The scheme involved a now defunct joint venture by Iran’s two largest lenders altering financial records to hide transactions made between Iran and foreign partners. Throughout 2004 to 2015, the Bahraini venture, called Future Bank, moved US$ 7 billion illicitly.
Sanctions against Iran had barred banks from international markets for the country’s nuclear program and alleged terrorist financing.
Bahraini auditors uncovered several hundred bank accounts that were owned by convicted money launderers and terrorist financiers, The Washington Post found in confidential court filings. Phantom loans that provided money to fronts involving Iran’s Islamic Revolutionary Guard were also found.
The operation was discovered after a legal battle in The Hague at an international arbitration court between Future Bank shareholders and Bahraini regulators who had investigated the dealings. The Iranian shareholders sued Bahrain for shutting down the bank and freezing assets.
After the accusations were flung at Bahrain, the government sent their findings to the court uncovering the concealed transactions.
The investigation found Future Bank had used methods such as wire-stripping and informal alternatives to the SWIFT system to move the money.
The United States and the European Union had already blacklisted the bank prior after previous allegations emerged against it.
Bahrain now intends to press criminal charges against the bank, according to the country’s Foreign Minister Kahlid Ahmed al-Khalifa, who in a statement to The Washington Post said that the investigation had “revealed crimes and violations of Bahraini and international law of massive proportions.”
Bahrain and Iran have been at odds in recent years, including Bahrain accusing Iran of pushing for violence against its monarchy.
