'You f---ing Americans. Who are you to tell us, the rest of the world, that we're not going to deal with Iranians'
British-based Standard Chartered Bank stands to lose its license to operate in New York State because it
hid $250 billion in transactions with Iran in violation of US law.
The New York State Department of Financial Services (DFS) said Standard Chartered "schemed" with the Iranian government and hid from law enforcement officials some 60,000 secret transactions to generate hundreds of millions of dollars in fees over nearly 10 years, also exposing the US banking system to terrorists, drug traffickers and corrupt states.
The loss of a New York banking license would be a devastating blow for a foreign bank, effectively cutting off direct access to the US bank market. Standard Chartered processes $190 billion every day for global clients, the New York bank regulator said.
...
The New York regulator, headed by former prosecutor Benjamin Lawsky, ordered Standard Chartered to explain why the bank should not lose its state license and the ability to process dollar transactions. Lawsky also ordered the bank to bring in an outside consultant to monitor its transactions.
"Standard Chartered Bank operated as a rogue institution," Lawsky said in the order.
...
Lawsky said Standard Chartered moved money through its New York branch on behalf of Iranian financial clients, including the Central Bank of Iran and state-owned Bank Saderat and Bank Melli, that were subject to US sanctions.
Monday's order alleged that Standard Chartered removed codes on money transfers and altered message fields, inserting phrases such as "NO NAME GIVEN" to hide the nature of the transactions.
At the center of concern were alleged "U-Turn" transactions, involving money moved for Iranian clients among banks in Britain and the Middle East and cleared through Standard Chartered's New York branch, but which neither started nor ended in Iran.
Such transactions were permissible until November 2008, when the Treasury Department prohibited them on concerns that they were being used to evade sanctions, and that Iran was using banks to fund nuclear and missile development programs.
The New York order also alleged that even as some banks exited the U-Turn transactions, Standard Chartered hustled to "take the abandoned market share." In a December 2006 memo titled, "Project Gazelle, Report on Iranian Business," bankers discussed how to increase "wallet share" with Iranian clients.
And for those of you who wonder why sanctions aren't having any effect on Iran, this ought to be a clue.
In an unusual look inside a bank, the regulator described how Standard Chartered officials debated whether to continue Iranian dealings. In October 2006, the top official for business in the Americas, whom the regulator did not name, warned in a "panicked message" that the Iranian dealings could cause "catastrophic reputational damage" and "serious criminal liability."
A top executive in London shot back: "You f---ing Americans. Who are you to tell us, the rest of the world, that we're not going to deal with Iranians." The reply showed "obvious contempt for US banking regulations," the regulator said.
You mean the Obama administration hasn't given Standard Chartered an exemption from the sanctions? That might be the first instance I've heard where there was no exemption.
What could go wrong?
Labels: Bank Mellat, Iran sanctions regime, Iranian central bank
Iran to be banned from SWIFT?
The European Union may
ban certain Iranian entities from using the Belgian-based SWIFT bank transfer system, a move that would make it extremely difficult for those entities to pay and be paid for goods and services.
The system, known as the Society for Worldwide Interbank Financial Telecommunication, or Swift, oversees the network used by most of the world's largest banks to conduct financial wire transfers. American lawmakers have charged in recent weeks that Iranian companies and banks blacklisted by the U.S. and EU have been using Swift to evade international sanctions.
Both houses of the U.S. Congress have drafted legislation threatening to penalize Swift's board of directors and owners if they didn't ban the suspect Iranian entities from using its network.
A formal ruling by EU financial regulators on Swift is expected by late February or early March, according to European and U.S. officials. Swift's board is expected to comply, according to these officials.
"Yes, [it's a] done deal," said a European official. "[It] should be explicitly confirmed by the end of February, early March."
...
According to Swift's public records, many of Iran's largest banks, which have been sanctioned by the U.S. and EU, have continued to use the Swift system in recent months. These include: Banks Sepah, Saderat, and Mellat.
Congressional officials said they're not certain if the new EU regulations will also ban Iran's central bank from using Swift. Banning Bank Markazi would almost completely freeze Iran out of the global banking system, they said.
What took so long? Two years ago, this sanction might have had a chance of stopping Iran.
Labels: Bank Mellat, Iran sanctions regime, Iranian central bank, Iranian nuclear threat
Obama signs defense authorization bill that includes sanctions against Iranian central bank
In 2-6 months, we may finally get to see whether real sanctions can have an impact on Iran's pursuit of nuclear weapons. It's long overdue. President Obama has thrown in the towel and signed a defense authorization bill that includes
tougher sanctions than before against countries and institutions that deal with Iran's central bank.
