The Slave Trade: Tracking Human Traffickers

Money Laundering Bulletin

People, often with limited opportunities in their home country and who hope for better overseas, represent massive profit potential to those willing to move and exploit them. Significant sums will, inevitably, pass through financial institutions and work is underway, reports Paul Cochrane, on human trafficking indicators and creative identification of associated account-holders.

Scale of 'business'

Profits from human trafficking are estimated at US$32 billion a year and growing, according to the International Labour Organization (ILO), with the trade one of the fastest growing international crimes, now second to the drugs trade and ahead of arms trafficking. But despite its emotive nature as a crime, only recently has the money laundering angle to human trafficking been taken more seriously, and there is still a way to go.

Human trafficking grew exponentially in the post-Soviet Union era of globalization, to the point that 2.4 million people were trafficked at any one time in 2012. Some 20.9 million people are victims of forced labour, with profits from forced economic exploitation estimated at US$4 billion, and from forced sexual exploitation at US$28 billion, says the ILO. An estimated half of the profits, US$15.5 billion, are made in industrialized countries, and close to one-third in Asia, at US$9.7 billion, while on a global level this represents an average of US$13,000 per annum for each forced labourer.

International law and guidance

Efforts to curb the trade only took on a global dimension in 2003, when the United Nations Protocol to Prevent, Suppress and Punish Trafficking in Persons, especially Women and Children, entered into force, and by 2011, 143 states had ratified or acceded to it. At the financial level, the Financial Action Task Force (FATF) started to address trafficking in human beings (THB) in 2010, when the body sent out questionnaires to jurisdictions and collated typologies for a 2011 report, “Money Laundering Risks Arising from Trafficking in Human Beings and Smuggling of Migrants”. In 2012, FATF's revised recommendations included THB as a predicate offence.

While not a 21st century crime, the belated response to going after the revenues of human trafficking has meant there is no 'King Pins Act' (to borrow from the USA's Foreign Narcotics Kingpin Designation Act) as there is to cover the illicit drugs trade or terrorist financing. Neither are there convenient databases to screen for suspected traffickers.

“For terrorism and drug trafficking there are lists of suspects, both formal and informal, but to my knowledge there's no list of suspected human traffickers. It has been identified as a challenge for law enforcement and the private sector,” said Christian Larson, Programme Officer for Economic and Environmental Activities at the Office of the Co-ordinator of the Organization for Security and Co-operation in Europe (OSCE).

Compiling such a list would require cooperation between the financial sector and the government with anti-hunting trafficking organizations, which has been lacking until recently. “The anti-human trafficking world and the anti-money laundering (AML) world often works completely separately, with not enough known about either and vice versa,” said Larson. “Experts until recently didn't look at the financial side and prosecutors often don't have financial investigative training concerning THB. On the other side of the coin, AML experts understand transactions and how to trace funds to offshore jurisdictions or wherever, but often don't know enough about human trafficking and how it might appear.”

Signals ahead

The London-based charity Finance Against Trafficking (FAT) has noticed a gradual change to tackling the financial side of THB, beginning with FATF's report. “It was a really good first step but a lot more needs to be done,” said Jantine Werdmuller von Elgg, Global Projects Officer at FAT. “While I think it is a good report, when it comes to businesses or financial institutions wanting to use it, it's not practical enough, so FAT have developed a Red Flag manual (soon to be released) to identify suspicious financial activity. Along with developing an online auditing tool, we hope this will create a change, starting with the UK and then grow from there.” FAT's aim is to turn THB from being a low risk, high reward crime into a high risk, low reward crime at both ends of the trade – the originating and destination country.

Typologies

Understanding how human trafficking works is, of course, critically important to tackling the financial proceeds of traffickers, and to figuring out how traffickers utilise the financial system. A general definition of human trafficking is the recruitment of people by deception or coercion for exploitation, whether for prostitution, domestic labour, forced labour, crime or organ removal. This can mean that while migrant workers or people being smuggled to another country to start a new life are not initially trafficked persons, as going voluntarily, many become trafficked persons through being deceived and exploited by traffickers. ILO's criteria for forced labour include debt bondage, when somebody is not paid but works to pay off a debt; restriction of movement; and retention of passports or identity documents so a worker cannot leave or prove his/her identity.

