(Economist) Inside the secret oil trade that funds Iran’s wars

The Economist has spoken to a range of people with first-hand knowledge of Iran’s oil system. To check and verify what they told us, and flesh out the detail, we then sought information from other sources, including former sanctions officials, Iranian insiders, intelligence professionals and WikiIran, a third-party website soliciting leaks. Our investigation shows that the country has built sprawling shadow financial channels, which run from its oil rigs to the virtual vaults of its central bank. China, Iran’s main buyer, is an architect of this system, and its chief beneficiary. Global banks and financial hubs, often unknowingly, are used as vital cogs. A source familiar with Iran’s books says that, as of July, it had $53bn, €17bn ($19bn) and smaller pots of other currencies lying abroad.

Although enforcement has weakened in recent years, Iran is subject to the broadest sanctions America has imposed on any country. Aimed at forcing Iran to curb its nuclear enrichment and funding of terrorism, they target swathes of its economy, as well as the government. No other country imposes such stringent sanctions, so, in theory, most can deal with Iran. In practice, few do so openly, as America bans its firms not just from trading with Iran, but also with foreigners that knowingly do so. It is especially tough for Iran to receive and move dollars, as every such transaction, almost anywhere in the world, must eventually be cleared by an American bank.

But our report shows that, with patchy enforcement, determination and help from a greedy partner, a country under a de facto global embargo can end up flouting it on a cosmic scale. Many of Iran’s tactics are reminiscent of those a drug cartel would use to market products and recycle proceeds into other dark enterprises, often via seemingly legitimate businesses. Iran’s subterranean oil system is governed by rules as much as by threats. The task is to construct an elaborate charade that will dupe sanctions-enforcers.

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Iran's money laundering network (simplified by the Economist) https://t.co/oIUs0Pjo3A pic.twitter.com/qI1FZb8okf

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