By Ian Barclay
Though the claims relate to the period 2001-7, since the start of this year co-ordinated sanctions by the EU as well as the US have tightened the noose on Tehran by blocking access to the key financial and insurance markets of Europe. Iran is slowly being excluded from large parts of the global financial system, unable to sell its oil and fast running out of space to store it.
Living with sanctions is not new to Iran, nor are many of the methods it has used to evade them. But all its counter-efforts have locked western sanctions enforcement agencies in a game of cat-and-mouse aimed at exposing anyone trying to access the financial system to launder funds or hide transactions.
And Iran’s tactics are often sophisticated. Over the past year, the regime has launched a diplomatic offensive focused on developing economies, which are desperate for cheap fuel, and it has offered them huge discounts on oil. Some countries have found ways to trade or evade by negotiating barter deals involving grain or consumer goods in exchange for oil.
In addition, tankers carrying Iranian oil are alleged to have switched off their automatic identification systems used to track their locations, and Iranian shipping firms are known to have frequently changed the name, owners, and flag state of vessels – even allegedly to have repainted tankers.
The lack of transparency in the shipping industry makes detection of offenders more difficult, and Iran has historically been successful in staying ahead of US and European efforts to track and blacklist them.
Iranian corporations, directed by their government, have long used offshore companies, which have limited or no ownership disclosure requirements, to trade or try to enter the financial system. In 2010, with the help of US pressure group Iran Watch, the New York Times exposed a web of companies being used by the Iranian state-owned Islamic Republic of Iran Shipping Lines. Its network of interlinked companies was registered in financial centres such as Hong Kong and Isle of Man, and in some cases had
British directors. This level of sophistication should not come as a surprise when Iran has been subject to US asset freezes since 1979 and more widespread sanctions since 1984, during its war with Iraq.
As modern sanctions have become more targeted and focused on isolating Iran from the global financial system, limiting its ability to earn foreign currency through sales of oil and gas, so too have the methods used to undermine them. Some anti-money-laundering specialists have been forced to run background checks on their students to ensure they are not trying to discover weaknesses in the system. And there are fears among oil traders that Iranian oil is being mixed with non- Iranian supplies.
There will always be countries and companies who will choose to trade with Iran, regarding sanctions as western or US-inspired measures that are unenforceable against them. As a result, major western companies doing business in Asia, the Middle East and the former Soviet Union are becoming increasingly wary of clients who may be discreetly trading with businesses in Iran.
While the headlines are focused on allegations against Standard Chartered, today’s major sanction-busting deals are being done by firms that are not household names. Last week’s blacklisting by the US treasury of Bank of Kunlun Co, part of the Chinese state-owned China National Petroleum Corp, and the Elaf Islamic Bank of Iraq for “knowingly facilitating significant transactions and providing significant financial services for designated Iranian banks” was not so widely reported.