Professor Louise Shelley, Director of the Terrorism, Transnational Crime and Corruption Centre at George Mason University in Virginia, USA, and author of “Human Trafficking: A Global Perspective” (2010), has identified a number of THB models that operate around the world. The first, developed by focusing on crime in the former Soviet Union, Shelley termed the “natural resources model”. As she explains: “Women are sold and resold like wholesale gas, and so not as much profit as there could be. Guess where the money goes? Sometimes into real estate, and small quantities are sent back to put into small businesses in the home country, but a lot is deposited in offshore accounts. In one case involving a man that was part of a trafficking ring, US$6 million wound up in Switzerland.” The Chinese version is a “trade and development model” that maximises profits along the chain, from the victim being trafficked from their home country to being forced into labour or sexual exploitation in another jurisdiction: this model favours alternative remittance systems and underground banking.

“Other models took a while to figure out,” said Shelley. “The American pimp model is high consumption and low savings, like the US economy. Few assets can be traced as so much is spent on consumption. Even though proceeds for the pimp can be in the hundreds of thousands not much is in traceable assets.”

The “supermarket model” refers to the trafficking and smuggling of people across the US border from Mexico, with money made on volumes not individuals. The Balkan version is the “violent entrepreneur model,” where organized rings overwhelm competitors through violent means.

“Trafficking models are different throughout the world, and they don't all operate in the same way. Human trafficking may intersect with the banking system, which is not what people thought before, but interacts in more ways than people realized, primarily with the credit card system. If you understand the attributes of business models it shows up in different ways,” said Shelley.

Intelligent track-back by JPMorgan

JPMorgan Chase recently adopted an innovative approach to tackling the financial side of human trafficking. The US bank reverse engineered a criminal indictment to identify clients who had visited the adult section of website Craig's List, focusing on Manhattan and between the hours of 1am and 5am. A small team of three people took six weeks to pull all of the phone numbers they could find on the website, and then compared them to the bank's customer database to see if anyone advertising a service or finding a partner was a customer. They also looked to see if account holders were buying a lot of DVDs or renting them, as human traffickers show films to keep victims occupied when not working. As a result JPMorgan Chase compiled a list of some 300 locations, gained knowledge of THB in New York City, and provided law enforcements with a customer database of suspects. (MLB contacted JPMorgan Chase for further comment but without success).

Police record

Law enforcement in the US and Europe has become more active. The US Department of Homeland Security's Homeland Security Investigations (HSI) section has launched Project STAMP (Smuggler and Traffickers Assets, Monies and Proceeds) to pursue THB via the financial route. And in Britain, the London Metropolitan Police set up Operation Golf to dismantle child trafficking gangs. In 2010, a joint operation by the Met with the Romanian police led to the arrest of 26 individuals for trafficking and exploiting 181 children. “They traced together the groups and links between both ends. People were prosecuted for THB but also for benefit fraud and money laundering,” said Werdmuller von Elgg.

Another success was the 'Sneep' case in Holland, which broke in 2008 and involved 120 women that had been trafficked and forced into sexual exploitation by a Turkish gang; some of the women had been openly on sale in the windows of red light districts for up to 10 years. “Sneep ran for 20 years, and the amount of money they generated was Euro 100,000 to Euro 200,000 a day. Most of it was traced to Turkey where it was laundered into real estate. That is one area that is not getting enough attention in AML; focusing on real estate is essential to countering THB,” said Shelley.

Yet while there is progress in tackling THB at the receiving end in the West, the originating countries – or indeed transit countries – have not been as cooperative in clamping down on the trade. “Some countries are not willing to address the push factor, of preventing women to take these “opportunities” elsewhere as their economies cannot support so many people, and they get remittances. There's often a lack of political will to challenge THB on the country of origin side,” said Larson. 

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Regional trade for China awakens dragon

Executive magazine

From the archives - June 2007

In what is being dubbed “the New Silk Road,” trade and political ties between China and the Arab Gulf are growing stronger as both regions take an increasingly prominent role on the financial world stage. Politics is playing its part,with Saudi Arabia’s newly appointed King Abdullah opting for Beijing over Washington for his first trip overseas last year, and Chinese President Hu Jintao repaying the visit with trips to Riyadh and Dubai.


Bilateral trade between the United Arab Emirates and China is soaring as Emirati companies look eastward for investment opportunities to diversify away from oil, while Beijing secures energy sources and new export markets to keep its burgeoning economy afloat.

Strictly business

“Arabs see China purely as business, at least for the moment,” said Glen Osmond, managing partner for Middle East Strategy Advisors, a leading strategy consultant and investment advisory firm in the GCC.

“The Chinese don’t have problems such as political baggage or externalities like protecting the region, and are there for consumers—the GCC is not a major consumer of Chinese goods compared to the EU or US—but for raw materials,” he added.