The sanctions target both private and government-controlled banks - including central banks - and would take hold after a 60- to 180-day warning period, depending on the transactions, a senior Obama administration official said.
Under the law, the president can move to exempt institutions in a country that has significantly reduced its dealings with Iran and in situations where a waiver is in the US national security interest or otherwise necessary for energy market stability. He would need to notify Congress and waivers would be temporary, but could be extended.
Sanctioned institutions would be frozen out of US financial markets.
"Our intent is to implement this law in a timed and phased approach so that we avoid repercussions to the oil market and ensure that this damages Iran and not the rest of the world," the senior US official told Reuters. "The idea here is to reduce Iran's oil revenues."
It's an election year. How many countries and institutions do you think Obama will want to exempt?
Labels: Barack Hussein Obama, Iran sanctions regime, Iranian central bank
US Senate votes UNANIMOUSLY to sanction foreign financial institutions that do business with Iran's Central Bank
In addition to being long overdue and the right thing to do, the
unanimous vote in the US Senate on Thursday to sanction Iran's Central Bank represents a stunning defeat for US President Barack
Hussein Obama.
The US Senate unanimously approved tougher sanctions against Iran on Thursday, voting to penalize foreign financial institutions that do business with Iran's central bank, the main conduit for its oil revenues.
The Senate acted despite warnings from Obama administration officials who said threatening US allies might not be the best way to get their cooperation in action against Iran.
Administration officials said they were indeed looking to sanction Iran's central bank, but in a calibrated manner, to avoid roiling oil markets or antagonizing allies.
...
The Senate voted 100-0 for an amendment sponsored by Senator Robert Menendez, a Democrat, and Senator Mark Kirk, a Republican, that would allow the US president to sanction foreign banks found to have carried out a "significant financial transaction with the Central Bank of Iran."
100-0. No abstentions. No one voting present as Obama was prone to doing when he was in the Senate. It doesn't get any more resounding than that.
The sanctions were approved as an amendment to a huge defense bill that passed later on Thursday in the Senate. Similar provisions have passed a House of Representatives committee, increasing the likelihood that some version will be sent to Obama for his signature into law -- or possible veto.
Let him dare to try to veto it.... In fact, I think the Senate gave him too much already.
The Senate amendment provides a six-month grace period before sanctions would kick in for petroleum transactions with Iran's Central Bank, a move that appeared designed to give world oil markets time to adjust.
It includes a "waiver" letting the president suspend the sanctions if he deems it vital to US national security.
I think the calculation is that Obama won't dare to invoke 'national security' at the height of an election campaign and run the risk of watching Iran develop a nuclear weapon during the run-up to November. The 'most pro-Israel President evah'? Is anyone still fooled by him?
YNet adds:
Meanwhile, US and Israeli delegations, headed by US Deputy Secretary of State William J. Burns and Deputy Foreign Minister Daniel Ayalon, met Thursday in Washington to continue the semi-annual US-Israel Strategic Dialogue.
The Strategic Dialogue is an opportunity for the United States and Israel to discuss at a senior level the issues that affect our mutual security and partnership.
"Israel and the United States are completely coordinated in their positions vis-à-vis Iran," Ayalon told reporters after the meeting.
"The dialogue was productive and thorough, and I expect to see results in the upcoming weeks," he said.
Israeli Ambassador to Washington Michael Oren added that "the Americans are determined to prevent Iran from developing nuclear weapons and we trust the determination of President Obama."
In a statement following the meeting, US Deputy Secretary of State William J. Burns noted: "Iran’s continued noncompliance with its international obligations related to its nuclear program, as well as its continued support for terrorist organizations, are of grave concern to our two countries and the entire international community.
"Continued efforts by the international community are critical to bringing about change in Iranian behavior and preventing Iran from developing a nuclear weapons capability," the statement read.
How much longer are our diplomats going to continue to allow Obama to save face by making statements like that? The man is a Jew-hater and it's time to call him one.
Labels: Barack Hussein Obama, Iran sanctions regime, Iranian central bank, Iranian nuclear threat, Mark Kirk, Robert Menendez
Confederation of Iranian Students statement on UK embassy attack
I received via email the following statement from the Confederation of Iranian Students and the Iranian Freedom Institute regarding the Basij-led attack (that's what they're calling it - the Iranians are calling the attackers 'students') on the British embassy in Tehran on Tuesday.
