Be vigilant on Iran, says Stuart Levey

The visiting US undersecretary for terrorism praises the UAE's 'serious' response but warns of the dangers of being duped by front companies.

Stuart Levey, the undersecretary for terrorism and financial intelligence at the US treasury department, says the US recognises the many ties between the UAE and Iran.

ABU DHABI // The UAE is taking sanctions against Iran "very seriously", a top US Treasury official has said during a regional tour aimed at strengthening support for the penalties against the Islamic Republic. The UN Security Council passed a new round of sanctions against Iran in June, the same month the US passed its own sanctions that also targeted the Islamic Revolutionary Guard Corps (IRGC), a powerful militia that is said to increasingly assert control over aspects of Iran's political and economic policy.

Stuart Levey, the undersecretary for terrorism and financial intelligence at the US treasury department, is visiting the UAE, Bahrain and Lebanon to meet officials and private sector businesses. His visit follows an announcement on Friday of new regulations by the treasury department that would effectively bar foreign entities from the US financial system if they deal with companies affected by UN and US sanctions.

"I think there is a real recognition that we're at a new stage here," Mr Levey said of the latest round of sanctions. "The new resolution is significant in scope, it contains a lot of provisions that require real intensity for appropriate implementation. The impression I have is that these new obligations and the new stage the diplomacy has entered is being taken very, very seriously here." While the UAE was taking this round of sanctions seriously, a "unique challenge" exists in the form of historic and commercial ties between the UAE and Iran, he said.

"We also understand that when it comes to this particular issue that there is a unique situation that the UAE confronts," said Mr Levey. "In the sense that there are historical ties between the UAE and Iran, commercial ties between the UAE and Iran, familial ties between the UAE and Iran, that make the issue of Iran a sensitive one but also one where it is very important for us to have a deep dialogue about how we proceed."

Iran was the UAE's fourth-biggest trading partner in the first quarter of the year behind India, China and the US. Non-oil exports of Dh173 million from the UAE to Iran were overshadowed by re-exports of Dh2.4 billion. As part of the implementation plans for the sanctions, the US is stressing the need for UAE businessmen to observe heightened vigilance in dealing with Iranian businesses, some of which may be front companies associated with the IRGC.

"What we've seen over time is a concerted effort by Iran to evade sanctions and that puts innocent businesspeople in the UAE at risk of being involved in illicit conduct that they don't want to be involved in," said Mr Levey. That illicit conduct involves using money to fund Iran's nuclear programme, arms transfers that violate UN resolutions and the funding of terrorist groups. There is significant evidence, for instance, that the Quds Force, an elite unit of the IRGC, helps fund the Taliban, said Mr Levey.

Part of the plan would be stronger cooperation between the US and the UAE to identify these front companies. "Commerce with Iran requires extraordinary vigilance," he said. "Iran has used channels of legitimate commerce, by which I mean banking, shipping, trans-shipment. They have used all these facially legitimate methods to facilitate illicit conduct. "Any place where there is commerce with Iran, there's a risk. I think the UAE takes the risk of illicit activity very seriously and very much wants to take the necessary steps to protect itself from that illicit activity.

"Has there ever been an illicit transfer through here? It sort of goes without saying. I'm just saying the UAE is taking steps and has demonstrated ... they have always taken these concerns very seriously." The US says the sanctions were necessary after Iran rebuffed attempts at engagement with the administration of President Barack Obama. Mr Levey, when asked about the general situation of terror financing through the Gulf, also said efforts to combat the financing of al Qa'eda has led to unprecedented pressure on the group.

Mr Levey had criticised Saudi Arabia in 2007 for failing to prosecute individuals identified by the US or the UN as terror financiers. While the situation has been improving, the threat had not been eradicated. "The most important fact is that al Qa'eda is under very significant financial stress, that they are in the worst financial position that they have been in years and that there is a strong sense of urgency in terms of continuing to prevent financial resources to go to al Qa'eda," he said.

Still, the risk of terror financing has not been eliminated and requires continued cooperation from countries in the region, he added. [e-mail]