Manama, Feb. 13 (BNA): The Kingdom of Bahrain’s Attorney General, Dr. Ali bin Fadhel Al Buainain, today announced that following a multi-year investigation, the first in a series of prosecutions have commenced against corporations and individuals involved in a vast money laundering scheme. The prosecutions relate to the laundering of billions of dollars channelled through a Bahraini entity, Future Bank, which was set up and controlled by two Iranian state-owned banks, Bank Saderat and Bank Melli.
The Kingdom’s Public Prosecution found that the scheme enabled various Iranian entities – including entities involved in financing terrorism or otherwise subject to international sanctions – to execute international transactions while avoiding regulatory scrutiny.
The defendants are charged with multiple offences under Bahrain’s Law on Prevention and Combating Money Laundering, as well as violations of applicable Bahraini banking laws and regulations. The Public Prosecution has referred the cases to Bahrain’s High Criminal Court, with further charges expected as investigations continue into thousands of remaining transactions. In parallel, discussions are being held with other countries affected to investigate how the illicit transactions may have impacted the global banking system.
Providing additional details on the investigations, the Attorney General stated that a 2018 assessment of Future Bank’s operations by the Central Bank of Bahrain (CBB) found Future Bank and its controlling shareholders to have engaged in systemic and widescale violations of Bahrain’s banking laws. Subsequent interviews with Future Bank employees and a review of tens of thousands of Future Bank documents were undertaken by the CBB, the Financial Investigation Unit of the Ministry of Interior, and independent international regulatory experts and forensic analysts.
The investigations found Future Bank, acting under the direction of Bank Saderat and Bank Melli, to have executed thousands of international financial transactions while concealing the involvement of Iranian entities. One form of concealment involved the deliberate removal of mandatory information when transferring money via the SWIFT network – an illicit practice referred to as “wire stripping”. The investigation identified thousands of wire-stripped transactions, totalling approximately USD 5 billion.
A second form of concealment involved the use of a covert messaging service as an alternative to SWIFT, which deliberately concealed transactions from Bahraini regulators. These actions allowed Future Bank to conceal an additional USD 2 billion of transactions.
H.E. Rasheed Al Maraj, the Governor of the Central Bank of Bahrain, which has been assisting the Public Prosecution with its investigations, said:"As part of the Financial Action Task Force and a founding member of the regional MENA-FATF, Bahrain is committed to full implementation of international standards in combatting money laundering and the financing of terrorism. Investigating and prosecuting violations is an essential part of protecting the integrity of the international financial system.”
The Governor went on to say that although the volume and value of transactions in the case are comparable to other international money laundering investigations, the complexity and magnitude of the investigations are compounded by the need to disentangle the subterfuge of Iranian-backed financing of terrorism.