Iran's Use of Two British Banks to Evade Sanctions; Shares of 'Lloyds and Santander' Plummet

Shares of financial institutions Lloyds and Santander fell on Monday, February 5, following a report by the Financial Times that the Iranian government has been using accounts in British banks to circumvent sanctions. The Financial Times reported on Sunday that the Islamic Republic of Iran has exploited two major British banks for covert money transfer operations worldwide as part of a vast sanctions evasion network supported by Iranian intelligence agencies. According to Reuters, citing data from the London Stock Exchange Group, shares of Santander in Madrid dropped by 6.1% to a loss of about 3 billion euros, making it the second-largest lender in the Eurozone. Lloyds shares fell by half a percent. Nuria Alvarez, an analyst in the Madrid stock market, stated, "They need to be aware that they may face penalties." Santander and Lloyds, in separate statements, claimed they had not violated sanctions based on their investigations. A Santander spokesperson said, "We have policies and procedures to ensure compliance with sanctions requirements and will continue to engage actively with UK and US authorities." A Lloyds spokesperson also stated that the company is committed to adhering to economic crime laws and added that they cannot comment on their clients. Reuters reported that by the time this news was published, the US Treasury and the UK Foreign Office had not immediately responded to requests for comment. Some European financial institutions have faced heavy penalties in the past due to sanctions against the Islamic Republic of Iran. An Italian lender paid $1.3 billion to the US in a settlement for similar reasons. Standard Chartered, a multinational financial services company, agreed in 2019 to pay $1.1 billion to US and UK authorities for financial transactions that violated sanctions against Iran and other countries. According to documents obtained by the Financial Times, Lloyds and Santander allocated several cover accounts to UK-based companies secretly owned by a sanctioned petrochemical trading company based in London. The report adds that this petrochemical trading company is part of a network that the US accuses of raising hundreds of millions of dollars for the Quds Force of the Islamic Revolutionary Guard Corps and collaborating with Russian intelligence agencies to finance proxy militants affiliated with the Islamic Republic. The Financial Times reported that this covert money transfer operation has been ongoing while the petrochemical trading company and its UK cover company, named PCC UK, have been under US sanctions since November 2018. The report states that the Islamic Republic has exploited Lloyds and Santander's financial institutions by designing complex structures to evade sanctions and conceal ownership. Revelations about the Islamic Republic's sanctions evasion operations in the heart of London came after the Royal Air Force joined US airstrikes against Iranian-backed Houthi rebels in Yemen. According to the UK Companies House, the company Pisco UK is wholly owned by a British citizen named 'Abdullah Siawash Fahimi.' However, internal documents, some of which have been leaked online by the Iranian opposition website WikiIran, show that Pisco is fully controlled by the British shell company PCC UK, and Fahimi manages it under a custodial agreement. The Financial Times: The Islamic Republic has used two major British banks to evade sanctions. The US Department of Justice's action against the Islamic Republic's oil smuggling network and financing of the Revolutionary Guard. The US and UK sanctioned 11 individuals linked to the Islamic Republic for 'transnational repression.' The US is seeking to prevent dollar smuggling to Iran; Iraq has banned 'eight banks' from dollar transactions. A senior US Treasury official's visit to the Middle East to counter the Islamic Republic's 'sanctions evasion.' The US has imposed further sanctions against the Iranian government's financial support network for the Houthis.