As the U.S. and its European allies begin to impose effective sanctions on the Islamic Republic, the western democracies should anticipate that the regime will initiate more of these fully-authorized, staged incidents under the guise of a student movement. The so-called students, of course, are plain-clothed basiji following orders from the regime. Even Moussa Ghornani, a member of the legal committee of the Iranian Parliament, admitted unwittingly in a statement that “the students who entered the British Embassy yesterday were members of one of the official and effective organizations within the regime.” The basiji “students” published an announcement in the Raja News (the official news agency of Mahmoud Ahmadinejad) that railed against the government of Britain because “this evil government had the audacity to sanction our Central Bank.”
The western democracies should take this incident as evidence that the recently imposed sanctions on the Central Bank of Iran (CBI) have infuriated the regime. And for good reason. The CBI sanctions will disrupt the smooth flow of revenue to the regime that is essential to pay its loyalists, the basiji, and the Revolutionary Guard Corps leadership. The Iranian Freedom Institute (IFI) and the Confederation of Iranian Students (CIS) applauded the imposition of CBI sanctions noting that this is a major step in the right direction.
Contrary to the regime’s propaganda, the Iranian freedom student movement believes the regime has lost its legitimacy and has called repeatedly for its removal. The western democracies should not be misled by the regime’s subterfuge. The Iranian freedom student movement seeks a free, democratic and secular Iran. The Confederation of Iranian Students, in particular, has been at the forefront of this fight for basic human rights and freedoms that the Iranian people desperately seek. Be clear on this point. The Iranian regime, not the average Iranian citizen, is affected by the CBI sanctions and only the imposition of oil sanctions would have a decisive impact on the Islamic Republic.
IFI and CIS believe that the imposition of oil sanctions against the Islamic Republic will cut off the life blood of the regime – the revenue essential to meet the payrolls of its domestic security forces, the basiji and the Revolutionary Guard Corps leadership. The oil sanctions report prepared by the CIS presents a detailed analysis showing how a carefully developed and implemented plan, coordinated closely with the Saudi government, would cripple the Iranian regime and avoid shocking the international oil markets during the current period of international financial turmoil. In this regard, IFI and CIS strongly support French President Sarcozy’s call for international sanctions on the Iranian regime’s oil exports, and will continue their efforts to encourage the U.S. Congress to adopt bipartisan legislation toward that end.
Well, I'm glad to see we've finally done something effective. Imagine if we actually had shut down all access for the Central Bank of Iran to the world financial markets. Maybe they'd even think about stopping the nuclear program.
And with that, I'd like to direct a question or two to whomever sent me this email (yes, I got this anonymously - that's how all these things come - but obviously whoever sent it is at least aware that this blog exists and is probably looking out for this post).
If you were to unseat the Mullahs and Ahmadinejad, what would you do with Iran's nuclear program?
If you were to unseat the Mullahs and Ahmadinejad, what kind of relations, if any, would you anticipate having with the State of Israel?
Two and a half years ago, during the Green Revolution, I could not get straight answers to either of those questions. And so, we will try again.
Labels: Basij, British embassy, Iran sanctions regime, Iranian central bank, Iranian nuclear program, Iranian regime change, Tehran
US, UK and Canada implementing new, coordinated sanctions against Iran
ABC News is reporting that the United States, the United Kingdom and Canada will implement new, coordinated
sanctions against Iran on Monday.
U.S. officials familiar with the plans say they target Iran’s nuclear sector as well as plugging key gaps that have allowed Iran to work around existing sanctions on its energy and financial sectors. The United Kingdom and Canada are both expected to announce unilateral measures to limit Iran’s access to their economies, with the UK essentially cutting off Iran’s access to its financial sector.
European Union ministers are expected to meet on December 1 to consider their own sanctions.
Two U.S. officials, who spoke on the condition of anonymity given the diplomatic sensitivities involved, say the State Department will sanction Iran’s petrochemical industry, which is normally used to produce products like plastic and styrofoam but is increasingly used to refine petroleum, as international sanctions have constrained the capacity of Iran’s energy sector. The new measure aims to discourage foreign companies from investing in that industry because it could inadvertently aid Iran’s energy sector and undermine previous sanctions.
The State Department is also expected to target both foreign and Iranian entities, many controlled by the Revolutionary Guard Corps, that have begun to help out with critical tasks in Iran’s oil and gas sector, picking up the slack as foreign companies pull out for fear of running afoul of sanctions.
A State Department spokesman declined to comment for this story.
The Treasury Department, meanwhile, is expected to issue a finding that the Iranian financial system is a “jurisdiction of primary money laundering concern.”
