U.S. Treasury Secretary Steven Mnuchin speaks during a reception hosted by the Orthodox Union in Jerusalem ahead of the opening of the new U.S. embassy in Jerusalem, May 14, 2018. REUTERS/Ammar Awad
US Treasury Secretary Steven Mnuchin has announced new sanctions against Iranian officials. Ammar Awad / Reuters

US Imposes sanctions on Iran banking head


The National

The United States Treasury on Tuesday imposed sanctions against the governor of Iran’s Central Bank, an Iraq based financial institution and its chairman, accusing the men of handling millions of dollars of transactions for Iran’s Revolutionary Guard and Lebanon’s Hezbollah.

“Iran’s Central Bank Governor covertly funnelled millions of dollars on behalf of the IRGC-[Qods Force] through Iraq-based al-Bilad Islamic Bank to enrich and support the violent and radical agenda of Hezbollah,” Treasury Secretary Steven Mnuchin said in a statement. “It is appalling, but not surprising, that Iran’s senior-most banking official would conspire with the IRGC-QF to facilitate funding of terror groups like Hezbollah, and it undermines any credibility he could claim in protecting the integrity of the institution as a central bank governor.”

The announcement named Valiollah Seif, the governor of the Iranian Central Bank, as well as Ali Tarzali, the assistant director of the International Department at the Central Bank of Iran, and accused the pair of “assisting, sponsoring, or providing financial, material, or technological support for, or financial or other services” for the Revolutionary guard and Hezbollah. However, the sanctions did not extend to the Central Bank as a whole.

The announcement also includes Aras Habib, the Chairman and Chief Executive of Iraq based Al-Bilad Islamic Bank on similar charges. The statement reports that Habib facilitated payments from Iran to Hezbollah through the Iraqi banking system. The Al-Bilad Islamic Bank was also included in the sanctions.

Lastly, the Treasury imposed sanctions against an individual named as Muhammad Qasir for working to facilitate payments to Hezbollah although the statement did not indicate the role that Mr Qasir had played in the reported money transfers.

The sanctions against the high-level Iranian official are the first since US President Donald Trump announced his withdrawal from the 2015 nuclear deal, however the new administration has both drafted and passed several new sanctions bills as part of a more aggressive stance towards Hezbollah.

In October 2017, the US announced the first financial reward in over a decade for information leading to the capture of two senior Hezbollah commanders. US State Department Counter-Terrorism Coordinator Ambassador Nathan Sales announced that the American Rewards for Justice program was offering up to $7 million for any information on the location, arrest or conviction in any country on Talal Hamiyah and up to $5 million for such information on Fuad Shukr.

Sales said at the time that Shukr was a close military adviser to party Secretary-General Sayyed Hasan Nasrallah and also the commander of Hezbollah forces in south Lebanon. He said that Hamiyah heads Hezbollah’s External Security Organization that deals with the group’s activities outside of Lebanon.

Hezbollah has rapidly expanded its regional footprint in recent years, heavily backing the embattled Syrian President Bashar Al Assad and carrying out extensive operations in Iraq. They are also reported to operate across the region, including in Yemen and Bahrain.

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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