UK High Street banks were used by Iran to move money around the world, it has been alleged.
Lloyds and Santander UK provided accounts to British front companies secretly owned by a sanctioned Iranian petrochemicals company, reports the Financial Times.
It comes as Iran is facing an extensive sanctions programme against its financial activities.
The Times reports that HSBC also provided banking services to a company that appears to have been trading with another Iranian front company.
Lloyds, Santander UK and HSBC have been trading with an Iranian front company
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The state-controlled Petrochemical Commercial Company (PCC) is based opposite Westminster Abbey in central London.
The company was part of a network that the US has accused of raising hundreds of millions of dollars for the Iranian Revolutionary Guards Quds Force. Both PCC and its British subsidiary PCC UK have been under US sanctions since November 2018.
A report from the FT was based on a leak of documents published by the Iranian pro-democracy activists WikiIran. It reports that PCC’s UK division continued to operate secretly out of an office in Grosvenor Gardens in Belgravia by using a complex web of front entities in Britain and other countries.
The investigation alleges PCC has used companies in the UK to receive funds from Iranian entities in China, while hiding their real ownership through "trustee agreements" and nominee directors.
One of these companies is reportedly registered to a detached house in Surrey and used a business account with Santander UK. According to the UK corporate registry, it is fully owned by a British national with no apparent links to Iran.
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The Petrochemical Commercial Company's (PCC) UK division continued to operate secretly out of an office in Grosvenor Gardens in Belgravia, London (file pic)
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However, the report claims that internal documents show the company is fully controlled by PCC and that the owner signed an agreement to own the company in trust on its behalf.
Allegedly, the man used a PCC email address for correspondence with company officials in Tehran. It was reported that another PCC front company in the UK has an account with Lloyds.
The company, officially owned by another UK national, who according to internal emails is a senior executive of PCC UK, has regularly communicated with company officials in Tehran.
According to The Times, another document in the leak shows a shipping invoice between a Hong Kong company, which banks with HSBC, and a Chinese firm which appears to be a proxy for PCC, which appears to be linked to the export of plastics from Iran.
Conservative chair of the Commons foreign affairs committee Alicia Kearns said: "For years I have repeatedly raised my concerns about our need to shut down cut-outs of the IRGC operating in the UK. This investigation proves once again that more needs to be done."
A spokesman for Santander UK said: "Santander is not in breach of US sanctions based on our investigation. We have policies and procedures in place to ensure we comply with sanctions requirements and will continue to engage proactively with relevant UK and US authorities."
Lloyds Banking Group said: "We believe we have met all legal and regulatory obligations and, based on our own investigation, we do not believe we have breached any sanction requirements."
A spokeswoman for HSBC said it was "committed to complying with all applicable sanctions resolutions and regulations in the jurisdictions in which we operate."
