FinCEN Files: UAE central bank failed to prevent sanctions evasion


By Ahmed Elshamy & Owen Pinnell
BBC Information Arabic

File photo of the Central Bank of The UAE in Dubai (3 January 2017)

picture copyrightGetty Photographs

picture captionThe Central Financial institution of the UAE didn’t reply to the BBC’s request for remark

The United Arab Emirates’ central financial institution did not act on warnings a few native agency which was serving to Iran to evade sanctions, the BBC has discovered.

Leaked paperwork present Dubai-based Gunes Common Buying and selling processed $142m (£110m) in suspicious transactions by way of the UAE monetary system in 2011 and 2012.

The exercise was flagged by a British financial institution, however the agency was in a position to proceed utilizing native monetary establishments.

In 2016, the US mentioned it was concerned in a serious sanctions-busting scheme.

The Central Financial institution of the UAE didn’t reply to the BBC’s request for remark.

Gunes Common Buying and selling has been wound up inside the final two years. The BBC has been unable to achieve anybody for remark.

The paperwork – referred to as the FinCEN Recordsdata – have been leaked to BuzzFeed Information, then shared with the Worldwide Consortium of Investigative Journalists (ICIJ) and BBC Information Arabic.

What sanctions have been being evaded?

The US first imposed sanctions on Iran throughout the 1979-1981 Tehran hostage disaster.

Since then, successive US administrations have launched measures meant to compel Iran to vary its behaviour, comparable to limiting its nuclear programme. One among these measures was to chop off Iranian banks from the worldwide banking system used to make funds in {dollars} in 2012.

picture copyrightAnadolu Company
picture captionReza Zarrab pleaded responsible within the US to fraud, conspiracy and cash laundering costs
US prosecutors alleged that Gunes Common Buying and selling was half

of a network controlled by Turkish-Iranian gold trader Reza Zarrab that carried out a whole lot of tens of millions of {dollars}’ price of transactions on behalf of the Iranian authorities and different Iranian entities that have been barred underneath US sanctions.

There have been no additional issues raised in regards to the firm’s actions following Zarrab’s arrest within the US.

In 2017, Zarrab pleaded responsible to fraud, conspiracy and cash laundering costs. He’s but to be sentenced.

What do the paperwork present?

Banks based mostly within the UAE depend on massive US-based banks to observe and approve their US greenback funds – a service referred to as “correspondent banking”.

Correspondent banks are required to alert authorities to potential situations of felony exercise, comparable to cash laundering or terrorist financing, by submitting a document known as a suspicious activity report (SAR).

Among the many FinCEN information is an SAR that reveals the New York department of UK-based Normal Chartered Financial institution contacted the Central Financial institution of the UAE in 2012 after noticing a whole lot of suspicious transactions by Gunes Common Buying and selling. The stories didn’t say any of this exercise was linked to sanctions evasion by Iran.

SARs are a solution to alert authorities regulators and legislation enforcement to irregular exercise that needs to be investigated, though they aren’t essentially proof of wrongdoing.

The central financial institution informed Normal Chartered that “the case has been handed on to legislation enforcement authorities” and that “accounts have been closed in September 2011”.

However Normal Chartered flagged that the corporate was in a position to “proceed its suspicious exercise” by “using numerous accounts that [it] maintains with different banks”.

In reality, the central financial institution did not cease Gunes Common Buying and selling utilizing two different accounts with two UAE state-owned banks – Rakbank, the nationwide financial institution of the northern emirate Ras al-Khaimah, and the Nationwide Financial institution of Dubai (NBD).

picture copyrightReuters
picture captionGunes Common Buying and selling was based mostly within the emirate of Dubai

The FinCEN information present Gunes Common Buying and selling was in a position to course of an extra $108m of transactions flagged as suspicious till September 2012, nearly all of them by way of Rakbank.

Rakbank mentioned that due to confidentiality it doesn’t touch upon particular transactions but it surely complies with anti-money laundering and sanctions rules and has strict insurance policies in place to observe this.

NBD didn’t reply to the BBC’s request for remark.

In April 2013, the US Financial institution of New York Mellon filed a SAR saying that following a US authorities inquiry into Gunes Common Buying and selling, it believed the corporate was conducting transactions in a fashion designed to evade sanctions towards Iran.

“Authorities authorities should each examine alleged instances of economic crime and defend the integrity of the monetary system,” mentioned Tom Keatinge, director of the centre for monetary crime and safety research on the Royal United Providers Institute (Rusi).

“This case brings into query the extent to which the UAE Central Financial institution took the second a part of this duty critically. Legal actors thrive because of failures to share info, and this seems to be a chief instance of such a failing.”

The FinCen Recordsdata is a leak of secret paperwork which reveal how main banks have allowed soiled cash to be moved world wide. In addition they present how the UK is usually the weak hyperlink within the monetary system and the way London is awash with Russian money.

The information have been obtained by BuzzFeed Information which shared them with the Worldwide Consortium of Investigative Journalists (ICIJ) and 400 journalists world wide. Panorama has led analysis for the BBC.

FinCEN Recordsdata: full protection; observe response on Twitter utilizing #FinCENFiles; within the BBC Information app, observe the tag “FinCEN Recordsdata”

Associated Subjects

  • Money laundering

  • United Arab Emirates
  • Iran
  • Iran sanctions
  • Banking

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