The Lloyds Banking Group PLC (LON: LLOY) share price fell 2% following a report by the Financial Times (FT) indicating that Iran utilised accounts at Lloyds Bank and Santander to clandestinely transfer funds globally, circumventing sanctions with the support of Iranian intelligence.
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The FT report unveiled that Lloyds and Santander UK managed accounts for UK-based shell companies covertly controlled by an Iranian petrochemical firm under sanctions, situated in London.
The drop in Lloyds' share price was attributed to market expectations of potential fines on the two banks. “The market is probably recognising the potential for fines,” commented Nuria Alvarez, a market analyst with Renta 4 in Madrid.
Historically, European banks, including Unicredit and Standard Chartered, have faced substantial fines for violating Iran-related sanctions, with Unicredit settling for $1.3 billion with U.S. authorities and Standard Chartered paying $1.1 billion in 2019 to both U.S. and UK regulators for sanction breaches.
The FT highlighted the Petrochemical Commercial Company (PCC), a state-run Iranian entity accused by the U.S. of generating substantial funds for the Iranian Revolutionary Guards Quds Force and collaborating with Russian intelligence, and its UK subsidiary PCC UK, which have been under U.S. sanctions since November 2018.
The report identified a supposed front business, Pisco UK, registered to a residential address in Surrey and holding a Santander UK business account. It was noted that Santander has since terminated Pisco's account.
Santander refrained from discussing individual client engagements but emphasised its commitment to legal and regulatory obligations, including sanctions compliance, stating the bank takes necessary actions upon identifying sanctions risks.
Similarly, a Lloyds spokesperson underscored the bank's dedication to complying with all sanction laws and regulatory mandates related to economic crimes, declining to comment on specific customer cases.
Lloyds share price.
Lloyds' share price fell 1.99% to trade at 41.053p from Friday’s closing price of 42.320p.
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YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY
YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY.