200,000 bags of Cuban sugar in the cargo hold of a North Korean bulk carrier.

Step 3:  Lie to the world by claiming, upon discovery of the smuggling attempt, that the aircraft were being sent to Pyongyang “to be repaired and returned to Cuba,” while the fighter jets are actually intended for end use in North Korea.

38 North has the details, which illustrate common state-sponsored sanctions evasion tactics:

Full Disclosure: Contents of North Korean Smuggling Ship Revealed

By Hugh Griffiths and Roope Siirtola

27 August 2013

All is seldom as it first appears in the world of North Korean sanctions busting. Six weeks after the inspection of the North Korean vessel Chong Chon Gang by Panamanian authorities on suspicion of drug trafficking, the full extent of the ship’s illicit military cargo falsely declared to be sugar and spare plastic sacks appears to have been much larger than previously reported. Moreover, key parts of the shipment seem intended for Pyongyang’s own use in its conventional military defenses, not to be repaired and returned to Cuba. Finally, the results of the search by Panamanian authorities provides new insight into North Korea’s illicit procurement priorities as well as evidence of its preferred maritime concealment methods and raises a host of still unanswered questions.

Undeclared Artillery and Small Arms Munitions Discovered

While initial media reporting suggested the seizure amounted to a few shipping containers with anti-aircraft missile components, two jet fighters and related engines, in fact a total of 25 shipping containers have now been recovered, together with six military vehicles. These were camouflaged at the bottom of five of the ship’s holds beneath about 200,000 bags of sugar, weighing approximately one hundred pounds each. This amount of sugar together with “two thousand empty polyethylene bags” were the only declared items listed in the cargo manifest signed by North Korean Captain Ri Yong Il.

A report compiled by various Panamanian authorities and the United Nations Organization on Drugs and Crime (UNODC) Container Control Programme (CCP) together with photographs of the seizure make clear that contrary to both the North Korean shipping declaration and Cuban government statements the shipment was without a doubt a violation of United Nations sanctions on North Korea.

Read the rest of this entry ?

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Sanction-busting smugglers flock to Oman

July 16, 2013

Barack Obama has said, “We’ve imposed the toughest sanctions in history.”  But with respect to Iran, the sanctions regime looks more like a game of whac-a-mole where, as one sanctions loophole pops up and is beaten down, another loophole or workaround pops up somewhere else.  In the latest illustration of this, the UAE has been pressured to clamp down on smuggling to Iran, and an island off the coast of Oman has begun picking up the slack.

From France 24 on Jul. 11 (h/t latlongpacific):

Iranian smugglers set up shop in coastal Oman

Iranian sanctions evasion via Oman

Due to the ramping up of international sanctions, many Iranian merchants who were working legally in Dubai are leaving and heading to Khasab, a small coastal town in Oman, where smuggling is rife.

Khasab, in the southern part of the Hormuz Strait, is conveniently located just 45 kilometres from the Iranian island of Qeshm. Many Iranian merchants who previously worked in the UAE are now establishing themselves in Khasab, where they rely on “shooties” – a local term for smugglers – to take their goods to Qeshm and from there to the rest of Iran.

According to our Observers, as well as other reports, both Omani and Iranian police appear to turn a blind eye to this practice. A photographer who recently travelled to the region told FRANCE 24 that the Omani authorities try to prevent this from making the news. He said that after taking photos of the smugglers, he was repeatedly interrogated, made to erase almost all his photos, and warned to stay away from Iranians working in Khasab.

Many Iranian businessmen have quit Dubai in the past couple of years because UAE authorities — under pressure from the United States — have made it increasingly difficult for them to work there. Many Iranian businessmen’s bank accounts have been frozen; they no longer enjoy banking facilities such as loans; and work permits are increasingly difficult to obtain. According to one veteran Iranian businessman FRANCE 24 spoke to, such measures have pushed Iranians who were previously working in the UAE legally to go to Oman, and smuggle their goods to Iran via Khasab: “They simply could no longer compete with non-Iranian merchants and were incurring loses. Doing business here in Dubai has now become almost impossible for Iranians”…

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Backstabbed: How Iraq helps Iran skirt sanctions

April 11, 2013

Nobody has been as good at tracking the painful truth of Iraqi-facilitated evasion of international sanctions on Iran as financial crime consultant Kenneth Rijock.  Consider:

  • The Kurds in northern Iraq have “allowed both rampant money laundering, and widespread facilitation of global Iran sanctions evasion” though their banks. In central Iraq, U.S. dollars are flowing in bulk from Baghdad to Iranmore>>
  • Lebanese banks and Bank Melli, a sanctioned Iranian bank, are operating in northern Iraq.  EU and North American businesses that use Lebanese banks may not be taking sufficient steps to prevent their transactions from benefiting Iranian end-users… more>>
  • “Iraq blatantly disregards UN sanctions on Iran” in accepting an Iranian-flagged vessel‘s shipment at its Um Qasr port, for example… more>>
  • Five Turkish banks in Iraq may be facilitating Iran’s sanction dodging behavior… more>>
  • Iran will reap $16 billion annually from a new natural gas deal with Iraq… more>>

Reading about the dangerous anti-money laundering (AML) and combating the financing of terrorism (CFT) policies of Iraq may be upsetting to those who have made personal sacrifices fighting for Iraqi freedom, but we have to face the current facts.  How does Rijock describe the Iraq invasion?  “Military success, yes; but AML/CFT utter failure.”

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Wednesday word: bitcoin

April 3, 2013

Bitcoin is an online medium of exchange.  Rather than being regulated by monetary authorities, bitcoin digital currency was devised by unelected, anonymous Internet users.  Investopedia defines bitcoin as:

A decentralized digital currency that enables low-cost payments without the need for central authorities and issuers. Bitcoin is a peer-to-peer (P2P) currency system created in open source C++ programming code. Bitcoins can be accessed from anywhere in the world with an internet connection. Once a user has Bitcoins, they are stored in a digital wallet. Bitcoins can then be sent to anyone else who has a Bitcoin address. Bitcoin was developed in 2009 and based on the works of an individual or group of individuals known as Satoshi Nakamoto.

Like earlier forms of digital cash, bitcoin operates outside the conventional currency system.  It may allow for greater individual freedom in transactions, but it is difficult to trace and can be used for criminal activity such as sanctions evasion or buying contraband.