An Iraqi businessman who is under US sanctions due to allegations of financing Iran's Islamic Revolutionary Guards Corps and its network of militant groups has revealed he is seeking to appeal against the measures.
Ali Ghulam, 42, has British citizenship and lives in a $42 million mansion in London, from where he told The National that he intends to challenge the designation. The US placed him under sanctions in October as part of a package targeting what Washington alleged was the financing of Iran-backed militias and the IRGC.
Mr Ghulam strenuously denies the claims made by the US Treasury. Washington has alleged that parts of Iraq's banking system controlled by Mr Ghulam and others operate a complex scheme to procure US dollars and cycle the funds into laundering operations that rely on counterfeit documents and receipts.
This year, as many as 13 banks were banned from the country's dollar trade after talks between officials from the Central Bank of Iraq, the US Treasury and the Federal Reserve. The banker is also accused of avoiding justice in Iraq by bribing the country's judicial authorities. The US Treasury penalties were imposed under the Specially Designated Global Terrorist sanctions programme.
In response, Mr Ghulam's lawyers said he "denies ever knowingly engaging in any of the activities alleged by the US Treasury" and also "denies having authorised any entity or individual to engage in such activities". Their statement said he was "wholly unclear what the evidential basis is to support the allegations made".
He said he intended to challenge the premise of US designation and resist any spillover effects on his interests in the UK. Mr Ghulam added that "any wider designation in the UK would be similarly misconceived, unjust and oppressive".
Mr Ghulam's lawyers say he has lived in the UK since 2018, along with his wife and their six children. They are all "British citizens and their lives are firmly rooted in the UK", his lawyers added.
"Our client condemns money laundering, sanctions evasion and corruption in all its forms and agrees that the UK must not serve as a safe haven to anyone engaging in those activities," they said. "Our client is adamant that he has never laundered money, evaded sanctions or engaged in corruption."
After reportedly beginning his working life as a flour trader, he established a currency exchange in 2008, then moved into banking. He took control of Middle East Investment Bank in 2014 and also controls Al Ansari Bank and Al Qabidh Bank.
Mr Ghulam started establishing a presence in the UK in about 2012 when he filed as a director at Companies House. At that time, he was already on his way to becoming one of Iraqi's wealthiest people through his banks.
Militia links
The US alleges Mr Ghulam has given the IRGC's Quds Force a degree of control over his banks. According to Washington, Mr Ghulam has managed the finances of Kataib Hezbollah, an Iran-aligned militia, including investing the fortunes of its highest-ranking leaders outside Iraq.
Kataib Hezbollah is designated as a terrorist organisation by the US. It fought a long-running campaign against American forces in Iraq after 2004. The US has also claimed Mr Ghulam provided financial services to another militia, Asaib Ahl Al Haq. It is also designated as a terrorist organisation by the US.
London life
Visitors to Mr Ghulam's mansion may admire a collection of luxury cars before they arrive at the front door. A Ferrari, Rolls-Royce SUV and BMW SUV parked outside the property are evidence of the wealth amassed through the currency trading carried out by his banks and money exchanges.
Records show Mr Ghulam appears to have paid cash for the eight-bedroom, three-storey mansion, which is in an upmarket area of London. Other large houses line the street.
He bought the house in 2021, three years after moving to London but his connections to the city stretch back nearly a decade before that, The National can reveal. Mr Ghulam can also be linked to a non-descript social housing property in the city, which was used as an address for a business venture with another Iraqi banker.
Transparency International
Over the years, London has acquired a reputation as a place where people under sanctions or whose business interests have come under scrutiny can live discreetly.
Ben Cowdock, senior investigations lead at Transparency International, told The National said that "when Britain's allies sanction individuals for posing serious illicit finance risks, it is important that the UK government takes note and considers taking action themselves". The country “must not serve as a safe haven to those who launder money, evade sanctions or engage in corruption", he added.
