On Tuesday, the country’s two major state lenders suspended operations – after the Iranian rial had already plunged to roughly 1,500,000 per US dollar in January.

Western intelligence services estimate that roughly 90% of Iranian oil exports end up in China. While there is no comprehensive estimate, analysts at the Western intelligence service say a network of shell and front companies processes transactions worth several billion euros each year.

Hundreds of millions of euros are estimated to pass through the European banking system because international payments typically rely on correspondent banking relationships.

Within this shadow-banking mechanism, the analysts say there is a notable concentration of euro-denominated bank accounts, many facilitated by private financial institutions. Among the correspondent banks handling these euro settlements listed in the documents are Deutsche Bank, Commerzbank, Standard Chartered, Barclays, BNP Paribas, as well as the German branches of Bank of China and J.P. Morgan SE.

Difficult to track

One example of the modus operandi of Iranian shadow banking is Sepehr Energy Jahan, an Iranian state company that sells oil to China on behalf of Iran’s Armed Forces General Staff, responsible for Iran’s regular armed forces as well as the Islamic Revolutionary Guard Corps (IRGC).

In 2023, the company was placed on a sanctions list by the US Treasury Department.

Channelled into the EU

The Western intelligence agency estimates that additional millions in profits from the illicit oil trade have been invested across the European Union.

“If sanctioned entities or networks connected to the Islamic Revolutionary Guard Corps are storing or transferring assets in Europe, those funds must be identified and frozen without delay,” said Hannah Neumann, chair of the European Parliament’s delegation for relations with Iran.

The EU on Wednesday sanctioned 19 Iranian officials and entities but Mojtaba Khamenei – who is subject to US sanctions – has reportedly not been included.

(vib, aw)