FROM A
DIFFERENT ANGLE by Kenneth Rijock
Financial Crime Consultant, for World-Check
US warnings to UAE companies about Iran increase
21 March 2007

Strong statements made recently by US government officials traveling in the United Arab Emirates, preaching of the dangers of diversion of dual-use goods to Iran should serve as a timely warning to bankers whose customers may be exporting those sensitive high-technology and chemical products. Whilst the exporters run the risk of US sanctions, up to and including OFAC designation, their UAE bankers could find themselves in danger of becoming casualties in America's increasingly bellicose posture towards Iran. The military term is "collateral damage," meaning that UAE banks could become incidental casualties, as America & Iran edge closer to war. Rest assured, if military hostilities do break out between the US and Iran, those regional financial institutions that are processing payments from Iran for dual-use technology may find themselves on the OFAC list for a long, long time. Consider that when approving a suspicious transaction.

The US position is simple: Iran disguises its commercial activities through front corporations that engage in deceptive methods to funnel dual-use goods (products that may have both civilian and military applications, and can be used in illicit WMD and missile programmes) that the US has vowed to interdict.

There is substantial UAE-Iran trade in which to hide dual-use goods, and one must assume that US security services have agents in the region, carefully watching and recording all trade involving the ultimate shipment of goods into Iran.

Prudent MLROs and compliance officers in the region, and in Dubai in particular, should look beyond letters of credit, and require actual customs documents. There is now new technology that allows bankers to profile and identify, on a real-time basis:   

  • Abnormal Trade Pricing
  • Abnormal Weight Analysis
  • Transfer Pricing
  • Trade-based Money Laundering

Although outside the scope of this article, should any reader engaged in trade financing not be aware of these resources, kindly send e-mail for the details.  

The unfortunate reality is that there exists a real danger that the US, in its zeal to deter the shipment of technology to Iran that assists its WMD and missile programmes, will mete out sanctions against not only the trading companies involved, but the financial institutions that facilitated payment therefor. Be careful if your clients trade with Iran, as Uncle Sam is watching.

The facts and opinions stated in this article are those of the author and not those of World-Check. World-Check does not warrant the accuracy of any facts and opinions stated in this article, does not endorse them, and accepts no responsibility for them.

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