Ex-Mossad expert warns Iran has built global financial network to bypass sanctions

Udi Levy, former head of spy agency’s financial division, says if Israel’s partners seriously intend to weaken Tehran, they must target its money-transferring infrastructure

Gianluca Pacchiani

Gianluca Pacchiani is the Arab affairs reporter for The Times of Israel

Illustrative: Iranian President Hassan Rouhani dedicates the final phase of a new oil refinery in the city of Bandar Abbas, Iran, February 18, 2019. (Official website photo)
Illustrative: Iranian President Hassan Rouhani dedicates the final phase of a new oil refinery in the city of Bandar Abbas, Iran, February 18, 2019. (Official website photo)

Udi Levy stepped down in 2016 as head of Mossad’s economic warfare unit, after a 35-year-long career in Israeli intelligence. He spent decades researching the money flows that allow the survival of terrorist groups and regimes with animosity toward Israel — chiefly Hamas, Hezbollah and Iran.

In an interview with The Times of Israel, he said the country should harness the coalition that came together to repel the recent direct attack on Israel by Tehran in order to halt the global money flows that constitute the lifeline of the Islamic Republic and that allow it to bypass US and international sanctions.

On the night between April 13-14, Iran launched hundreds of ballistic and cruise missiles alongside hundreds of drones at Israel in an unprecedented attack from its territory, in response to an alleged Israeli strike in Syria that killed Revolutionary Guard generals.

The United States, Britain, Jordan and France actively participated in intercepting drones heading to Israel, while other Arab countries, including Saudi Arabia, reportedly passed on intelligence about the Iranian plan, and in some cases actively assisted. The vast majority of the projectiles were intercepted before they reached Israel.

“Something new happened on that night in the Middle East and in the world. We have a new coalition that includes Saudi Arabia, the United Arab Emirates, Bahrain, Jordan, Israel, the United States, Germany, France, and the UK,” Levy said. “And these are exactly the players that we need if we want to achieve a strategic result against Iran — not just to punish it, but to change the situation in the Middle East by applying economic warfare.”

According to foreign media sources, Israel conducted a retaliatory strike on Iranian territory on April 19, hitting a radar system that provided defensive cover for Iran’s underground Natanz nuclear enrichment facility. The attack appeared to be mostly symbolic, designed to send a message while avoiding an escalation, and at the same time to preserve the newly-formed alliance with Western and regional partners.

The Iron Dome air defense system launches to intercept missiles fired from Iran, in central Israel, April 14, 2024. (AP Photo/Tomer Neuberg)

Levy maintained that members of the anti-Iran coalition should now acknowledge Israel’s restraint, and actively cooperate with it “to dismantle the network that Iran has built to finance terror around the Middle East.”

“The ball is in their court,” he added.

The idea of applying economic warfare against Tehran is, of course, not new. The Islamic Republic has been under US and international sanctions since the Islamic Revolution in 1979 (with a break between 1981-1987), which were exacerbated with the launch of Tehran’s nuclear program in the 2000s.

On Thursday, the European Parliament called to expand sanctions against the Islamic Republic for its role in destabilizing the Middle East, a move that was lauded by Foreign Minister Israel Katz.

However, Levy called for a different type of financial warfare — one that would not impact the life of Iranian civilians, and would be effective in halting the money flows that allow the Islamic Revolutionary Guard Corps (IRGC) to finance proxy groups around the Middle East: Hezbollah in Lebanon, Shiite militias in Syria and Iraq, Hamas and the Palestinian Islamic Jihad in Gaza, and the Houthis in Yemen.

European Parliament members attend the last session before the upcoming European elections, Thursday April 25, 2024 at the European Parliament in Strasbourg, eastern France. (AP Photo/Jean-Francois Badias)

“For many years, under the coordination of [slain IRGC general] Qassem Soleimani, the Iranians built an unbelievable infrastructure to circumvent sanctions and be able to move money around the world to continue to finance all the terrorist infrastructure in all the Middle East — and their nuclear project,” Levy said.

