A SMALL Hamburg bank is at the centre of an inquriy over its suspected use by Iranian authorities.
It’s been alleged Varengold, which is being investigated by Bafin, could have already laundered billions in illicit transactions.
Western intelligence flagged evidence to German financial authorities that the Iran was using Varengold Bank AG to fund its terror affiliates, Politico reported today (Friday).
German financial regulator Bafin announced an investigation into Varengold last year, citing money laundering concerns, but did not disclose the suspected links between the bank and Tehran.
Varengold has denied any wrongdoing and insists that its dealings with Iran were limited to the shipment of humanitarian aid, including medical equipment and food.
“Our customers in the commercial banking or payment transaction business are mainly producers and global wholesalers of food and pharmaceuticals,” a Varengold spokesperson told Politico.
“In this context, the bank supports, for example, exporters and importers in processing payments for urgently needed humanitarian goods that were not subject to EU or US sanctions,” the spokesperson added.
On August 3 last, Bafin said it had discovered “high money laundering risks and grave deficits” with Varengold’s compliance safeguards.
“Credit institutions like Varengold Bank must ensure that they are not abused for money laundering or terror financing,” Bafin said, without making specific accusations that such abuse had occurred.
As part of Bafin’s intervention, the authority barred Varengold from carrying out transactions with entities and persons connected to Iran — a pillar of its business. Bafin also installed a special auditor to supervise the bank’s activities and ensure it didn’t violate the regulator’s orders.
Many of the transfers under scrutiny involved what Bafin referred to as “payment agents” — suspected Iranian front companies — that held accounts in Varengold.
Iran relies on front companies to launder the proceeds from the sale of oil and petrochemicals, primarily to China and Russia, the officials said. Those transactions are often disguised as humanitarian aid, which isn’t sanctioned.
The media outlet said that western intelligence sources believe some of the Iranian front companies that used Varengold are linked to Iran’s Quds Force, an affiliate of the Islamic Revolutionary Guard Corps (IRGC).
Instead of handing the IRGC and Quds Force cash to fund their clandestine operations, Iran’s central government grants them allotments of oil which they then sell, primarily to China, via a labyrinthine underground financial network in order to skirt sanctions.
The advantage for the buyer is that the price of the sanctioned crude is significantly lower than market rates, Politico reported.
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