China has been quietly taking advantage of its negligible political history in the Middle East and Africa over the last five years, investing billions of dollars in infrastructure projects, signing energy deals, and attracting Gulf money, estimated as high as $20 billion in the past year from the GCC countries alone.

Although Saudi Arabia, the Middle East’s largest economy,has attracted the lion’s share of Chinese investment to the region and been more active in entering the Chinese market,the UAE is slowly catching up.

Since 2001, trade has grown by 30% per annum and the UAE is now China’s top export market in Western Asia and North Africa, according to Global Sources, with exports reaching$14.2 billion in 2006, up from $8.7 billion in 2005. Trade is likely to double by 2010 if targets projected by the Chinese government prove correct. Based on past trade growth, surging 45.5% in 2004 alone, this figure doesn’t seem to be overly optimistic.

“The UAE is a trading centre for the Middle East, so I think this year, or next, trade will grow at high speed,” said Han Xi, Vice Commercial Consul at the Consulate General of China in Dubai.

Dubai’s rulers are certainly aware of the potential. “We want to be number one, and not second. If we join forces together (China and the UAE), we will be number one,” the UAE’s Vice President and Prime Minister Sheikh Mohammed Bin Rashid Al Makhtoum said at a recent press conference.

But Dubai’s ruler is also aware that China is not the only game in town. Trade between the UAE and Malaysia soared20.7% last year to $3.4 billion while UAE-India trade not far behind China at an estimated $11 billion in 2006. India has emerged as Dubai’s largest export destination ahead of Pakistan, Iran and Kuwait, Indian investment in the UAE has doubled in the past four years and trade is expected to surge to $20 billion by 2010.

Indeed, in a seeming about face on the growing UAE-China relationship, Sheikh Mohammed also called for raising India-UAE bilateral trade to the ‘number one’ spot in the region.

But Sheikh Mohammed’s statement is perhaps more about pragmatism, realizing the UAE’s need to have its fingers in many pies. As Osmond pointed out, “the more buyers the better. It’s a souk mentality, and they have a huge machine and it needs to be fed.”

India certainly has a more established connection with the UAE, bolstered by approximately 1.4 million expatriate Indians working in the Emirates versus an estimated 50,000Chinese expatriates.

India however lacks the political and military position of China on the world stage (China is widely seen as a potential counterbalance to the US that Middle Eastern states are keen to develop), and is not a manufacturing powerhouse on par with China. Indeed, in terms of trade with Dubai the statistics speak for themselves: 36.6% of textile imports, 40.7% of furniture, toys and sports products, and48% of all footwear, headgear, umbrellas and flowers came from China in 2005. And according to the Dubai’s Department of Ports and Customs, 17% of all of Dubai’s imports came from China in 2005, making China Dubai’s top supplier of imported goods.

“Dubai is the third largest re-export market in the world,after Hong Kong and Singapore—that is a very impressive statement,” said Bill Janeri, the Middle East general manager of Global Sources, a Hong Kong-based publisher and trade show organizer.

Enter the Dragon

There are now more than 1,000 Chinese companies operating in the UAE, according to Standard Chartered, and that figure is expected to grow as investment floods in.

“China’s first export markets have traditionally been the US or Europe, but everyone wants to sell to these established markets,” said Janeri. “So over the years Chinese companies have either sold to there or been creative and looked for new markets when demand is equally strong—markets where they can be the number 1, 2, 3 player in their segment. Dubai has shown that it is a good location where these companies can ‘plant their flag,’ win new customers, and build market share where demand is strong.”

Global Sources will hold its first trade fair in the region, the China Source Fair, in Dubai in June—with over500 exhibitor booths, it will be the largest ever exhibition of Chinese products in the Emirate, according to the Dubai Trade Center.

Although only $200 million was invested by private Chinese companies in the UAE in 2005, that figure surged to $800million last year and UAE financial institutions are scrambling to procure a slice of the growing trade between the UAE and China.

Standard Chartered have recently rolled out a UAE-China ‘trade corridor’ to cater to small and medium-sized enterprises (SME’s) in the UAE and China.

“We felt this need as China kept the heat turned up on its Gulf marketing blitz to overtake such industrial giants as the US and Japan to become the top exporter to the UAE since2004,” said Sandeep Bose, Regional Head of SME Banking at Standard Chartered in Dubai. “This is expected to continue as the most populous nation on earth is stepping up its export offensive, aided by the fact that its products are more competitive than the products of most other industrial nations.”

