NEW YORK/LONDON/SHENZHEN (Reuters) – There is no trace of Shenzhen Lanhao Days Electronic Technology Co Ltd at its listed address in the beige and pink-tiled “Fragrant Villa” apartment complex in this southern Chinese city. The building’s managers say they’ve never heard of it.
But a Western intelligence report says Shenzhen Lanhao is one of several companies in China that receives money from Iran through a Chinese bank. Such transfers help to finance international operations of the Islamic Revolutionary Guards Corps’ elite Quds Force, the report said.
The report said that the Central Bank of Iran (CBI) holds accounts with the Bank of Kunlun Co Ltd, a China National Petroleum Corp unit. Quds-controlled Iranian companies, including one called Bamdad Capital Development Co, initiate transfers from these accounts to either Chinese entities directly controlled by the Quds or to Chinese entities owed money by the Quds, such as Shenzhen Lanhao.
“The money transfers from accounts held by the CBI with Bank Kunlun are initiated by the Quds Force and transferred to Chinese companies connected to the Quds Force in order to meet its financial needs,” the seven-page report said.
The suspected movement of Iranian funds linked to the Quds Force through a Chinese bank and Chinese companies is a reminder of the difficulty of enforcing sanctions on Iran.
The US Treasury sanctioned Kunlun in 2012 for conducting business with Iran and transferring money to an entity linked to Iran’s Revolutionary Guards. Once the money is transferred from Kunlun to other entities, the Quds can use it for acquisitions in China and to finance covert activities.
The report does not suggest that either the Chinese government or Bank of Kunlun were aware of the possibility that there could be a Quds Force connection.
The exact amount of money the Quds could have received from the Kunlun channel is unclear. But the sums flowing from the Iranian central bank to Kunlun over the past year have been in the hundreds of millions of dollars, the report said.
As Western sanctions tightened on Iran in 2012, Beijing picked Kunlun as its main bank to process billions of dollars in oil payments to Iran, shielding other banks from penalties.
The US Treasury’s 2012 sanctions targeted money Iran was being paid for oil exports, including $22 billion held at Kunlun. However, there was an easing in the restrictions on Iran’s access to the money in November 2013 under a bilateral agreement with China, and as an interim nuclear deal was reached with six world powers in the same month.
The deal between Iran and the United States, Britain, France, Germany, Russia and China gave Tehran access to several billion dollars in frozen assets at banks.
Bamdad’s website said it is engaged in pharmaceutical and base metals trading. Its Iranian telephone number was out of service. It lists an address in a non-existent Iranian province. A person listed as a general manager in a directory for Shenzhen Lanhao said he does not work for the company when contacted by telephone. The apartment complex listed as the business address for Shenzhen Lanhao in Shenzhen’s western suburbs is occupied by a family. They told a Reuters reporter they hadn’t heard of the company, nor of its general manager.