DIFFERENT ANGLE by Kenneth Rijock
The blunt warning, delivered last week by FinCEN in a major Advisory on Iran, of the risks to the international financial system posed by the Iranian financial sector, including the Central Bank of Iran, adds a new and dangerous dimension to the Iran problem. Here, we have America's FIU stating that Iran's Central Bank is requesting that its name "be removed from global transactions in order for intermediary financial institutions to determine the true parties in the transaction." This means that Iran's current billion dollar financial relationship with Venezuela, including the Banco Central de Venezuela, places Venezuela's Central Bank, and Treasury Bank, on the short list of unacceptable high risk entities. Since Venezuela's central banking structure is facilitating transactions for sanctioned Iranian banks, through the Central bank of Iran, then both the Banco Central de Venezuela and its affiliate, Banco Tesoro, are off limits.
- The Central Bank of Iran, also known as Bank Markazi Jomhouriislamiran, is funneling massive amounts of dollars into, and through, Venezuela, much of which is handled by Iran's own captive Venezuelan-based entity, Banco Internacional Desarrollo. If you read between the lines, that means that if you transact business with the Banco Central de Venezuela, you run the risk of showing up in an investigation by US law enforcement, seeking to enforce OFAC sanctions. You now have the FinCEN Advisory, which has put you on notice about Iran's Central Bank, and only someone practising willful blindness could miss the connection with Venezuela. Therefore, you now need to consider the risks involved in continuing any financial relationship with Venezuelan financial institutions. It is as simple as that.
- One also does not want to forget Banco Tesoro (Treasury Bank), created by the Venezuelan government, ostensibly to take tax payments, customs and other funds which ordinarily went to the Central Bank. Known as a clever method by which the Venezuelan government evades central bank control of inbound funds, it is also known to have reportedly transacted business with Iranian entities, and to act as a conduit for illicit transactions. Legally speaking, its very operation may constitute a violation of Venezuelan law, rendering all of its actions illegal, ab initio. Either central banking entity should be regarded as off limits on a risk management basis.
Whilst we hesitate to recommend that financial institutions decline to deal with the central bank of any sovereign state, the OFAC and FinCEN actions involving Iran have now made transactions with all Venezuelan governmental financial entities forbidden, by virtue of the close relationship between Iran and Venezuela. How do you possibly know that you are not dealing with sanctioned Iranian funds, when you receive, or transfer, money of Venezuelan origin? the short answer is, you do not, and the risk of US regulatory sanctions, which can be Draconian in the Global War on Terror, render such transactions too dangerous to accept.
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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