But the investment deals and joint ventures the Chinese government is most interested in are Abu Dhabi’s gas,petrochemicals, and aluminum nuggets.

“I wouldn’t be surprised if China makes strategic investments in the region to develop the relationship in all the energy rich countries… Britain has been in the UAE for how long? China wants a piece of that,” said Osmond.

Non-energy imports from the UAE are steadily growing however, up from $2 billion in 2005 to $2.8 billion last year. Investment in China’s booming economy, the fourth largest in the world, is also increasing, spurred on by high liquidity in the UAE and Gulf markets.

“Because oil prices are high there is more interest by UAE businessmen in worthwhile markets, and China has the economic and social elements for attracting such business,”said Han.

Dubai’s mammoth construction companies Emaar and Dubai Holdings, both responsible for tens of billions of dollars in real estate projects throughout the MENA region, have also opened offices in Shanghai. DP World, the world’s fourth largest port operator, also has a corporate division in the North-Eastern Chinese city of Tsingtao.

“I think this is the beginning of Dubai real estate coming to China,” said Han.

But it is not just real estate that is attracting Arab businessmen.

“I went to a trade show in Yiwu recently and part of the town is all Middle Eastern restaurants and businesses,”recalled Janeri. “It doesn’t surprise me that other marketsare looking to invest in China. There is gaping wide demand for certain products—in fact, everything you can imagine,”he added.

Interest in China is certainly growing, with the consulate in Dubai China’s busiest worldwide.

“Everyday we receive more than 300 visa applications—you can see more people want to go to China,” said Han.

An increase in airline flights is also indicative of the growing links, with China Southern Airlines opening an additional route between Dubai and Guangzhou at the end of last month.

Lost in Translation

Dealing with Chinese companies is not always easy—a common complaint voiced by businessmen ever since China opened its doors to the outside world in the 1980s, citing cultural differences and transparency in business practice.

“You hear stories of Chinese signing deals with companies and then reneging on the deal, saying it didn’t comply with their legal definitions or simply disappearing,” said a source at a real estate firm.

“There have also been cases of the Emirati authorities closing down construction sites as in the heat the Chinese workers strip down to their underwear and only wear hardhats, which is against UAE law—they have to cover up,”he added.

Han acknowledged that the consulate had received complaints, largely about wording and English terminology,but said the language issue and business transparency were being addressed.

“Both languages are difficult to learn, so it’s not a deep relationship but a growing one between the Arabs and the Chinese,” said Han.

The relationship is in fact an ancient one that is being gradually rejuvenated.

According to historical texts, some 1,400 years ago there were an estimated 10,000 Arab and Persian traders in Guangzhou (Canton) plying the waters between China and the Middle East. Evidence of the ancient link is also present at Dubai’s Ibn Battuta Mall, where one section is devoted to the famous Tangerine’s travels in the 14th century to China—the exterior a partial replica of the Forbidden City and the interior painted red and offset with traditional Chinese woodwork.

The dark side of the relationship

But it is the Chinese Ministry of Commerce-supported Dragon Mart in Dubai that is the Emirates’ real China Town.

The China connection is not only bolstering official trade ties. As has been the case for most rapidly growing markets,organized crime is on the rise in Dubai. Russian and Indian money launderers are considered the main perpetrators in the financial line, taking advantage of Dubai’s construction boom and real estate speculation to launder money without paying out large commissions to “clean” the cash. But in terms of counterfeit goods, China is the bad guy.

One source likened China to a “massive Xerox machine,”ready to copy any product a buyer might want. China is indeed the No. 1 manufacturer of counterfeit goods, which are estimated at $500 billion worldwide.

Dubai has become the conduit for that illicit trade in the Middle East, with Dubai ports handling some seven million containers a year. Although most of the illicit trade transactions are between Chinese suppliers and Middle Eastern buyers, Dragon Mart, a mall and business center established three years ago, has become the hub for Chinese organized crime, according to a source in the real estate sector.

Earlier this year an undercover Dubai cop was sent to the Dragon Mart to investigate organized crime links at some of the center’s businesses. Told to call in on the hour, every hour, the cop suddenly disappeared. The Dubai police made a raid on the Dragon Mart and after kicking down a few doors, found the policeman dead in a freezer.

Such gruesome incidents are not the only illicit activity connected with China.

According to the real estate source, construction companies linked to the People’s Liberation Army—China’s largest business owner—were exporting convicts to work on sites in the UAE to cut overheads.