The finding, made under section 311 of the USA Patriot Act, enables the Secretary of the Treasury to require American banks to conduct additional reporting to ensure their corresponding foreign accounts are not indirectly dealing with Iran. That extra vigilance, officials say, will have a cascade effect where foreign financial institutions are more reluctant to do business with Iran.
The State Department and Treasury Department are also expected to designate additional Iranian entities for their role in Iran’s nuclear program.
A Treasury Department spokeswoman also declined to comment for this story.
But as long as Europe continues to trade with Iran, how effective are these sanctions going to be? If the US really wanted to shut Iran down, all it has to do is bar any bank that deals with the Iranian Central Bank from doing business in the US banking system. YNet refers to sanctioning the Central Bank as '
truly disabling sanctions.' Unfortunately, that's not happening right now. Iran's economy will be
spared yet again.
Despite the renewed pressure, sanctions on the Iranian Central Bank and bans on Iran’s oil and gas sector will not be included in this latest round, according to one U.S. official, citing fears that such measures could lead to a spike in oil prices that would harm America’s own economic recovery.
Yes, of course, where have we
heard that before?
While I have yet to see an official reaction from the Israeli government, JPost
reports that the new sanctions are "not expected to satisfy those in the West and in Israel, who had hoped IAEA document would trigger concrete international action, such as an IAEA referral of its case to the UN Security Council."
Pick your poison. If the 'international community' refuses to stop Iran, I can name one country in the Middle East that will do everything it can to stop them.
Labels: Iran sanctions regime, Iranian central bank, Iranian nuclear threat
IAEA confirms Iran seeking nuclear weapons
I was away from the computer even more than I anticipated today. The problem is it also means a lot of my work slipped for another day....
The IAEA confirmed on Tuesday that Iran is pursuing a nuclear weapon. I suppose we should be grateful that Yukio Amano now runs the IAEA - if ElBaradei was still running it, they'd have to confirm that it was a nuclear weapon after it hit Israel, God forbid. But now that everyone knows that Iran is developing a nuclear weapon,
will anything be done to stop it?
In the most critical and damning report of Iran’s nuclear program to date, the International Atomic Energy Agency (IAEA) said Tuesday that the Islamic Republic is working to develop a nuclear-weapon design and is conducting extensive research and tests only relevant for a nuclear weapon.
"The agency has serious concerns regarding possible military dimensions to Iran's nuclear program," the IAEA said in the report, which included a 13-page annex with key technical descriptions of its research. “The information indicates that Iran has carried out activities relevant to the development of a nuclear explosive device."
...
The report focuses on three main technical areas - the “green salt project”, a name for a covert Iranian program to enrich military-grade uranium; the development and testing of high explosives; and the re-engineering of the payload chamber of ballistic missiles to be able to accommodate a nuclear warhead.
In the report, for example, the IAEA reveals that Iran was working on “exploding bridgewire detonators” which are fast-acting detonators required to create a nuclear explosion.
“Given their possible application in a nuclear explosive device, and the fact that there are limited civilian and conventional military applications for such technology, Iran’s development of such detonators and equipment is a matter of concern,” the report said.
One member state provided the IAEA with information about a “large-scale” test Iran conducted in 2003 to initiate a high explosive charge in the form of a hemispherical shell whose dimensions are consistent with the dimensions of a potential nuclear payload that can be installed on a Shahab-3 ballistic missile.
Work on this project was assisted, according to the IAEA, by a foreign expert, apparently a reference to a Russian scientist who worked with Iran from 1996 to 2002. The scientist has been named in various media reports as Vyacheslav Danilenko.
Additional information in the report reveals that Iran has manufactured simulated nuclear explosive components using high density materials such as tungsten to determine if its theoretical design of an implosion device is correct.
Unfortunately, for now at least, the western response looks like
it will be weak.
However, a US official said on Tuesday that Washington may impose more sanctions on Iran, possibly on commercial banks or front companies, but is unlikely to go after its oil and gas sector or its central bank for now,
"I think you will see bilateral sanctions increasing," the official, speaking on condition of anonymity, said after the report's release.
"From our side, we are really looking to close loopholes wherever they may exist," he added, noting that US sanctions are so comprehensive that "there is not a whole lot out there other than the oil and gas market and you know how sensitive that is."
"I don't think we are there yet," he added, referring to the possibility of the United States seeking via US sanctions to make it harder for Iran to export oil and gas, the mainstay of the Islamic Republic's economy.
The official also played down the chances of sanctioning Iran's central bank, which is the clearinghouse for much of its petroleum trade with the rest of the world and which Washington recently suggested was a possibility.
"That is off the table (for now)," said the US official. "That could change, depending on what other players (think). I don't want to rule that out, but it is not really currently on the table."
