Reported by MATTHEW KARNITSCHNIG

A small Hamburg bank was at the center of a clandestine financial network Iran relied on for years to funnel money to its terror proxies in the Middle East, including Hezbollah in Lebanon and Yemen’s Houthi rebels, officials from two western intelligence agencies say. 

POLITICO can reveal that western intelligence flagged evidence to German financial authorities that the Islamic Republic was using Varengold Bank AG to fund its terror affiliates, leading to a sweeping investigation that has forced the bank to all but shut down its commercial banking operations. 

Iran’s military complex relies on European banks to launder the proceeds of its illicit sale of oil and other goods, western intelligence officials say, in order to get it hands on hard currency, which is easier to move through the global financial system without detection.

If the authorities’ suspicions about Varengold’s Iran business are borne out, the bank would serve as a glaring example of the relative ease with which Tehran has circumvented western sanctions, while also underscoring the high risks firms face when they fail to adhere to the highest standards of money laundering prevention. 

Money laundering concerns

German financial regulator Bafin announced an investigation into Varengold last year, citing money laundering concerns, but did not disclose the suspected links between the bank and Tehran’s terror network. 

Varengold denies any wrongdoing and insists that its dealings with Iran were limited to the shipment of humanitarian aid, including medical equipment and food.

“Our customers in the commercial banking or payment transaction business are mainly producers and global wholesalers of food and pharmaceuticals,” a Varengold spokesperson said in a statement to POLITICO. “In this context, the bank supports, for example, exporters and importers in processing payments for urgently needed humanitarian goods that were not subject to EU or US sanctions.”

Yet according to western intelligence sources, some of the Iranian front companies that used Varengold are linked to Iran’s Quds Force, an affiliate of the Islamic Revolutionary Guard Corps (IRGC) that trains and finances Iran’s terror proxies in the Middle East.

Read full report: https://www.politico.eu/article/hamburg-bank-suspected-as-financial-hub-for-iranian-terror/