Bahraini government audit reveals bank aided evasion of Iran sanctions

A Bahraini government audit has revealed that a Persian Gulf bank helped Iran to evade sanctions for over a decade. Future Bank – a joint venture between Iranian and Bahraini banks – allegedly hid around $7bn worth of transactions between 2004 and 2015, at a time when sanctions prohibited Iranian banks from accessing the international financial markets.

Bahraini regulators closed Future Bank in 2015, prompting two Iranian shareholders to file a complaint in The Hague against Bahrain for ‘improperly’ closing down the bank. They also sought the recovery of frozen assets.

According to confidential court findings obtained by The Washington Post, in the investigation that followed the closure of the bank, auditors found scores of bank accounts linked to individuals convicted of money laundering and terrorism financing, as well as phantom loans to companies acting as fronts for Iran’s Islamic Revolutionary Guards Corps. The audit findings were submitted in response to the complaint.

The bank is alleged to have altered financial documents to conceal the recipient or sender of the funds (such practice is known as ‘wire stripping’).

Future Bank was added to the US Department of the Treasury’s Office of Foreign Assets Control (‘OFAC’)’s Specially Designated Nationals (SDN) List in 2008 for being controlled by Iran’s Bank Melli and was also sanctioned by the EU in 2010. It was removed from both lists in 2016 as part of the Joint Comprehensive Plan of Action (‘JCPOA’), but US parties were still prohibited from dealing with it as part of the government of Iran.