In a recent revelation, Iranian entities reportedly used accounts at Lloyds Banking Group PLC LYG and Banco Santander SA SAN to evade U.S. sanctions. The banks are now under scrutiny for their involvement in the illicit transactions.
What Happened: The Iranian entities, including the Islamic Revolutionary Guard Corps, used the British and Spanish banks to bypass U.S. sanctions, reported the Financial Times on Sunday. The IRGC is a branch of the Iranian Armed Forces and has been designated as a terrorist organization by the U.S.
The transactions were reportedly carried out through a complex web of companies and individuals, making it difficult for the banks to detect the illicit activity. The U.S. authorities are now investigating the matter, and the banks could potentially face significant penalties if found guilty of violating U.S. sanctions.
"The Group's business activities are conducted to ensure compliance with applicable sanctions laws. We are committed to adhering to all legislative and regulatory requirements as they relate to economic crime. We are not permitted to comment on individual customers. In addition, due to legal restrictions, we cannot comment on the submission of suspicious activity reports to relevant authorities when and if they occur," Lloyds Banking Group spokesperson told Benzinga in an emailed statement.
However, Santander did not immediately respond to Benzinga's request for comment.
Why It Matters: The revelation of Iranian entities using European banks to evade U.S. sanctions comes at a time of heightened tensions between the U.S. and Iran. The U.S. has recently announced its intention to conduct additional strikes on Iran-aligned groups in the Middle East, following recent attacks on these factions in Iraq, Syria, and Yemen.
Despite the U.S.’ assertion that it is not seeking war with Iran, analysts warn of a larger conflict already brewing due to the alarming escalation in tensions. The U.S. has also been increasingly concerned about Iran’s supply of advanced weaponry to Houthi rebels in Yemen, which is bolstering the rebels’ capacity to disrupt international commerce and attack merchant vessels.
Earlier, Iran had temporarily paused the supply of weapons to Houthi rebels in Yemen via sea routes following U.S. and UK airstrikes, leading to a cautious sense of optimism among Western officials regarding the effectiveness of the military intervention.
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