Udi Levy, former head of the Mossad economic warfare unit until 2016, April 2024 (courtesy)

Sanctions against Iran have largely been ineffective, the Mossad expert argued, because they remained on the declarative level, but were often not implemented.

“Many countries in the world felt that the US-led sanctions were politically motivated,” he said.

“On top of that, European countries felt that they were placed under a lot of pressure [in trading with Iran] and were even being punished, while the US was not imposing any sanctions on other countries where it has interests, like Qatar,” Levy added.

Tehran has reportedly become increasingly apt at circumventing the sanctions imposed on its oil exports, its main source of revenue.

At a US Congressional hearing in December, Claire Jungman, chief of staff of United Against Nuclear Iran (UANI), revealed that Tehran has quadrupled its oil revenue since 2020, and that “due to diminished sanctions enforcement, Iran has accumulated north of $80 billion dollars in oil revenues since 2021.”

Jungman pointed out that China is the largest buyer of illicit Iranian oil, with a share of 72%. The oil is mostly exported through a “ghost fleet” made up of ships that Iran renders untraceable.

UANI, a group of ex-US diplomats, security officials, scholars, and professionals whose objective is to increase international pressure on Tehran, estimated that the ghost fleet is comprised of around 300 foreign owned and foreign flagged oil tankers moving the country’s oil.

China, which accounts for 20% of Iran’s foreign trade volume, making it Tehran’s main export partner, appears to play a prominent role in aiding and abetting the Islamic Republic in circumventing sanctions, and not only through oil purchases.

Iranian opposition outlets have unveiled lucrative telecom deals between Tehran and Beijing, while the Wikiran project has collected and published hundreds of thousands of documents leaked from Iranian government agencies and industries, exposing the money-transferring network built by the Islamic Republic.

“Wikiran has revealed the whole infrastructure — how [Iranians] are moving the money from the central bank to the money changers in Iran, and from there to cover companies in China, Hong Kong and elsewhere. They open bank accounts in China and then move the money from there, especially to the Emirates,” Levy said, estimating that around 80% of Tehran’s money transits through the Gulf country, a major global financial hub.

“We have the bank account numbers, the names of the companies, the names of the people, we have everything,” he added.

A woman walks across a pedestrian crossing near a billboard depicting named Iranian ballistic missiles in service, with text in Arabic reading “the honest [person’s] promise” and in Persian “Israel is weaker than a spider’s web”, in Valiasr Square in central Tehran on April 15, 2024.(ATTA KENARE / AFP)
“And this is all happening with the full cooperation of the banking system in Western countries, even in the United States. Money has been transferred and used freely, without any disturbance,” he continued. “Now, we have the opportunity to do something together.”

“Israel’s partners need to freeze the assets, confiscate them, and close the companies. This would not just be a tactical move, but a strategic one. The Iranians have no alternative infrastructure. It would take them years to rebuild it. It would be a disaster for them,” Levy predicted.

Iran’s covert financial network has been an open secret for years, Levy added. Recent reports have shown that large sums have also transited through Western financial institutions.

In February, the Financial Times reported that two major UK banks, Lloyds’ and Santander UK, provided accounts to British front companies secretly owned by the PCC (Petrochemical Commercial Company), an Iranian state-owned corporation that the US accuses of raising hundreds of millions of dollars for the IRGC.

Illustrative: A dark plume of smoke rises up from a main oil refinery south of Tehran, Iran, June 3, 2021. (AP Photo/Ebrahim Noroozi)

Both PCC and its British subsidiary PCC UK have been under US sanctions since November 2018, the paper noted.

In the same report, the Financial Times wrote that the PCC used UK-based companies to receive money from front companies in China, whose Iranian ownership was concealed in various ways.

The very fact that a company owned by the Islamic Republic has been able to operate freely in London, at the heart of the world’s financial system, is bewildering to Levy, who claimed that PCC is part of the IRGC.

The IRGC is considered a terror organization in the US, but not in the UK or in the European Union.

“It’s impossible that a company under sanctions has a branch in the UK, and is able to operate freely,” Levy said. “And nobody, I repeat, nobody, is doing anything.”

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