Posts Tagged ‘stripping’

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Lawsuit: sanctions evasion helped kill U.S. troops

November 30, 2014

Many of the attacks during the Iraq insurgency that left over 4,000 American troops dead were carried out by Sunni militants funded by and aligned with Al Qaeda, former members of Saddam Hussein’s regime, the Gulf monarchies, or combinations of all three. But a new lawsuit by veterans and the families of our war dead is pointing out that a lot of the killing of coalition forces also came from Shia terrorists trained and funded by Iran. Iran was able to fund the trainers of those terrorists partly because of Iran’s access at the time to the international financial system as allowed by major banks with branches in the U.S. despite the sanctions against Iran throughout the 2000s.

From Reuters earlier this month (h/t El Grillo):

U.S. veterans sue banks, claim they should pay for Iraq attacks

Wounded U.S. veterans and family members of U.S. soldiers killed in Iraq sued five European banks on Monday, seeking to hold them responsible for shootings and roadside bombings because they allegedly processed Iranian money that paid for the attacks.

The lawsuit filed in U.S. District Court in Brooklyn, New York, named Barclays Plc, Credit Suisse Group AG, HSBC Holdings Plc, Royal Bank of Scotland Group Plc and Standard Chartered.

Barclays, Credit Suisse, RBS and Standard Chartered declined to comment. HSBC did not respond to requests for comment.

The lawsuit was brought under the U.S. Anti-Terrorism Act, a 1992 law that permits victims to bring private suits against alleged financiers of militant operations.

The lawsuit alleges the banks conspired with Iranian banks to mask wire transactions in order to evade U.S. sanctions. The Iranian banks then funneled more than $100 million to militant groups that operated in Iraq at Iran’s direction, according to the suit.

The militant groups included a Shi’ite militia in Iraq, Kataib Hezbollah, as well as Quds Force, the overseas arm of Iran’s Islamic Revolutionary Guard Corps, the suit says.

Since 2009, the five banks have agreed to pay about $3.2 billion to the U.S. government to resolve allegations that they handled money in violation of sanctions against nations such as Iran, Libya and Cuba. All the banks signed deferred prosecution agreements with the U.S. Justice Department in addition to settlements with U.S. banking regulators…

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More fines for stripping

August 16, 2010

MoneyLaundering.com has revealed that Barclays will probably be fined by the U.S. Department of Justice for removing data (or “stripping” in AML industry jargon) from financial transactions with Iran. We’ve seen this already with Lloyds, Credit Suisse, and RBS. The banks stripped the data to cover the source or destination of wire transfers involving Iranian customers in violation of U.S. sanctions laws.

The banks helped Iran, now they’re helping fill DOJ’s coffers. Revenues from all these fines are likely to exceed $2 billion.

Bank Status Amount fined
Lloyds Settled $350 million
Credit Suisse Settled $536 million
RBS Settled $500 million
Barclays In progress Probably $300 million
Banca Intesa Sanpaolo Pending N/A
Deutsche Bank Pending N/A
HSBC Pending N/A
  TOTAL $1.7 billion & counting
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Tightening the nuke noose? Lloyds fined for helping Iranian banks evade sanctions

January 4, 2010

Over the holidays, the U.S. Treasury’s Office of Foreign Asset Control announced a settlement with Lloyds Banking Group for its role in channeling Iranian money through American banks.  (Or as one commenter put it, “English whorehouse Lloyds TSB Bank settles out of court.”)

Here’s how it worked:  banks in Iran, Libya, and the Sudan held accounts with Lloyds.  Then Lloyds allowed money from those accounts to be wired or transferred through U.S. financial institutions after stripping identifying information such as bank names, customer names, and addresses.

Naturally, Lloyds knew who their own clients were, and they knew they weren’t supposed to allow transactions through the U.S., which is why they stripped the information from the transactions.

Lloyds clients include:

  • Bank Melli, Iran
  • Bank Saderat, Iran
  • Bank Sepah, Iran
  • National Bank of Khartoum, Sudan

In allowing these transactions to take place, Lloyds violated the U.S. International Emergency Economic Powers Act.  The money may have benefited terrorism or furthered Iranian nuclear ambitions.  How?  For one thing, once the money was transferred, it could be put into the coffers of front companies to pay for “goods and services” (such as sensitive weapons, technologies, or other materials).

As I noted in my review of Out of the Ashes, a powerful case can be made against the effectiveness of economic sanctions on Middle Eastern dictatorships.  The news that major financial institutions such as Lloyds have allowed for the circumvention of the sanctions regime casts doubts on both the strategy behind the sanctions and the how the sanctions are being administered.

But, congratulations are in order for the New York DA’s office and OFAC for uncovering and penalizing the activity, and for making our sanctions regime slightly less sieve-like.