US, UAE break up network funnelling illicit funds to Iran

The network, directed by senior officials of Iran’s central bank, forged documents and disguised its dealings behind front and shell companies.
Thursday 12/07/2018
Sigal Mandelker, Under Secretary for Terrorism and Financial Intelligence at the US Treasury, speaks at the US Embassy in Kampala, last month. (AFP)
Sigal Mandelker, Under Secretary for Terrorism and Financial Intelligence at the US Treasury, speaks at the US Embassy in Kampala, last month. (AFP)

LONDON – The United States and the United Arab Emirates have broken up a network funnelling illicit funds to Iran as Washington steps up a drive to restrict Iranian trade and access to hard currency in the region, a senior US official said.

“We jointly disrupted a currency exchange network that was transferring millions of dollars to Iran’s Islamic Revolutionary Guards Corps’ Quds Force,” said Sigal Mandelker, Under Secretary for Terrorism and Financial Intelligence at the US Treasury.

She said the network was dismantled in May. Currency exchanges had used the UAE financial system to transfer cash out of Iran and convert it into US dollars for use by Iranian-supported proxy groups in the region, she said.

The network, directed by senior officials of Iran’s central bank, forged documents and disguised its dealings behind front and shell companies, Mandelker told reporters.

She did not give further details of the operation. In early June, the UAE central bank announced it had restricted the operations of seven currency exchange houses for unspecified violations of anti-money laundering and other regulations.

Iran has denounced the US campaign to hurt its economy as unjustified interference in its affairs.

The UAE central bank and the UAE government media office did not immediately respond to questions on Thursday on the crackdown described by Mandelker and on whether the seven exchange houses sanctioned by the central bank were involved.

Mandelker was visiting the UAE after making similar trips to Saudi Arabia and Kuwait to win support for the US effort to squeeze Iran, which comes after President Donald Trump decided to pull out of an international deal on Iran’s nuclear programme and reimpose sanctions on Tehran. She said governments and financial institutions in the Gulf were cooperating closely with the United States because they agreed on Tehran’s malign influence in the region.

Mandelker said Washington was trying to constrict Iran’s trade in general, not just its oil and gas sales, which provide for over half of its export receipts.

But Washington may struggle to achieve a sharp reduction of Iranian business with the UAE. Dubai has traditionally served as a hub for exports to Iran and received Iranian investment in its businesses and real estate market.

UAE exports to Iran totalled $19.9 billion in 2017, or about 5 percent of the UAE’s gross domestic product, according to International Monetary Fund data.

Asked about this, Mandelker said Washington had an “excellent partnership” with the UAE. “There’s no question in my mind that working together, we can take significant action (against Iran) to disrupt their ability to fund themselves,” she said. 

Economic protests in Iran linked to sanctions

Mandelker linked American financial pressure on Tehran with ongoing economic protests roiling the country, saying she hoped the strain would limit the Islamic Republic’s “malign activities” across the Middle East. 

“You’ve seen the Iranian people, of course, stand up loudly, at risk of their own lives, shouting in protest about the corruption that’s happening within Iran,” Mandelker said. “Of course the fact (is) that so much money has gone to support malign activities elsewhere, with very little focus on the economy itself.”

Iran’s support for the Lebanese Shia militant group Hezbollah, Shia rebels in Yemen and embattled Syrian President Bashar Assad represents a “despicable use of Iranian revenue,” she said.

Mandelker and other Treasury officials have traveled to Saudi Arabia, Kuwait and the United Arab Emirates this week as part of a worldwide effort to get American allies to crack down on Iran ahead of November 4, when importing Iranian crude oil becomes a sanctionable offense for the US.

While the US has said it will grant some waivers to importing countries, Mandelker said American officials want to “very significantly reduce” Iran’s crude oil exports. 

In Iran, the US pullout from the nuclear deal only worsens its already-hobbled economy. The Iranian rial now trades at 78,500 to the dollar, despite the official rate being 43,100 to $1. Unemployment remains high. Promised billion-dollar deals with Western firms have evaporated for fear of being cut out of the American financial system.

Economic protests swept the Iranian countryside at the end of last year and have occurred in recent weeks as well. Wildcat strikes and demonstrations over water scarcity also have erupted.

As the US tightens its sanctions on Iran, Mandelker said American officials wanted to make sure their allies shut off avenues Tehran could exploit to evade them. 

“There’s no transparency within Iran,” Mandelker said. “The world needs to be wise to the ways in which they move deceptively.”

Germany charges Iranian diplomat detained in bomb plot

An Iranian diplomat suspected of involvement in a bomb plot against an Iranian opposition rally in France, was charged in Germany with activity as a foreign agent and conspiracy to commit murder.

Assadollah Assadi, a Vienna-based diplomat, is suspected of contracting a couple in Belgium to attack an annual meeting of an exiled Iranian opposition group in Villepinte, near Paris, German federal prosecutors said.

He allegedly gave the Antwerp-based couple a device containing 500 grams of the explosive TATP during a meeting in Luxembourg in late June, prosecutors said in a written statement.

Assadi was detained earlier this month near the German city of Aschaffenburg on a European warrant after the couple with Iranian roots was stopped in Belgium and authorities reported finding powerful explosives in their car.

In their statement, German prosecutors allege that Assadi, who has been registered as a diplomat at the Iranian embassy in Vienna since 2014, was a member of the Iranian intelligence service “Ministry of Intelligence and Security,” whose tasks “primarily include the intensive observation and combatting of opposition groups inside and outside of Iran.”

Iranian Foreign Minister Javad Zarif has called the allegations of a foiled extremist plot a ploy.

Belgian authorities also accuse Assadi of being part of an alleged plot to set off explosives at a rally of the Mujahedeen-e-Khalq group, or MEK, in neighboring France, and want him extradited.

German prosecutors said their investigation would not hinder Belgium’s extradition request for the suspect.

The MEK is an exiled Iranian opposition group based largely in Paris and Albania. The formerly armed group was removed from European Union and US terrorism lists several years ago after denouncing violence and getting western politicians to lobby on its behalf.

(The Arab Weekly staff and news agencies)