By Rachel Ehrenfeld
On September 8, 2006, the US Department of the Treasury issued an unusual statement, announcing that in a few days it was going to cut-off Iran's Bank Saderat's access to the U.S. financial system. This was done, according to the statement "to counter Iran's support for terrorism.”
How effective was this move? Why was this warning issued? To allow Bank Saderat to make arrangements to move its money? Saderat has correspondents and branches in many parts of the world. How is Treasury going to know if funds are from Bank Saderat when it is sent via a correspondent?
Examining just one website: http://www.me-gold.com/bank_accounts.php one can see a structure that involves gold being exchanged for cash, or vice-versa-with funds being paid by out of a Saderat a/c-or an account at another bank, and the funds exchanged without anyone knowing where it came from.
On September 12, after Treasury's block was supposed to be in effect, the list of Saderat's corresponding banks included: Royal Bank of Canada, Toronto; Commerzbank AG, Frankfurt; Standard Chartered Bank, Mumbai; Sumitomo Mitsui Banking Corporation, Tokyo; Banque de Commerce et de Placements, Geneva, and Credit Suisse, Zurich.
A number of banks with questionable connections operate also in the Pacific states. Nauru attracted much attention in this regard in the past, but there are other jurisdictions and banks that ought to be of concern. For example, MBf BAnk Tonga has only 2 other branches or subsidiaries, one in Myanmaar and the other in Pyongyang. However, it has correspondence arrangement with Bank Watchovia in the United States.
Given lax international regulations, and the large number of branches and corresponding banks doing business directly and indirectly with Iran, it is clear that the blocking of Bank Saderat is unenforceable. Indeed, Treasury’s latest announcement seems like a good PR move.
Ganesh Sahathevan contributed to this posting