The issue has reportedly become so acute that the UAE government has recently banned Chinese construction workers.“It has become too much of a headache for both contractors and the government to regulate,” said the source.

China denies it is involved in such activity, however.

“It’s not true. China is now free, so if a construction company wants to go elsewhere, workers must have passports and visas,” said Han.

China is also reportedly trying to curb counterfeits.“China has a special department to regulate products,especially for exporting products as too many people want to do forgeries and sell low quality products to our friends—this is not good for business,” he added.

Even if this developing friendship will bring with it certain negativities, both economies are experiencing double-digit growth so bolstering such a relationship can only be prudent business for all concerned parties.

But as Han points out, the increasingly strong trade ties require political and economic stability in the Middle East for the relationship to warm any further.

“I think growth all depends on the regional situation,particularly over Iran. If Dubai keeps silent, like the present situation, China will pay more attention.”

Iran dances the sanctions side-step

Money Laundering Bulletin

Iran is labouring under United Nations, US and European Union sanctions. Last year the US tightened the screws further by a series of executive orders: as President Barack Obama said following his re-election in November, 2012: “We’ve imposed the toughest sanctions in history.” Circumvention might also be tougher than ever but even so, some jurisdictions are not cracking down as much as Washington would like. Paul Cochrane reports from Beirut.

Iran has been subjected to US sanctions since the Islamic Revolution in 1979, when the the US blocked Iranian government assets, while the first financial sanctions started in 1980, with an Executive Order prohibiting certain transactions with Iran. Over the last three decades, the US has slapped more sanctions on the country, and in the last few years adding more sectors, ostensibly to reign in Tehran's support for terrorist groups and to stop the development of nuclear weapons.

In 2011, the US renewed the Iran Sanctions Act of 1996 and under Section 311 of the USA Patriot Act 2001, Iran was identified as a jurisdiction of primary money laundering concern. The National Defense Authorization Act of 2012, Sec 1245, ratcheted up the pressure; in effect, “foreign financial institutions that knowingly facilitate significant financial transactions with the Central Bank of Iran or with Iranian financial institutions designated by [the US] Treasury...risk being cut off from direct access to the US financial system.”

In July 2012, sanctions were extended to freeze property of the government of Iran, Iranian financial institutions, and the energy sector; they apply to both US and non-US individuals, companies and other entities. Executive Order 12622 of December 26, 2012, at section 218, prohibited a non-US entity owned or controlled by a US person from engaging in any transaction with the Iranian government.

On the other side of the Atlantic, the EU imposed restrictive measures against Iran in 2007, and again in 2010 and 2012 – targeting the financial sector, energy and the trade in dual-use goods – all designed to frustrate its nuclear ambitions. There have also been four UN Security Council (UNSC) Resolutions (1737 in 2006, 1747 in 2007, 1803 in 2008, and 1929 in 2010), ordering actions against Iranian interests, although only the last dealt with the financial sector and asset freezes. The effects are clear. “I come across dozens of companies a day that are doing due diligence related to Iran – in Dubai, the UK, everywhere, and I've seen many business deals stopped due to the involvement of third party Iranian companies,” said Ghanem Nuseibeh, founder of London-based political risk analyst group Cornerstone Global Associates.

Pushing compliance are the fines for sanctions breaches levied by the US authorities, including Credit Suisse, which paid US$536m in 2009; Barclays US$298m in 2010; Dutch bank IMG setlled an action for US$619m; last year also saw Standard Chartered penalised US$674m and HSBC US$1.92bn (which also covered extensive and persistent Bank Secrecy Act/ AML offences).

“Let's face it, it is only the US regulator that has shown some teeth and has levied serious fines for non-compliance. Regulators in other jurisdictions follow a light-touch approach to non-compliance for money laundering. Punishment of senior management members for failing to take action has been scarce, if any. Plus, there is a lot of pretension around. How many central banks are compliant themselves to AML provisions? And they're the ones - in most cases - that are supposed to audit financial institutions for non-compliance,” said Dr Dionysios Demetis, head of the Anti-Money Laundering and Counter Terrorist Financing Group at Syntax IT Inc., an Athens based consultancy.

Such wide ranging sanctions have caused legal and due diligence complexity for financial institutions and businesses around the world to make sure they are in compliance.

