By Sigal Mandelker
Source: The Hill
France, Germany and the United Kingdom (the E3) pressed ahead this month with their efforts to support the Iran nuclear deal by creating a special purpose vehicle aimed at facilitating trade between Europe and Iran.
The E3 proclaimed that this vehicle will function under the highest anti-money laundering standards and European Union (EU) and U.N. sanctions compliance.
As under secretary for Terrorism and Financial Intelligence at the U.S. Department of the Treasury, I can tell you that if they are dealing with the Central Bank of Iran or other elements of the Iranian regime, that is not possible.
Setting up a vehicle to create new streams of revenue for Iran has proven difficult for the European Union. Country after country refused to host it while international banks and businesses have been leery of conducting any business with Iran that risks violating U.S. sanctions. That is no surprise.
As the world’s leading state sponsor of terrorism, Iran prioritizes funding for brutal regimes and terrorists over supporting its own people.
Iran provides billions of dollars to terrorist groups like Hizballah and Hamas, funds Bashar Al-Assad’s campaign against his own citizens, and sends vulnerable refugees and child soldiers to die in Syria fighting for Iran’s Islamic Revolutionary Guard Corps (IRGC) and its Qods Force.
Nearly three years after stating that they will adopt standards set by the Financial Action Task Force (FATF), the global anti-money laundering/combating the financing of terrorism standard-setting body, Iran still has not adopted reforms necessary to meet many of the most basic standards, let alone given any confidence in a funding vehicle.
As a result, Iran has zero financial transparency, and it is very difficult to know who is on the other side of a transaction. And that is how Iran wants it, as groups funding terrorism like the IRGC and its Qods Force — both sanctioned by the United States and the EU — remain deeply embedded in the Iranian economy.
The United States has repeatedly sought to hold Iran accountable for its failure to adhere to these international standards. Europe, on the other hand, has repeatedly given Iran more time, as if time will motivate Iran to set up a system that keeps it from funding terror.
The Iranian government has completely rejected the E3’s call for Iran to adhere to FATF standards, stating this week that is “not possible” to tie the funding vehicle to FATF and that Europe should not “burn this opportunity by wasting time” on tying it to FATF, conditions that the regime has called “humiliating.”
Iran’s deputy foreign minister has also said that to make the funding vehicle operational, “domestic measures by the Iranian Central Bank would be necessary.” But it begs credulity to think that Iran’s Central Bank will adopt the necessary reforms, much less implement measures to make the vehicle trustworthy.
As the United States has exposed three times over the last year, its Central Bank — the banker of the Iranian government and supervisor of all Iranian banks — has played a key role in funding terrorists.
In just one example, three months ago, we sanctioned an oil-for-terror network that involved Central Bank of Iran officials facilitating the movement of hundreds of millions of dollars to support oil shipments to Assad.
At the center of the scheme was a so-called “medical and pharmaceutical” company used to cover up these payments as part of an offsetting scheme ultimately funding Hizballah and Hamas through the Qods Force.
This past October, we issued a financial advisory that revealed scheme after scheme by which the Iranian regime used front companies, forged documents and engaged in other subversive financial tactics, including in Europe, to deceive private and public actors.
In one case, Iran used German-based front companies to mislead European suppliers, circumvent European export restrictions and print counterfeit bank notes, potentially worth hundreds of millions of dollars for the benefit of the IRGC-Qods Force.
In addition to exploiting Europe’s financial system, Europe has been victim to some of Iran’s most destructive behavior. France, which plans to host the vehicle, was the target of Iran’s June 2018 foiled plot to bomb an Iranian opposition group rally outside of Paris.
Authorities in Denmark subsequently disrupted another Iranian-backed assassination plot. This is on top of Iran’s support to the Assad regime that has led to waves of refugees fleeing in fear to Europe and its procurement of ballistic missile-related items that threaten peace everywhere.
The EU’s decision last month to impose sanctions related to Iran’s recent terrorist plots was a good step toward recognizing the regime’s true nature. Europe should now take heed to remember with whom it is dealing, how the Iranians operate to skirt the international financial system and the basic standards of behavior they refuse to live by.
In the meantime, those that engage in activities that run afoul of U.S. sanctions risk severe consequences, including losing access to the U.S. financial system and the ability to do business with the United States.
Sigal Mandelker is the under secretary for Terrorism and Financial Intelligence at the U.S. Department of the Treasury.