Following up on Andy McCarthy’s NRO column on the $1.31 billion in ransom payments to Iran (apart from the $400 million in cash) and on my related post, a reader with background in federal law enforcement writes:
I saw your post regarding the suspicious transactions totaling $1.31 billion to Iran and thought I could explain part of it but with more questions.
The reason for the 13 structured payments is pretty easy. (It’s actually 14 if you count the $10 million also paid on the same day.) The Federal Reserve system can’t automatically process checks of $100 million or over. No federal agency will accept deposits or write checks for more than $99,999,999.99 – 10 digits. It’s not illegal structuring, because it’s not cash.
If you look at the register of the judgment fund, you’ll find a similarly structured transaction in October 2015 in the Western District of Oklahoma where the government paid $1.35 billion or so to an Indian tribe. A $99,999,999.99 transaction and the rest in a separate $35 billion and one penny in a second on the same day. So because it’s a dollar denominated transaction it has to go through the Federal Reserve’s system, in which larger checks than $100 million or more, have to be hand-written. That’s why the government agencies don’t accept or pay checks in those amounts.
Now, the questions – two of them. I’m pretty sure but not certain that this only applies to checks, not wire transfers, which can be larger. I don’t think FEDWIRE or CHIPS have limits except FEDWIRE’s $50 million on securities. Could be wrong but I don’t think so.
So why did the government need to pay with 14 checks if they could just wire the money directly? Because we have no banking relationship with Iran is one obvious reason, but it’s also illegal to do ANY banking transactions of any kind with Iran, which is blacklisted by the Financial Action Task Force.
My guess is that the checks were written to a third party, probably a central bank (Switzerland and the Netherlands handled the $400 million cash payment) and that entity disbursed the funds. This is called “layering” in a money laundering context. No commercial bank would handle the transaction, certainly not an American one, because of the FATF blacklist. Who were the checks written to and why are they in the middle of this deal? That’s probably who the State Department is protecting with this “confidentiality” claim.
Second question: why the separate $400 million cash transaction? That looks more like a money laundering deal to me, erasing the money trail by turning the money into cash. The central banks in Netherlands and Switzerland received the money in some form from the US, probably cash dollars, then converted it into Euros and Swiss francs. Layering again. Then they shipped it out.
Netherlands requires large cash transactions ($34,000 or more) to be reported to its Financial Intelligence Unit, so both the receipt of the dollars and the export of the Euros should have been reported. Switzerland has similar requirements on cross-border transfers. State had to use central banks for this because of the sanctions. No commercial bank would ever do a deal this obviously shady. Unless somebody was giving them $10 million maybe.
I don’t know, but those are the really interesting questions for me. And obviously, very suspicious about why the administration violated its own sanctions against Iran – and FATF’s – by conducting these transactions at all.
In his column Andy observes: “Obama has not just orchestrated a king’s ransom — better, an ayatollah’s ransom — for the benefit of the Death to America regime in the absence of congressional authorization. He refuses to tell us how he transferred it to them.” And he asks the operative question: “What is going on here?”