Treasury Department Targets Iranian-Owned Bank in Germany Facilitating Iran's Proliferation Activities
The U.S. Department of the Treasury today designated Europäisch -Iranische Handelsbank (EIH), one of the few remaining European banks actively facilitating business with Iranian banks and handling billions of dollars worth of transactions on their behalf. Today's action was taken pursuant to Executive Order (E.O.) 13382, which blocks the property of designated weapons of mass destruction (WMD) proliferators and their supporters, thereby isolating them from the U.S. financial system.
Headquartered in Hamburg, Germany, EIH provides financial services to Bank Mellat, Persia International Bank, the Export Development Bank of Iran and Post Bank of Iran, all previously designated by Treasury pursuant to E.O. 13382 and by the European Union.
"EIH has acted as a key financial lifeline for Iran. As one of Iran's few remaining access points to the European financial system, EIH has facilitated a tremendous volume of transactions for Iranian banks previously designated for proliferation," said Under Secretary for Terrorism and Financial Intelligence Stuart Levey. "As international sanctions tighten, Iran will find it increasingly difficult to find banks like EIH that will cooperate with it. Treasury will continue to target any bank, wherever located, that supports Iran's nuclear or missile programs."
EIH has facilitated Iran's proliferation activities on a series of occasions. Examples include:
In 2009, EIH and Bank Mellat facilitated nearly $350,000 of business between a weapons exporter and a subsidiary of WMD proliferator Iran Electronics Industries (IEI).
In 2007, EIH and Bank Mellat facilitated a transaction of more than $250,000 directly between IEI and the same arms exporter.
In a six-month period beginning in late 2007, EIH and the Export Development Bank of Iran enabled Iran's missile programs to purchase more than $3 million of material.
Also in 2007, almost $1 million in business involving an Iranian WMD proliferator was facilitated by EIH and Bank Mellat.
EIH also engages in the type of deceptive practices that have become the hallmark of Iranian government-controlled financial institutions. In addition to providing financial services to Iranian WMD proliferators described above, EIH actively obscures Iranian involvement in the process.
Not only has EIH provided financial services to Bank Mellat, the two banks also share leadership. Ali Divandari has served as EIH Deputy Chairman of the Board and Bank Mellat's Chairman and Managing Director and was designated by Treasury under E.O. 13382 in November 2009 and by the EU in July 2010.
Bank Mellat was designated as a supporter of the Atomic Energy Organization of Iran (AEOI) and Novin Energy Company in October 2007. Persia International Bank, a Bank Mellat subsidiary, was also designated in October 2007 for being owned or controlled by Bank Mellat. The AEOI, which reports directly to the Iranian president, is the main Iranian organization for research and development of nuclear technology and manages fissile material production programs. Novin Energy, AEOI's financial conduit, has transferred millions of dollars on behalf of AEOI to entities associated with Iran's nuclear program. Both AEOI and Novin Energy are designated by Treasury under E.O 13382 and by the United Nations Security Council in Resolution 1747.
The Export Development Bank of Iran was designated by Treasury in October 2008 pursuant to E.O. 13382 for providing or attempting to provide financial services to the Iranian Ministry of Defense and Armed Forces Logistics (MODAFL), which was previously designated by the Department of State pursuant to E.O. 13382 in October 2007.
Treasury designated the Post Bank of Iran pursuant to E.O. 13382 in June 2010 for providing financial services to, and acting on behalf of, Bank Sepah since its designation by Treasury in January 2007 for its support and services to Iran's missile industries and subsequent designation by the United Nations Security Council in March 2007.
EIH is the first financial institution designated by Treasury for facilitating Iran's proliferation activities since the Department issued the Iranian Financial Sanctions Regulations on August 16, 2010 to implement the Comprehensive Iran Sanctions Accountability and Divestment Act of 2010. Under these regulations, Treasury may prohibit, or impose strict conditions on, foreign financial institutions' access to the U.S. financial system for facilitating significant transactions or providing significant financial services for a financial institution designated by the U.S. -- such as EIH -- in connection with Iran's WMD proliferation or support for international terrorism. EIH is the 17th financial institution designated by the United State for such activities.
The United States has closely consulted with the German government in taking today's action against EIH and is aware that the German government is also taking steps under its national authorities.
© 2015 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.