Several Iranian and North Korean nationals are suspected of smuggling gold and cash to the Democratic People’s Republic of Korea (DPRK) via the United Arab Emirates, according to a recent UN report. Our additional research on the scheme revealed unnamed exchange houses tied to the Iranian nationals as well as their Dubai residence, based on Iranian and Emirati public records.
Compared to the limited corporate transparency in North Korea, the rich corporate data available in Iran consistently provide crucial details of illicit transactions involving Iranian individuals or entities, even when they are only minor parties to the scheme.
The value of foreign currency for sanctioned regimes
The recent gold smuggling scheme exemplifies one of the many ways that isolated regimes like North Korea and Iran accrue foreign currency in order to purchase foreign goods or fund their overseas activities in circumvention of international sanctions.
Holding sufficient foreign currencies in reserve is essential for an economy, as it allows countries to purchase imports, pay debts to overseas creditors, and stabilize their native currency. The extensive international sanctions imposed on the DPRK and Iran have isolated them from the global economy, making it challenging for both countries to amass U.S. dollars or any other important reserve currency.
The need for foreign currency is further exacerbated by the relatively weak and unstable currencies printed in North Korea and Iran. The North Korean won, for example, is used exclusively by ordinary citizens but is practically worthless in the global foreign exchange market. The Iranian Rial, on the other hand, is known for its extreme volatility, losing more than 70 percent of its value from May 2018 to January 2021.
Given the similar economic isolation experienced by the DPRK and Iran, it is unsurprising that both countries would collaborate in obtaining foreign cash. Previous attempts by the DPRK and Iran to acquire foreign currency have ranged from soliciting donations via fraudulent charities to counterfeiting U.S. $100 Federal Reserve notes (known as supernotes).
North Korea’s gold and cash smuggling scheme via Dubai
A UN Panel of Experts report published in March 2021 claims that three Iranian individuals and seven North Korean officials were involved in a gold and cash smuggling operation based in the United Arab Emirates. Several of the North Korean officials were previously tied to Korea Mining Development Trading Corporation (KOMID), a DPRK state-owned enterprise sanctioned by the UN for proliferating weapons of mass destruction.
A 2019 UN report discussing the same operation alleges that Kim Yong Chol and Jang Jong Son, both DPRK diplomats designated as KOMID representatives, took more than 282 flights in 2015 and 2016, mostly via Emirates Airlines, between Tehran and Dubai airports. The report further describes the diplomats’ quick return flights to Tehran within hours of arriving in Dubai, which is a common practice of cash couriers.
The Iranian connection
It is difficult to determine the extent, if any, to which the Iranian government was aware of these activities. However, several exchange houses tied to individuals involved in the scheme obtained licenses from the Central Bank of Iran.
Two of the Iranian individuals named in the 2021 UN report, Mohammad Hussain Mehrchian and Mohsen Hussain Fahad, are both 25 percent shareholders of Seyed Salahuddin Behbahani & Partners Exchange Company. Based on records filed in Iran’s official gazette, the Behbahani exchange house is active in the buying and selling currencies for gold coins minted by the Central Bank of Iran.
Fig. 1: The snapshot above shows a company announcement filed by Seyed Salahuddin Behbahani & Partners Exchange Company in Iran’s official gazette, known as Rooznameh Gazette. The record includes detailed information on the board members, shareholders, and business activities of the general partnership.
Another Iranian national believed to be connected to the gold smuggling scheme is Heidar Saheb Faraji Dana, according to the same UN report. Faraji Dana is the registered chairman of the board for Ali Faraji Dana & Qeshm Partners Company, another licensed exchange house that trades currencies for gold coins minted by the Central Bank of Iran.
Furthermore, an apartment in downtown Dubai is linked to an individual sharing Faraji Dana’s full name, based on UAE real estate records. Since the gold smuggling operation took place in Dubai, it is likely that this apartment is associated with the Iranian national cited in the UN report from 2021.
Fig. 2: A street level view of Heidar Saheb Faraji Dana’s apartment building in downtown Dubai, taken from a Google Maps photo captured in November 2014. The Burj Khalifa can be seen in the background.
Another individual with a similar but not identical name, Hedar Saheb Dana, shows up as a 49 percent shareholder and manager of an Emirati company involved in logistics services, according to third party records sourced from the UAE. It is possible, though not certain, that this Hedar Saheb Dana is the same Heidar Saheb Faraji Dana mentioned in the 2021 UN report.
Leveraging Iranian Corporate Data in International Investigations
After combining our findings from public records with details from the UN reports, we learned that the three Iranian individuals involved in the scheme, Mohammad Hussain Mehrchian, Mohsen Hussain Fahad, and Heidar Saheb Faraji Dana used their ties to exchange houses in Iran to provide gold and/or cash to North Korean officials. Based on the apartment address we found connected to Faraji Dana, we can also confirm that the individuals involved in the gold and cash smuggling scheme have links to Dubai where the Iranian nationals presumably met with North Korean officials.
The strong corporate data available in Iran enabled us to provide greater depth to the DPRK gold smuggling scheme by focusing on the Iranian nationals involved. More broadly, this case proves that Iranian public records can indirectly help investigators uncover details of illicit financial schemes within hard-target jurisdictions whenever an Iranian individual or company is involved.
Source » sayari