“Client enquiries have increased following the recent rounds of sanctions, executive orders in the US, and council decisions in the EU - which are extraterritorial in their reach,” said Ibtissam Lassoued, Senior Associate heading the Global Economic Sanctions Practice at Al Tamimi & Company, a law firm registered with the Dubai International Financial Centre in the United Arab Emirates. “There is still some misunderstanding on how global economic sanctions apply to the UAE as, legally speaking, there is no legislation related specifically to the UAE, although the UAE Central Bank has implemented UNSC Resolution 1929/2010. Clients think that as they are far from the EU or the US, they are not caught up in the sanctions, but lately they've started to understand that this is something they have to seriously look into and should be very cautious and take preventive actions, even if the company or individuals are based in the UAE.” The delayed response is explained by geographical proximity to Iran and close commercial ties: Dubai, in particular, serves as a major re-export hub for the country; trade between them was US$9.8 bn in 2011, according to Dubai Customs. Half a million Iranians live in the UAE with some 8,000 Iranian traders registered in Dubai.

“For a long time Dubai has been one of Iran's doors to the global economy but it is being clamped down upon, and the federal government is taking it more seriously than a year ago,” said Nicholas Bortman, Head of Middle East Practice at the Dubai office of GPW, a corporate investigations and business intelligence firm. “You hear about local firms coming under pressure, and rumours of banks upping compliance procedures to make sure customer's onboarding are not acting on behalf of Iranians. It is all anecdotal but a while ago we didn't hear about that kind of thing.”

But a Lebanese banking consultant, who preferred not to be named, laughed at the idea of Dubai getting tough. “Dubai is a sanctions free zone, and the US knows it,” he said.

The figures suggest otherwise: the UAE's re-exports to Iran fell by US$3.6 bn in the first half of 2012, down 32% from the same period of 2011, while Dubai saw a 24% drop to US$3.45 bn, according to Dubai Customs. The decline is attributable, at least in part, to the reduced availability of Rials as the Iranian government seeks to halt the currency's depreciation: US$1 bought IRR10,280 in March 2011, now it buys IRR12,270. In February this year, the central banks of the UAE and Qatar told commercial lenders to stop financing trade with Iran.

Trade continues by different means: “We hear of cash-less bartering, trading in kind, deferred payment arrangements, and contracts done not in Iran rials but in other currencies, like Indian rupees,” said Bortman. “There's a general feeling of people sticking to the letter of the law but not necessarily the spirit, as the sanctions regime can be so difficult, even for lawyers, to understand.”

Other neighbouring countries have come under fire from the US for facilitating transactions with Iran, namely Armenia, Turkey and Iraq. In 2012, gold exports from Turkey to Iran surged by 10 times from the year before, to US$6.5 bn, and exports to the UAE rose to US$4.6 bn from US$280 mn, according to Turkish government data. But as of February 2013, US pressure has resulted in the gold trade drying up.

Iraq is also accused of operating as a major hub for Iranian trade and access to foreign currency, notably the Kurdish Autonomous Region. Seyed Azim Hossani, Iranian consul to the region, told the Iraqi press last year that at least 500 Iranian businesses were active in the Kurdish region; while reported trade between Iran and Iraq was officially US$7 bn, the real value was probably closer to US$10 bn, with 70% funneled through the Kurdish region.

Demetis, however, thinks it is a mistake to identify one country or region as especially prone to sanctions busting: “The whole Middle East region is a potential conduit and this is reasonable despite the fierce sanctions,” he said. “The reality of trading and the interdependencies that have been created over decades cannot be cut abruptly even if there are good intentions. Nothing has come to light that would suggest one country is considered more of a conduit than another.”

Indeed, Switzerland has been criticized for blocking sanctions on Iran, while in February 2013, the US urged the European Central Bank (ECB) to stop Iran from using the “Target2” clearing system for global Euro transactions. Some jurisdictions are not reporting on their implementation of sanctions, notably India, Russia and Malaysia, said Nuseibeh. “As the situation has developed and become more difficult, so people are looking for more innovative ways to get around them. Some countries don't use IBAN and those will be easier targets to do such transfers – Qatar for instance, but there is not much business between the two although Doha is trying to be a hub of Iranian travel,” he said.

Ultimately, stopping any Iran-linked transaction is exceedingly difficult. “There are so many different parameters to consider and sometimes transactions could get through by sheer accident, as the monitoring technologies themselves are seriously weak, operate in low True Positive Rate thresholds, and identity data is often incomplete so there is no such thing as proper KYC [know your customer],” said Demetis.

The Iranians have certainly had plenty of experience in getting around sanctions. As a senior Iranian official told the International Crisis Group last year, “After living under sanctions for three decades, we are now in a position to open up a consultancy and share our know-how with other countries facing a similar situation!”