A sign at the headquarters of Lloyds Banking Group Plc in London, on Monday, March 20, 2023. (Jason Alden/Bloomberg)
Iran evaded sanctions and was able to covertly move money around the world using accounts at two of the U.K.’s biggest banks, Lloyds Banking Group PLC and Santander UK, the Financial Times reported.
The lenders provided accounts to front companies secretly owned by a sanctioned Iranian petrochemicals company, the newspaper reported on Sunday, citing documents it viewed. The sanctions-evasion plan was backed by Iran’s intelligence services, the report said.
The state-controlled Petrochemical Commercial Company and its British subsidiary have been under US sanctions since 2018. The firm is accused of raising money for Iran’s Islamic Revolutionary Guard Corps Quds Force, the FT said. Quds is responsible for handling many of Tehran’s relations with proxy groups in countries such as Iraq, Syria and Lebanon.
The company is also accused of cooperating with Russia to fund Iranian-backed proxy militias, according to the report.
Representatives for the banks said they couldn’t comment on individual customers. Based on its investigation, Santander said it’s not in breach of U.S. sanctions. “We have policies and procedures in place to ensure we comply with sanctions requirements and will continue to engage proactively with relevant U.K. and U.S. authorities,” a representative said. Shares of the Spanish lender fell as much as 6% in Madrid on Monday.
A spokesperson for Lloyds said that the lender’s “business activities are conducted to ensure compliance with applicable sanctions laws” and “due to legal restrictions, we cannot comment on the submission of suspicious activity reports to relevant authorities when and if they occur.”
Full check
Lloyds has done a full exposure check and it believes it has met all legal and regulatory obligations, a person familiar with the matter said, asking not to be identified discussing confidential information.
Though the report is a “significant headline,” it isn’t necessarily a financial risk for Lloyds, according to Bloomberg Intelligence. Lloyds shares were down about 0.7% as of 1:41 p.m. in London.
The petrochemical company has also used companies in the U.K. to “receive funds from Iranian front entities in China while concealing their real ownership through ‘trustee agreements’ and nominee directors,” the newspaper reported, citing documents it analyzed.
The U.S. last week imposed a raft of sanctions targeting Iran’s ballistic-missile and drone programs as well as its ability to wage cyber warfare against the U.S. It also struck many locations in Iraq and Syria linked to the Quds. Those attacks were in response to the killing of three U.S. soldiers in a drone attack on an American based in Jordan last month.
And recently, the U.S. and U.K. launched airstrikes against Iranian-backed Houthis in Yemen in an effort to stop the group’s attacks on ships in the Red Sea.
Banks like Standard Chartered Plc and UniCredit SpA have previously been fined for violating U.S. sanctions on Iran. StanChart agreed to pay more than $1 billion in 2019 for repeated violations while UniCredit paid $1.3 billion.
With assistance from Rodrigo Orihuela, Paul Wallace, Sam Nagarajan, William Shaw and Macarena Muñoz.
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