Israel Matzav: Iran using Venezuelan banks to skirt existing sanctions

Iran using Venezuelan banks to skirt existing sanctions

Manhattan District Attorney Robert Morgenthau told the Brookings Institution on Tuesday that investigations by his office show that Iran is using Venezuelan banks to circumvent existing sanctions designed to penalize Iran for continuing its pursuit of nuclear weapons. At the same time, Venezuelan President Hugo Chavez wants to build a destabilizing 'nuclear village' in his country. And the Obama administration is not paying attention.

"Generally speaking, nobody is focused sufficiently on the threat of the Iran-Venezuela connection," said Morgenthau, whose New York jurisdiction includes the offices of numerous U.S. financial institutions.

Venezuela is not subject to U.S. or international economic sanctions. That means U.S. banks processing wire transfers from Venezuelan banks rely on their Venezuelan counterparts to ensure the exchanges are for legitimate purposes.

"I have little faith that this is being effectively done, and the Iranians, aware of this vulnerability, appear to be taking advantage of it," he said.

In early 2008, Iran opened in Caracas a subsidiary of the Export Development Bank of Iran. Last fall, the Treasury Department's Office of Foreign Assets Control imposed economic sanctions against both banks for providing financial support to the military organizations responsible for Iran's nuclear program.

Still, Morgenthau said he believes Iran's Caracas subsidiary has ties with banks in Venezuela and in Panama, which has a reputation as a center for money laundering.

Morgenthau said Iranian-owned and operated factories have sprung up in remote and undeveloped areas of Venezuela. While there's little known about what's going on inside these plants, "we should be concerned that illegal activity might be taking place," he said.

Morgenthau cited cases his office has recently pursued that underscore the lengths Iran will go to avoid sanctions aimed at curbing its nuclear program.

Well why would anyone be focused on Venezuela's activities when the Obama administration has decided that Hugo Chavez is their friend?

There's a big problem with trying to cozy up to your enemies: There's usually a reason why they were your enemies in the first place. That's certainly true here. What would happen if - let's just say - Iran were to sell a few Shihab missiles to Venezuela and Chavez were to install them pointing north? What could go wrong?

Israel Matzav: Iran using Venezuelan banks to skirt existing sanctions