Israel Matzav

Bolton: How Iran beats the sanctions

Manhattan District Attorney Robert Morgenthau told the Senate Foreign Relations Committee on Wednesday that the Iranian nuclear threat is a 'deadly serious' threat to the United States.

Sources told FOX News that the Morgenthau probe into Iranian money laundering schemes is broad and ongoing. So far, the Manhattan DA has struck a plea deal with a British bank and, separately, indicted a Chinese citizen and his company on charges related to Iran's violations of international sanctions designed to block its acquisition of nuclear weaponry.

In the British case, Lloyds Bank admitted it had engaged in a "stripping" scheme designed to hide the Iranian origin of more than $300 million in wire transfers. Bank coding information indicating an Iran address for the money was "stripped" from wire transfers.

Some of Iran's biggest banks -- blacklisted by the U.S. and international agencies for their alleged role in nuclear armament and terror funding -- are believed to have played a role in the illegal money movement.

Lloyds paid $350 million in fines and is cooperating with a joint investigation by Morgenthau and federal authorities. The British bank shut down the stripping scheme in 2004, well before law enforcement learned of the activities. According to published reports, Morgenthau is investigating at least nine other banks for similar practices.

There are more details of the Lloyd's case in this press release from the Manhattan District Attorney's office. The problem is that the investigators are trying to catch up when they're starting at a great disadvantage.

In the agreement LLOYDS admits that from 2001 – 2004, LLOYDS falsified the business records of banks in Manhattan by engaging in a systematic process of altering wire transfer information to hide the identity of its clients. This process allowed the illegal transfer of more than $300 million on behalf of Iranian banks and their customers; the Iranian banks involved included Bank Melli, Bank Saderat, Sepah Bank and others. While LLOYDS voluntarily exited the Iranian business by 2004, the Sudanese business, which resulted in the illegal transfer of over $20 million, continued into 2007, after the beginning of the investigation. The transfers were made to buy goods and services from U.S. companies and to finance the purchase of goods and services from foreign vendors that sought payment in dollars.

...

New York banks use sophisticated computer systems to monitor and screen all wire transfer activities to ensure that the banks do not engage in prohibited transactions. The banks depend on these automated systems to prevent sanctioned entities from accessing the United States banking system.

The investigation revealed that LLOYDS engaged in a systematic practice of “stripping” wire transfer information. Stripping is the practice of removing wire transfer information that would identify that the transfers originated from a prohibited source. By stripping out the originator information, the wire transfers could pass through the screening software used by New York banks that would otherwise have rejected or frozen them for further inquiry. The stripping of wire transfer information in this manner made it appear that the transactions originated at LLOYDS in the United Kingdom rather than the sanctioned banks.

The investigation of LLOYDS focused primarily on its handling of accounts for financial institutions from two designated countries: Iran and Sudan. Knowing that they could not legally access U.S. banks, Iranian and Sudanese banks with accounts at LLOYDS sought to evade U.S. sanctions. Beginning in the mid-1990s, LLOYDS began removing any information from Iranian and Sudanese wire transfers that would trigger the detection systems at New York correspondent banks. To execute this policy, LLOYDS personnel removed any information that identified the payment messages as originating from Iranian, Sudanese or other sanctioned countries. The falsified wire transfers would then be processed undetected by the OFAC filters in place at the U.S. banks.

Here's former American ambassador to the United Nations John Bolton talking about the Lloyd's case and the consequences of Iran obtaining nuclear weapons. Note what he says about the consequences for Israel from Iranian nuclear weapons, and the likelihood that Iran would use them.

Let's go to the videotape.



Does anyone out there still believe that there is any chance that 'sanctions' will work or that we have time left to find out?

For those who believe that not giving sanctions more time to work is over-reacting, please consider this interview with Shimon Peres (yes, I am actually going to agree with Shimon Peres) on Jeffrey Goldberg's blog (Hat Tip: Instapundit).

President Shimon Peres: I want to make the following point about Iran, starting with the United States. The greatest asset for Israel, both moral and strategic, is our relationship with the United States. We should not permit any rift, any rupture. This remains our top consideration. And since Iran is a world problem, we should participate in facing its dangers, but without trying to monopolize it. Now there are many options. Whatever can be achieved diplomatically or economically is better. But if there will be a guarantee that these are the limits of our options, the Iranians may make the wrong call. The Iranian danger is composed of two parts: The weaponry and the character of its rulers. And I don't think that the present rulers of Iran are the permanent answer to the Iranian destiny. There were (government) changes in the past and maybe changes in the future. I don't suggest that other countries will introduce the changes, but others can call upon the Iranian people to come back to their own history.

JG: Is there a chance that Israel is over-reacting to the language that comes out of Tehran? Let me ask this another way: Is it possible to over-learn the lessons of Jewish history?

SP: If we have to make a mistake of overreaction or underreaction, I think I prefer the overreaction to underreaction.

JG: That's a lesson of Jewish history?

SP: This is a lesson of world history, not Jewish history. Because if the world had correctly read Hitler at the time, it would have saved 50 million lives.

JG: Are you equating Ahmadinejad or Khamenei with Hitler?

SP: No. I am equating the danger. I don't say they are the same. I'm talking about estimations. I think one of the greatest mistakes in history was to underestimate the danger of Nazism. All of us paid heavily for it. To prevent is better than to regret.

Now the Messiah must be on his way: Shimon Peres is learning history.

posted by Carl in Jerusalem @ 2:13 PM