Tobacco company
The US Treasury alleges that Mr Ghulam uses aliases including Ali Mohammed Glam Hussein. According to the UK’s Companies House records, Ali Mohammed Glam Hussein was the director and owner of a company called UK International Tobacco, which was founded in 2012 but dissolved in 2017.
The correspondence address of UK International Tobacco is in the Chelsea area of west London. Despite being in a famously upmarket area of the capital, the owner of the property is the Royal Borough of Kensington and Chelsea, the local council.
It has been leased to a housing association, which provides homes to residents at rents below the market rate. The property is tucked away on the ground floor the non-descript three-storey apartment block, a few minutes walk from Stamford Bridge, home of Premier League club Chelsea.
UK International Tobacco is described as being involved in the sale of food, beverages and tobacco. Accounts show an individual named Abdulmunem Mahdi Saleh Al Salawi owned 51 per cent of the shares and Mr Ghulam held the rest.
Its accounts show it has not done any trading and only had assets of £100 ($132).
Mr Al Salawi, 58, is a director and shareholder of Al Arabiya Islamic Bank, its annual report showed. It was one of eight banks that the Central Bank of Iraq last year banned from making dollar transactions as part of a crackdown on the smuggling of currency to Iran.
The Iraqi Securities Commission lists Mr Al Salawi as being one of the two largest shareholders in the bank, with a 10 per cent holding, and says he also sits on its board. When The National visited, a man making his way into the apartment said he a was a carer for a “Middle Eastern gentleman” who lived there. The man would not elaborate.
Mr Ghulam's lawyers said the original intention of the company was to acquire an international tobacco agency. The planned venture did not develop as the acquisition failed to materialise, so the company never traded.
Mr Al Salawi is "simply a friend" and has never had any business dealings with Mr Ghulam beyond setting up UK International Tobacco, the lawyers said. Their client "does not have any role at or interest in Al Arabiya Islamic Bank and one should not be implied on the mere basis of their friendship".
Feeding on dollars
The US began cracking down on Iraqi banks in 2022 after years of mounting evidence that they were exploiting a system set up to sell the country’s oil, to obtain dollars for its adversaries. These included Iran, Shiite militias backed by Tehran and former Syrian president Bashar Al Assad.
After the 2003 US invasion of Iraq that toppled Saddam Hussein, the UN Security Council set up the Development Fund for Iraq (DFI) to administer the country’s oil revenue. The proceeds were directed into a DFI account at the Federal Reserve Bank of New York. To begin with, millions in cash on cargo pallets were flown to Iraq, before being sent to the central bank.
What came next was the dollar auction system, through which banks applied for dollars held Federal Reserve Bank of New York. Under the system, Iraq’s central bank acted on behalf of Iraqi traders importing goods.
A trader wanting to buy goods from a company in another country is to go to a local bank and present an invoice for the goods, along with the necessary Iraqi dinars. The local bank is to then authenticate the transaction and deposit dinars with the central bank. The central bank then transfers the dollars to the local bank, which in turn transfers the money to the company's account.
of Horizon Engage
But the system was open to abuse because banks were not required to disclose the recipients of the funds. There was also a thriving black market for dollars.
Certain groups who were keen to obtain dollars employed fraudsters to register fake companies and fabricate invoices to create a bogus deal. This would then be used to acquire dollars through the auction and those dollars would then be resold at unofficial higher rates.
Some Shiite militias in Iraq also realised they could make money through dollar auctions and became involved by taking over private banks, it has been alleged. Those financial institutions essentially became vehicles for abusing the dollar auction system and were banks in name only, with a handful of employees.
Stuart Bowen, who from 2004 to 2013 led the body that oversaw US reconstruction funds, told the US Congress of widespread abuse of the dollar auction in 2012. An Iraqi audit found that 80 per cent of the nearly $1 billion purchased at the auction each week was connected to illegal transactions and potentially lost abroad to money laundering.
