Iran was able to covertly move money around the world using accounts at two of the UK’s biggest banks, Lloyds Banking Group Plc and Santander UK, according to the Financial Times. The banks provided accounts to front companies secretly owned by a sanctioned Iranian petrochemicals company, which was backed by Iran’s intelligence services in evading US sanctions. The state-controlled Petrochemical Commercial Company and its British subsidiary have been under US sanctions since 2018, accused of raising money for Iran’s Islamic Revolutionary Guard Corps Quds Force and also cooperating with Russia to fund Iranian-backed proxy militias.
The petrochemical company also used companies in the UK to receive funds from Iranian front entities in China while concealing their real ownership through ‘trustee agreements’ and nominee directors, according to the report. This news comes as the US imposed new sanctions targeting Iran’s ballistic-missile and drone programs as well as its ability to wage cyber warfare against the US. The US and UK have also 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 US sanctions on Iran.
Representatives for the banks said they couldn’t comment on individual customers, while a spokesperson for Santander UK said the firm is “highly focused on sanctions compliance.” Though the report is a “significant headline,” it isn’t necessarily a financial risk for Lloyds, according to Bloomberg Intelligence. Shares of Santander UK fell as much as 6% in Madrid following the news, while Lloyds shares were down about 2% in London as of 9:55 a.m. on Monday. It is unclear what the consequences will be for the banks involved in this latest revelation.