A US federal judge has ordered HSBC and Standard Chartered, two of Britain’s largest multinational banks, to submit records for inspection over allegations of processing payments tied to a multimillion-pound money laundering scheme for Iran.
The accusations, detailed in court documents filed in the Southern District of New York, claim the banks unwittingly facilitated transactions linked to a sanctions-evading conspiracy involving Iran’s state entities.
The case centers on Kuveyt Turk, the Turkish branch of Kuwait Finance House (KFH), which allegedly used HSBC, Standard Chartered, and three other major banks—JP Morgan Chase, Citibank, and Bank of New York Mellon—as correspondent banks to process transactions in US dollars. Court filings reveal a specific transaction of $5.7 million involving the National Iranian Oil Company, a sanctioned entity under US, EU, and British regulations. Additional allegations point to euro-denominated payments for equipment, including fan blades and axial fans, potentially tied to nuclear weapons and ballistic missile programs.
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These transactions reportedly involved two US-sanctioned companies, Khatam Al-Anbiya Construction and Arvand Petrochemical Company, both affiliated with Iran’s Islamic Revolutionary Guard Corps. Documents assert that Khatam Al-Anbiya indirectly funds groups like Hamas and Hezbollah while supporting Iran’s nuclear and missile industries through complex schemes designed to obscure sanctioned activities.
The allegations surface amid heightened US pressure on foreign financial institutions engaging with Iran. The US Treasury Department recently warned of deploying secondary sanctions against banks supporting Tehran’s activities, a move that coincides with strained UK-US relations over Middle East policy. President Donald Trump has threatened to revisit a trade agreement with Britain following criticism from UK Chancellor Rachel Reeves on war strategy, adding geopolitical weight to the financial probe.
Separately, the case ties into a personal dispute involving Delaram Zavarei, an Iranian businesswoman and regime critic, who claims Iran targeted her family and corporate interests through a state-sponsored campaign. Her lawyers allege KFH conspired with Iranian entities to steal millions in equipment from her company, Energy Exploration and Development Company Ltd (ENEXD), with Kuveyt Turk facilitating related payments. Zavarei is preparing a parallel claim in London’s High Court.
A sanctions expert familiar with the case noted that the correspondent banks likely acted without knowledge of the underlying connections, given their prior penalties for similar violations and rigorous compliance efforts. The judge has requested additional discovery from ENEXD following an objection by Citibank, signaling ongoing scrutiny.
The probe’s outcome could carry significant financial and reputational consequences for the banks involved, with potential fines or sanctions hanging in the balance as US authorities intensify their focus on Iran’s global financial networks. Court proceedings are set to continue through early 2026, with further disclosures expected.
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