Bank Sepah, the country's oldest bank in Iran, has been serving as the primary bank of the Iranian Armed Forces. Consequently, it has been involved in financing and facilitating various malign activities, including the Islamic Regime’s missile program, proxy financing and Iran’s nuclear ambitions. In Mid-June, shortly after celebrating its 100th anniversary, the bank suffered a devastating cyber-attack, followed by a massive leak of internal documents that have shed new light on the bank's dealings.

Upon reviewing the leaked materials, it became evident that Bank Sepah, through its FOREX department, has significant business dealings in the "Shadow Banking" mechanism, with hundreds of documents exposing front companies operating worldwide. It is essential to note that Bank Sepah's close connection to the military apparatus of Iran means that a large portion of exposed front companies were used as vehicles for transferring funds to or on behalf of the Armed Forces General Staff (AFGS), Islamic Revolutionary Guards Corps (IRGC), the Ministry of Defense and Armed Forces Logistics (MODAFL) and the Quds Force (QF).

This article focuses on "WikIran Verified" front companies based in the UAE as well as Turkiye. The leaked materials provide a unique insight into Bank Sepah's usage of these front companies.

For example, a letter issued by Bank Sepah addresses the usage of an apparently widely used UAE-based front – "Royal Red General Trading L.L.C":

According to this document, it looks like this company has at least four different bank accounts at important UAE Banks: First Abu Dhabi Bank, Al Masraf Bank, Banque Misr or Habib Bank – banks that are, unknowingly until proven guilty, complicit of all these money laundering and sanctions-evading schemes. And it's not the first time.

In fact, a lot of these leaked documents expose these UAE Banks, notably Banque Misr, the UAE's most accommodating bank to the Iranian Shadow Banking but also the banks mentioned earlier or even the Commercial Bank of Dubai (CBD) as can be seen in the following document – along with another account for Royal Red.

A formal letter issued by Bank Sepah that depicts the usage of two UAE-based front companies hosted at Banque Misr and Commercial Bank of Dubai.

The leaked materials also reveal connections to military deals. A typical example is Generation Trading FZE, a front company that was used in the past as a vehicle for Iran's MODAFL to receive Russian payments for drone exports. The company also appears on Bank Sepah's documents, suggesting the bank's direct involvement in its operation. This is not very surprising, considering it is the Armed Forces' official bank.

The materials also raise serious questions about Bank Sepah's direct involvement with front companies. Iranian authorities require banks to use affiliate companies, known locally as "Rahbar" companies (which roughly translates to "Pioneer"), to handle sanctioned trade. This arrangement allows banks to avoid direct dealing with exchange houses that operate front companies, which by definition violate anti-money laundering (AML) and countering the financing of terror (CFT) standards and regulations. Such violations could potentially cause long-term damage to the bank's reputation and business connections. However, Bank Sepah's documents show no evidence of a Rahbar company, which might suggest that the bank does not have one and is dealing directly with exchange houses.

WikIran calls on all banks involved to refrain from further hosting accounts for the exposed front companies. Such actions are immoral, as they assist a major funder of terrorism and proliferation of weapons of mass destruction. Hosting these front companies also puts banks at significant risk of breaching US sanctions, as well as local or international anti-money laundering (AML) and terror financing regulations and standards.

To download the documents used in this article, click here.