US Prosecutors Say Chinese Banks Helped Iran with Money Transfers

August 30, 2012Bankingby EW News Desk Team

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Prosecutors in the United States say they have uncovered new evidence indicating that Chinese banks may have assisted Iran in monetary transactions – a direct violation of financial sanctions imposed by the United States.

As part of its global investigations, US prosecutors have in recent weeks identified and taken action against several Wall Street banks for funnelling billions of dollars through their American branches to Iran and other sanctioned nations.

In the last two months, UK banks HSBC and Standard Chartered emerged as money-laundering suspects. Both banks agreed to pay hefty fines to settle the allegations without admitting any wrongdoing.

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According to a report by the New York Times, prosecutors have this time around gathered information on how Chinese banks may also be involved in routing money on behalf of Iran – information that is “more valuable than any monetary settlement the authorities could win from the global banks.”

The Times said prosecutors have not yet accumulated enough evidence to open a formal investigations into the Chinese banks involved, but there are concerns that the banks may have allowed “clients suspected of financing weapons development to open accounts in China, and then get access to dollars through money transfers from a foreign bank by way of its American subsidiary.”

US officials have complained that part of the problem with Chinese banks is that unlike their European counterparts, Chinese banks and regulators have largely ignored US’ requests for information.

John Moscow, a New York lawyer specialising in international bank fraud and money laundering, told the Times:

The Chinese business community has not show any sign that they accept US sanctions against Iran. [Chinese banks] will attempt to structure their legal affairs so they can do business with America and Iran, which means keeping secrets from the US.

Earlier this month, China raised its “strong dissatisfaction” and opposition towards US-led sanctions against Iran.

Urging the US to revoke its sanctions against the Bank of Kunlun, a state-owned Chinese bank accused of ties with Iran, a Chinese foreign ministry spokesperson said the US sanctions “badly violates rules governing international relations and hurt China’s interest.”

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