In particular, the dollar auction system was viewed by the US as a conduit for funds to reach its adversaries, including Iran-backed militias and the IRGC. In 2017, Iraq reportedly listed imports of $2.86 billion in watermelons from Iran, up from $16 million the year before.
Iraqi militias expert Mike Knights, of Horizon Engage, a strategic advisory working with the energy industry, told The National that the militias enriched themselves through the banking sector. “Iran-backed militias in Iraq attached themselves to the country's banking system and fed off the banks for over a decade,” he said.
“Militias like the Badr Organisation used the state banks to steal over $2.5 billion of unguarded tax deposits, and the terrorist group Kataib Hezbollah used multiple private banks to get access to US dollars for themselves and for Iran's Revolutionary Guard.”
The US Treasury alleges Mr Ghulam was one of those who has benefitted from the this system. "Ali Ghulam has managed Kataib Hezbollah’s finances, including investing the fortunes of Kataib Hezbollah’s highest-ranking leaders outside of Iraq," it said.
"Ali Ghulam has similarly provided financial services to Asaib Ahl Al Haq, including procuring US dollars and laundering funds using counterfeit documents and receipts to avoid government scrutiny. Despite his illicit activities, Ali Ghulam has avoided justice in Iraq by bribing judicial authorities."
US officials begun the crackdown on his banks in 2022 when it was banned from carrying out dollar transactions by the Federal Reserve and Treasury in 2022, The Wall Street Journal reported.
Iran Influence
Along with Mr Ghulam, other people under US sanctions include the brothers Ali and Aqeel Meften, who Washington says own and manage another IRGC-linked Iraqi commercial bank. The pair have close relationships with senior IRGC intelligence officials and help generate and transfer funds for militias in Iraq that support it, the US claims.
They have allegedly used their positions of ownership to support Kataib Hezbollah, working with Mr Ghulam to exploit US dollar access and assisting in laundering proceeds of corruption for political parties. “For decades, the Meften brothers have laundered tens of millions of dollars for Iran and smuggled oil and drugs and abused Aqeel Meften’s position as president of Iraq’s National Olympic Committee to engage in corruption," the Treasury said.
The business activities of those tied to the militias act as a means for Iran to defy sanctions and finance its nuclear programme, says Behnam Ben Taleblu, from the Foundation for Defense of Democracies (FDD).
“The dollar auctions, the creation of militias and trying to find vectors of influence into the Iraqi state, into Iraqi society, into Iraqi politics and even in the religious sphere in Iraq is part and parcel of the Islamic Republic's foreign security policy,” said Mr Ben Taleblu, a senior director of the FDD’s Iran programme.
“These illicit traders and militia groups, most of whom are Shiite are key to understanding the regime’s Trojan horse approach to state capture in Iraq.”
While oil exports are vital for Iran’s economy, its relationship with Iraqi militias is allegedly key to its trade links in the region, to launder money and above all to obtain dollars, which goes towards funding its nuclear programme and militia network.
The sanctions imposed on Mr Ghulam, as well as the designation of Harakat Al Nujaba, Kataib Sayyid Al Shuhada, Harakat Ansar Allah Al Awfiya and Kataib Al Imam Ali militias as foreign terrorist organisations, marks a change in the pace of US action against Iran, Mr Ben Taleblu said.
“There is a brewing cognisance in the Trump administration that now perhaps might be the time to really go after one of the main chokepoint for Iranians, which is this vast militia, proxy and front network in Iraq. So there's a very different understanding and a very different pace," he said. “When it comes to dealing with Iran’s sanctions busting and Iran backed terror threats in the region, Iraq may likely be at the top of that list.”
Mr Ghulam's lawyers said "our client has never knowingly authorised any funds from any banks to be transferred to, or to assist or to enrich the IRGC-QF, its militia proxies, or any Iranian-aligned militia groups".