Of course, the oil and gas industry and the central bank are the only unimposed sanctions that could have a major impact.
What could go wrong?
UPDATE 8:01 AMI meant to add this last night. You can find a copy of the IAEA report
here.
Labels: IAEA, Iran sanctions regime, Iranian central bank, Iranian nuclear threat, Iranian oil
House Foreign Affairs Committee passes sanctions against Iranian Central Bank
The US House Foreign Affairs Committee has passed sanctions against the Iranian central bank. While the bill must still pass the full House and be reconciled with a similar bill working its way through the Senate, it is likely that
some version of the bill will pass.
"I hope we can ... have these bills on the president's desk in time to hand the Iranian regime a nice holiday present," said Representative Ileana Ros-Lehtinen, the Republican chairman of the House Foreign Affairs Committee and a sponsor of the House bill.
The legislation requires the US president to impose sanctions on Iran's central bank if he determines it is facilitating terrorism or the development of nuclear weapons, or supporting Iran's elite military force, the Islamic Revolutionary Guard Corps.
"I believe the central bank of Iran is not only engaging in those activities; I believe it is the ultimate engine of those activities," said the author of the central bank provision, Representative Howard Berman, a Democrat.
The sanctions would effectively block from the US economy any foreign bank involved in significant transactions with Iran's central bank. The legislation was approved by the House panel on a voice vote.
It would extend and tighten existing US sanctions on Iran's energy and banking sectors that were approved by Congress last year as part of Washington's efforts to deter Iran from developing nuclear weapons.
I discussed some of the implications of sanctions against Iran's Central Bank
here.
Because even the House version of the bill requires a Presidential determination that Iran is using the Central Bank to promote its nuclear program, President Obama is unlikely to veto the bill.
But at this point, a sanctions bill is becoming irrelevant. As we have seen in earlier posts,
events seem to be taking on a life of their own. They're not going to wait for sanctions to take effect.
Labels: Iran sanctions regime, Iranian central bank, Iranian nuclear threat, toothless sanctions
This should have been done a long time ago
The Los Angeles Times reports on Friday that Iran's
failed plot to assassinate the Saudi ambassador to the United States, and to blow up with Saudi and Israeli embassies in Washington (although for some reason they mention Argentina rather than Israel), has convinced the Obama administration to consider sanctioning Iran's Central Bank. For once, it sounds like these sanctions
could actually do something.
David Cohen, the Treasury undersecretary for terrorism and financial intelligence, told the Senate Banking Committee that officials were "looking very actively" at such a step and might carry it out if other nations could be persuaded to follow suit.
The blacklisting is the first specific step the administration has identified as a possible response to the alleged plot to assassinate Saudi Arabia's envoy to the United States and to attack embassies in the U.S. and Argentina.
Such sanctions would aim to isolate the Bank Markazi, or central bank, from the world economic system by barring any firm that deals with it from doing business with U.S. financial institutions. That would make it far more difficult for Iran to sell crude oil, which funds much of the government's activities.
Some Iranian officials have warned that they would look on such a move as an act of war.
...
Sen. Mark Kirk (R-Ill.) said the administration's sanctions so far hadn't been enough to dissuade Iran from continuing its nuclear program or sponsoring terrorism. He called on the White House to "move quickly to implement the most effective nonmilitary response: cutting off the central bank of Iran and collapsing the Iranian currency." The move would "economically cripple" Iran, his office said in a statement.
Mark Dubowitz, a specialist on sanctions at the Foundation for Defense of Democracies, said a so-called designation of the bank would not halt all of Iran's crude oil sales, but it would sharply raise the cost of such transactions and thus "drain the Iranian treasury." He said Iran, the third-largest OPEC oil exporter, is a "one-crop country" that derives 50% to 75% of its government revenue from crude oil.
Congress last year slapped sanctions on Iranian banks involved in the energy sector to bar them from contact with the U.S. financial system. But U.S. officials say these banks have continued to conduct oil business because the central bank has secretly carried out the transactions on their behalf.
In his testimony, Cohen said U.S. officials were also considering another proposal many lawmakers favor: halting all sales of oil products made from Iranian crude to the U.S. market. Americans use gasoline that is refined from Iranian crude by international oil companies, which then distribute it in the United States. Cohen said Treasury economists were studying that proposal to evaluate its effect on oil markets.
Both these steps are long overdue. I find it incredible that Americans are buying gasoline that's being made from Iranian crude oil.
Labels: Iranian assassination plots, Iranian central bank, Israeli embassy, Saudi embassy
