The Government vowed on Tuesday to look into possible sanctions against a state-backed entity from Iran that has reportedly been using two UK banks to divert money around the world, out of premises in Belgravia.
Business minister Kevin Hollinrake told MPs that he was "disturbed" after the Financial Times reported that the Petrochemical Commercial Company (PCC), via accounts at Lloyds and Santander UK, was using a web of front companies in Britain to discreetly move hundreds of millions of dollars.
The report was seized on by MPs on the Business and Trade Committee as it held a hearing to examine the Government’s implementation of the Economic Crime and Corporate Transparency Act adopted last year.
“We’re sending RAF planes 3,000 miles away to hit Iranian-backed militias, only to learn that less than three miles away from Westminster, Iran’s intelligence services are using the City of London to finance terror,” the committee's Labour chairman Liam Byrne told the Standard.
“We must now know how on Earth this was allowed to happen, and whether frankly ministers and sanctions enforcement agencies were asleep at the wheel,” he said.
Mr Hollinrake told the hearing that he was "sure" that the Financial Conduct Authority and Treasury would want to examine the matter further.
Both PCC and its subsidiary PCC UK have been under US sanctions since November 2018. But in that time, documents cited by the FT showed the Iranian entity continuing to operate out of an office in Grosvenor Gardens near Buckingham Palace, using a web of front companies in Britain and elsewhere.
The United States alleges the network is used to get money to Iran’s Revolutionary Guards Quds Force and to work with Russian intelligence agencies on raising cash for Iranian proxy militias.
The allegations come as UK and US forces have been bombing Yemen-based Houthi rebels backed by Iran after they attacked cargo ships in the Red Sea, and as Washington pursues reprisals against other Iranian-sponsored militias in Iraq and Syria following the killing of three US soldiers in a drone attack a week ago.
Lloyds and Santander UK both denied breaching US sanctions and stressed their determination to work with the authorities on combating economic crime.
At the Commons hearing, Mr Byrne grilled the minister on why the company was sanctioned by the United States but not by Britain.
"We sanction some people that our allies don't, and our allies sometimes sanction people that we don't. Different jurisdictions have different approaches," Mr Hollinrake said.
"That's not to say we shouldn't sanction this organisation, and that would be a matter for the relevant authorities and the relevant individuals," he said, while stressing that UK authorities have sanctioned more than 400 Iranian individuals and entities.
The hearing was looking in part at new powers promised to Companies House to monitor foreign shell companies registered in Britain. Asked whether he was concerned that Companies House and other UK agencies are under-resourced, Mr Byrne said: “One hundred per cent.”
Layla Moran MP, the Liberal Democrat spokeswoman for foreign affairs, said: “These claims again show why we must proscribe the IRGC now.”
However, the Government is understood to be concerned that sanctioning Iran’s Islamic Revolutionary Guard Corps could backfire by empowering hardliners in Tehran who are bent on acquiring nuclear capability.
