January 9, 2007
Prepared Remarks of Stuart Levey
The world is by now well aware of Iran's defiance of the international community in pursuing its nuclear program and its sponsorship of terrorist organizations that maim and murder innocent civilians. What may be less well-known is that the Government of Iran is facilitating its proliferation and terrorism activities through the world's financial system, using its state-owned banks and an array of front companies and other deceptive techniques specifically designed to evade the controls of responsible financial institutions.
Over the past several months, we have been sharing information with our foreign counterparts and key executives in the private sector about these deceptive practices and discussing how best to safeguard the international financial system against them.
As the evidence of Iran's deceptive financial practices has mounted, financial institutions and other companies worldwide have begun to reevaluate their business relationships with Iran. Many leading financial institutions have either scaled back dramatically or even terminated their Iran-related business entirely. They have done so of their own accord, many concluding that they did not wish to be the banker for a regime that funds terrorism, defies the UN Security Council in pursuing a nuclear program, and deliberately conceals the nature of its business.
We have taken a number of steps to combat Iran's abuse of the international financial system. In September, the Treasury took action against Iran's Bank Saderat, which Iran used to move millions of dollars to terrorist organizations such as Hizballah, HAMAS, and the Palestinian Islamic Jihad. Our action alerted the world's financial community to Bank Saderat's role in funding terrorism and cut the bank off from the U.S. financial system altogether.
On December 23, 2006, the UN Security Council unanimously passed Resolution 1737, requiring states to take a number of actions to deny Iran access to the materials and services that support its nuclear and ballistic missile capabilities.
Under the resolution, all governments are obligated to take a number of steps to combat Iran's proliferation activities. Among other things, the resolution requires states to deny Iran any financial assistance, or the transfer of any financial resources or services, related to the supply, sale, transfer, manufacture, or use of prohibited items associated with Iran's nuclear and missile programs. It also contains an annex listing entities and individuals responsible for these programs, and requires states to freeze their assets and those of entities owned or controlled by them.
In accord with these UN obligations, the Treasury today is designating Bank Sepah, the fifth largest Iranian state-owned bank, as a supporter of WMD proliferation. In particular, Sepah provides direct and extensive financial services to Iranian entities responsible for developing missiles capable of carrying weapons of mass destruction. The Treasury is taking this action under our authority aimed at combating proliferation, Executive Order 13382.
Bank Sepah has been a key provider of financial services to the Shahid Hemmat Industries Group (SHIG) and the Shahid Bakeri Industries Group (SBIG), two Iranian missile firms listed in the annex to the Resolution 1737 for their direct role in advancing Iran's ballistic missile programs. Bank Sepah also provides financial services to SHIG's and SBIG's parent entity, Iran's Aerospace Industries Organization (AIO), which has been designated as a proliferator by the United States for its role in overseeing all of Iran's missile industries. AIO's Director is listed in the annex of Resolution 1737, thereby requiring states to freeze his assets as well as the assets of entities under his ownership or control.
Since at least 2000, Bank Sepah has provided a variety of critical financial services to Iran's missile industry, arranging financing and processing dozens of multi-million dollar transactions for AIO and its subordinates.
The bank has also facilitated business between AIO and North Korea's chief ballistic missile-related exporter, KOMID. Also previously designated by the Treasury, KOMID is known to have provided Iran with missile technology. The financial relationship between Iran and North Korea, as represented by the business handled by Bank Sepah, is of great concern to the United States.
Finally, like certain other Iranian banks and entities, Bank Sepah has engaged in a range of deceptive practices in an effort to avoid detection, including requesting that other financial institutions take its name off of transactions when processing them in the international financial system.
Our action today applies to all branches of Bank Sepah, including those in Paris, Rome, and Frankfurt, its wholly-owned subsidiary in London, and the Bank's chairman and director, as well as its more than 290 branches based in Iran.
The United States urges all governments to comply with their obligations under Resolution 1737 by taking appropriate action against all entities involved in Iran's nuclear or missile programs. The Treasury will continue to monitor and act against any threats that Iran and other rogue actors pose to the international financial system.