One World, Ready or Not: Western Banks Busted For Helping Iran Bust Sanctions

Do you ever get the feeling you live in the last honest country?

A black-market financial investigation spreading from Iran to Sudan, London and Cuba began in a cluttered fifth-floor cubicle in an old-school district attorney's office in Manhattan featuring dark corridors and frosted glass.

There, an intelligence analyst named Eitan Arusy began studying a slim lead. Suspicious money was flowing to and from an Iranian nonprofit operating in a Fifth Avenue office tower in Midtown Manhattan. Mr. Arusy's probe, later merged with a Justice Department inquiry, ultimately widened to some of Europe's vaunted banks, helping spark a global inquiry that found they actively evaded U.S. law in aiding sanctioned countries, banks or other enterprises move some $2 billion undetected.

Nine banks have been caught up in the probe, and some are in discussions to settle, according to a person familiar with the case. Three have already. Last month, Barclays PLC in London agreed to pay $298 million and admitted to allowing payments on behalf of clients in Cuba, Sudan and other countries. Lloyds Banking Group in London and Credit Suisse Group in Zurich—banks that operated extensive transfer systems for Iranian clients—have agreed to settlements totaling $350 million and $536 million, respectively.

These weren't rogue operations. The investigators discovered that the banks ran dedicated units to systematically aid the undetected transfer of money through the U.S. banking system. They did that by removing identifying coding on fund transfers so they could evade automated U.S. bank computer systems designed to spot money flowing from a sanctioned state.

Great, so while the US is out busting its ass trying to keep a lid on Iranian nuclear proliferation, multi-national banks were actively working to assist Iran and others to evade sanctions. Same deal with the Sudan and Cuba. I don't even want to know how much money these guys got through the backdoor bailout of AIG.

Barclay's, for one, is especially galling. That firm kept Lehman Bros. on tenterhooks on the now-infamous Lehman weekend, agreeing in principle to a private sale that would have saved the company and then pulling out at the last second at the behest of the Bank of England. Then, of course, they swooped in post-bankruptcy and bought Lehman's valuable parts for a song. Now, we learn Barclay's was enabling some of the worst regimes on the planet? Makes you start thinking that the "Special Relationship" is to relationships what the Special Olympics is to the Olympics.

We often hear about how America should adopt a more "European" approach to the world. Certainly, the European brand of morality and international relations is miles apart from that of America's - at least that of pre-Obama America. There really is such a thing as American Exceptionalism.

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