August 09, 2010

http://joongangdaily.joins.com/article/view.asp?aid=2924339

Agency will investigate alleged money laundering at Iranian bank

Korea’s Financial Intelligence Unit, an agency under the Financial Supervisory Service, may look into suspected money laundering at the local unit of the Iran-based Bank Mellat, in the latest in mounting restraints on Iranian businesses as part of sanctions on the country for its nuclear ambitions.

According to industry sources over the weekend, once the FIU has received materials on foreign currency transactions at the Iranian bank from the FSS, it will investigate whether money laundering took place that aided nuclear proliferation in Iran or North Korea.

The FSS said on Friday it had completed a probe into the local branch of the Iranian bank and was analyzing the materials it gathered.

Bank Mellat, Iran’s second-biggest bank, is on an American blacklist, and the U.S. is seeking action against it from its allies. Most recently, Japan last week decided to freeze the Japanese assets of First East Export Bank, the bank’s Malaysia-based subsidiary.

If the FIU confirms money laundering took place at the Seoul unit in support of terrorism, it could bar it from transactions with businesses, sources say. Closure of the branch would be up to the FSS, but the Korean government has yet to declare that illegalities took place at the branch.

Bank Mellat has four overseas branches, three in Turkey and one in Korea. Its Seoul unit has functioned as a gateway to bilateral trade: Korea imported $5.7 billion in goods from Iran last year, while exporting $4 billion.

Pressure is building on Korea to crank up sanctions. Dan Glaser, U.S. Treasury’s deputy assistant secretary, said sanctions against Bank Mellat were becoming the “international norm.”

A South Korean senior government official said last week, “Nuclear cooperation between Iran and North Korea has been ongoing for a long time, and thus sanctions against Iran should be viewed as an issue that also pertain to sanctions on North Korea.”