Bahrain court slaps more fines on Iran banks, officials in money laundering scheme

TDT, Agencies/Manama

The Daily Tribune – www.newsofbahrain.com

A fine imposed in the billion-dollar sanctions-busting scheme in Bahrain aided by the Central Bank of Iran has reached BD49 million. Raising the already hefty fines again is the latest conviction in the case by the High Criminal Court, which passed its verdict in seven related court cases.

Financial Crimes and Money Laundering Prosecution head Attorney General Nayef Yousef Mahmoud said the court sentenced the Iran-owned Future Bank officials five years to jail and fines amounting to BD1 million to each of them.

The court also fined the Central Bank of Iran and other involved banks BD1 million each raising the total fines amassed by the convicts in the case to BD49 million.

The verdict revealed that the confiscated funds in the case amount to USD173 million (BD65.2 million).

Bahraini investigators earlier uncovered a secret plan formulated by Iran to evade sanction using the now-closed Future Bank - a joint venture between National Bank of Iran (Melli) and the Iranian Exports Bank - to mask illicit trade involving Iran and its foreign partners.

The Public Prosecution found that the bank concealed transaction of at least USD7 billion (BD2.6 billion) during the period between 2004 and 2015 during which a ban prevented Iranian banks from accessing International financial markets.

Investigations found that Future Bank received requests for suspicious financial transfers in favour of the Central Bank of Iran and other Iranian banks through the ‘Swift’ system without reporting them or setting aside their sums.

Officials found that the bank systematically used a practice called “wire-stripping,” where they deliberately removed or changed identifying information when transferring money between banks. Reports say auditors found 4,500 such instances during the investigation.

These were for crimes including money laundering, terrorism financing and for providing phantom loans to companies that operate as fronts for Iran’s Islamic Revolutionary Guard Corps.

All these illicit transactions took care to avoid any direct reference to Iran or Iranian banking codes.

“Do not mention [sic] our bank name, BIC code ref. no., in any message, routed through the USA and or through New York,” a Washington Post report said Future Bank officials as instructed in one message from Iran’s Bank Melli.

The baffling size of the scam made the investigators also to liken the fraud to a Trojan horse operating inside Bahrain, where Iran freely bought and sold billions of dollars worth of goods in defiance of sanctions.

“Bahrain has never faced violations of this magnitude,” the kingdom asserted in a written summation to the Permanent Court of Arbitration in The Hague. “The ramifications rising from Future Bank’s systemic malfeasance cannot be overestimated.”

Concealing the identity of the Iranian bank from the transactions enabled the latter to move its funds in violation of laws and regulations.

Yusef Mahmoud added that investigations are continuing regarding international transactions in violation of the Law on Prohibition and Combating Money Laundering and Financing of Terrorism and banking laws and regulations.