Australia Briefing Memo - Final

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					         How Australian Authorities can Leverage the Banking Sector to Enforce Sanctions Against Iran
                                               By Avi Jorisch
                                                30 June 2010

                                                           To date, the United Nations Security Council has
Halting Iran’s progress toward nuclear weapons             passed four resolutions (UNSCRs) targeting Iran’s
appears to be high on the agenda of leaders in the         nuclear activities: UNSCR 1737 in December 2006,
United States, Europe, and the rest of the international   UNSCR 1747 in March 2007, UNSCR 1803 in March
community. Yet few governments fully grasp how             2008 and UNSCR 1929 passed in June 2010. All have
best to implement sanctions, which are one of the          expressed ―serious concern‖ over International
most powerful tools available if applied correctly.        Atomic Energy Agency (IAEA) reports regarding the
This is particularly true when it comes to stopping the    regime’s nuclear program.
flow of illicit funds through the banking sector—an
area in which sanctions can be most effective.             Three of the four resolutions have also made reference
                                                           to Iranian financial institutions. UNSCR 1747 enacted
The objective of this brief, which is based on Iran’s      sanctions against Bank Sepah and Bank Sepah
Dirty Bank’s: How the Islamic Republic is Skirting         International. UNSCR, 1803, called on all countries to
International Financial Sanctions by Avi Jorisch, is to    ―exercise vigilance‖ over any institutions dealing with
provide several key pieces of information regarding        Iranian banks and their foreign subsidiaries, in
Iran’s ability to circumvent UN sanctions via the          particular Bank Melli and Bank Saderat. Although the
international financial system:                            UN did not officially sanction Melli and Saderat, both
                                                           banks have been implicated in illicit international
   A brief description of the sanctions regime            activity. The most recent resolution, UNSCR 1929,
    currently in place against the Iranian banking         designated the First East Export Bank, located in
    sector.                                                Malaysia and a subsidiary of Bank Mellat.
   A detailed ―map‖ of Iranian banks designated by
    the UN and their financial connectionto Australia.     POLICY RECOMMENDATIONS
    Included is a list of the international banks that
    provide correspondent services to Iranian banks,       The Australian government should consider
    along with the currencies used in their trans-         passing legislation barring any company or
    actions. In all of these cases, bank account           financial institution that does business directly or
    information, Society for Worldwide Interbank           indirectly with designated entities from having
    Financial Telecommunication (SWIFT) data, and          Australian interests or operations. And, given
    Bank Identification Codes (BICs) are provided in       current estimates regarding Iran’s progress
    detailed charts—in other words, all of the nuts-       toward nuclear weapons, the Treasury and other
    and-bolts identifier information needed to ensure      relevant government departments and agencies
    that banks cease doing business with Iran.             should aggressively implement this legislation in
   A list of Australian banks that provide services to    order to impact the regime’s illicit finances sooner
    the international banks.                               rather than later. Currently, at least 34 banks around
                                                           the world are doing business with designated Iranian
UN SANCTIONS                                               entities. Of those, there are 29 banks that have either

                                                                      Red Cell Intelligence Group | |
operations or interests in Australia while               18.   Mizuho Corporate Bank Ltd (Japan)
simultaneously providing financial services to           19.   Sumitomo Mitsui Banking Corporation (Japan)
designated Iranian banks. In other words, these          20.   The Bank of Tokyo-Mitsubishi UFJ Ltd (Japan)
institutions have the best of both worlds—they can       21.   DnB NOR Bank ASA (Norway)
continue to do business with a rogue regime and          22.   Nordea Bank Norge ASA (Norway)
service the Australian public. The Australian            23.   BankMuscat SAOG (Oman)
government should mandate that foreign banks with        24.   Riyad Bank (Saudi Arabia)
Australian operations or correspondent relationships     25.   Aresbank SA (Spain)
with Australian banks must certify that they are not     26.   Banco Santander SA (Spain)
doing business directly or indirectly with any           27.   Bank of Ceylon (Sri Lanka)
designated Iranian banks – in other words, pass ―clean   28.   Nordea Bank AB (Sweden)
hands‖ legislation. If forced to choose between the      29.   Skandinaviska Enskilda Banken AB (Sweden)
Australian and Iranian markets, these banks would        30.   Banque de Commerce et de Placements SA
most likely pick the former.                                   (Switerland)
                                                         31.   United Bank AG (Switzerland)
The Australian government should consider                32.   Zürcher Kantonalbank (Switzerland)
passing legislation that bars Australian banks from      33.   Dubai Islamic Bank PJSC
providing correspondent services to any bank that        34.   Emirates NBD Bank PJSC
conducts business with designated entities. Cur-
rently, 6 Australian banks are providing such services   AUSTRALIAN BANKS CONDUCTING
to institutions that deal with UN-designated Iranian     BUSINESS WITH INTERNATIONAL BANKS
banks. Such institutions should not be rewarded with     THAT SERVICE DESIGNATED IRANIAN
access to the Australian market if they continue to do   BANKS
business with Iranian designees.
                                                         1. Australia and New Zealand Banking Group
INTERNATIONAL BANKS PROVIDING                               Limited (ANZ)
SERVICES TO U.N.-DESIGNATED BANKS                        2. Commonwealth Bank of Australia
                                                         3. JPMorgan Chase Bank, Australia
1.    Raiffeisen Zentralbank Österreich AG (Austria)
2.    UniCredit Bank Austria AG (Austria)                4. National Australia Bank Ltd
3.    Sonali Bank Limited (Bangladesh)                   5. State Bank of India
4.    Fortis Bank SA/NV (Belgium)                        6. Westpac Banking Corporation
5.    Danske Bank A/S (Denmark)
6.    Société Générale (France)                          **For more information contact us at
7.    BHF-BANK Aktiengesellschaft (Germany)     and/or download Iran’s
8.    Commerzbank AG (Germany)
                                                         Dirty Banking: How the Islamic Republic Skirts
9.    Deutsche Bank AG (Germany)
10.   UniCredit Bank AG(Germany)                         International Financial Sanctions at
11.   ING NV (Holland)                          Also available
12.   Habib Bank Limited (India)                         at the same URL is a complete financial picture of
13.   State Bank of India (India)                        Australian banks and their connections to the Iranian
14.   United Bank Ltd (India)                            designated entities.
15.   Bank of the Middle East Iraqi Investment (Iraq)
16.   Trade Bank of Iraq (Iraq)
17.   Intesa Sanpaolo SpA (Italy)

                                                                     Red Cell Intelligence Group | |

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