The Laundry Man by Kenneth Rijock ( Penguin/Random House UK)

Thursday, August 23, 2012


If you are a compliance officer at a foreign financial institution that has a branch, subsidiary, agency or office in the United States, you would be wise to ascertain immediately whether any of your clients is using your bank to trade with Iran, in violation of international sanctions. The US Department of the Treasury is reportedly ready to impose fines and penalties upon a number of foreign banks, including one major bank in the United Kingdom, and elsewhere in Europe.

You need to rule out the possibility that any of your bank clients is covertly selling sanctioned goods to Iran, in light of the disclosures that the names of OFAC-designated Iranian originating banks have been deleted (stripped) from inbound wire transfers, by the world's biggest banks. The huge investment in time, on the part of US regulators, may result in the identification of one or more of your clients, with serious regulatory and reputational consequences.

Have you updated your file on bank clients who ship what could be dual-purpose goods to the Middle East, or South Asia ? Iran could be the end user of such shipments. Enhanced Due Diligence (EDD) may be the best way to ensure that you are not unwittingly facilitating shipments to Iran.

Remember, sanctions evaders can be extremely clever. They can transship goods through your country, which will show up solely as imports. Those goods, which have then been paid in full by Iran, are exported, and since there is not subsequent financial transaction,  the bank is unaware of the shipment.

Given that the present national policy of the United States is to vigorously pursue all instances where a financial institution has facilitated illicit trade with Iran, it would be prudent to identify, and exit forthwith, any of your bank clients who are involved. You do not want to receive a mandatory "invitation" to negotiate the size of a multi- million dollar fine, which will be assessed against your US subsidiary, for Iran sanctions violations.

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