By Katherine Griffiths
Santander, Spain’s largest bank and the owner of Abbey in the UK, was doing business with Teheran-based Sepah as recently as March, The Daily Telegraph can reveal.
Trading with businesses that are blacklisted for alleged links to terrorism is a serious breach of US law and can have draconian consequences.
A spokesman for the US treasury department said: “Violations of US sanctions programmes may result in civil and even criminal penalties. The same statute or fine structure is used regardless of whether it’s a foreign bank operating in the United States or a US bank.”
Santander, which is currently bidding for ABN Amro along with Royal Bank of Scotland and Fortis, must comply with US law because it is listed in New York and has branches in New York and Miami. It also owns almost a quarter of Philadelphia-based Sovereign Bank.
Santander is thought to have opened accounts for Sepah in various European countries and in Teheran.
Allegations have also been made that Santander had a banking relationship with another Iranian bank that the US is targeting for its alleged links to terrorists.
Santander said: “Neither of these institutions has an open account with Santander.”
The Spanish bank appears to have ended its relationship with Sepah after March. No details are known about the nature of its contact with the other bank.
Santander said: “Banco Santander is confident that it complies with all relevant banking regulations in the territories in which it operates, and with international requirements placed on banks, including those concerning money-laundering and the financing of terrorism.”
Sepah, which is owned by the Iranian state, was placed on the US blacklist in January. At the time, Stuart Levey, under-secretary for terrorism and financial intelligence, said: “Sepah is the financial linchpin of Iran’s missile procurement network and has actively assisted Iran’s pursuit of missiles capable of carrying weapons of mass destruction.”
Mr Levey also urged other countries to “deny financial assistance to Iran’s nuclear and missile programmes”.
In March the United Nations agreed to freeze Sepah’s international assets.
While the threat of hefty penalties has prompted a swift response from US banks to increasingly severe restrictions on doing business with several Iranian banks, US officials have found it more difficult to crack down on European lenders.
Many European banks have historic relationships with Middle Eastern partners. Senior banking sources said they did not think Santander was alone in doing business with Iranian banks that are being targeted by the US.
In order to make the isolation of banks that are suspected of financing terrorists more effective, Mr Levey and Hank Paulson, the former head of Goldman Sachs who is now US treasury secretary, have mounted a campaign to persuade European banks to cut their ties with certain partners.
The treasury spokesman said: “We’ve been meeting with our government counterparts, as well as financial institutions, throughout Europe, Asia and the Middle East to discuss the risks of doing business with Iran.”
Sepah has denied the US allegations against it.
