31 Mar 2020
Rising numbers of Iranians are using a sanctions-busting scheme to buy property in Turkey and claim citizenship.
Using a network of money transfer offices, mostly in Istanbul, they are able to move funds out of accounts in Iran, even though US embargoes have severed the country’s banks from international payment networks.
The method is high-tech hawala, a way of transferring money across borders without going through systems that are monitored by the US Treasury.
Smuggled Iranian chip-and-pin machines connect the Istanbul offices with Tehran banks, the customer’s Iranian account is then debited and the equivalent in cash is handed over with a healthy commission deducted.
To get cash into the offices and transferred back to Iran, Iranian companies trading abroad use them to exchange their foreign currency earnings into riyal credited to their Iranian accounts, avoiding the high taxes that the Iranian government levies if they use the state exchange. Larger scale operations use faked certificates showing the purchase of goods that are permitted for import into Iran, such as food or medicines, to release funds from frozen Iranian bank accounts.
The transfer businesses, which operate in plain sight around Istanbul’s Taksim Square, mostly serve Iranian tourists and the 67,000 Iranian citizens living in Turkey, many of them young people who have escaped the stifling religious restrictions and often have cash sitting in accounts back home.
Others are eyeing bigger purchases. Leaflets on the counter of an office visited by The Times advertised luxury Istanbul properties for sale written in Farsi, with the bonus of Turkish citizenship.
The transfer businesses offer a seamless package for homebuyers. Instead of handing over cash they help set up accounts for their Iranian customers at a Turkish bank and transfer the money into it. That is then paid to the estate agent, and the property — and passport — purchase is complete.
Turkey launched its citizenship by investment (CBI) scheme in December 2017, giving nationality to anyone spending more than $1 million on property. Take-up was slow initially, then rocketed after the minimum spend was dropped to $250,000 in September 2018. Last month Suleyman Soylu, the interior minister, announced that nearly 25,000 people had become Turkish citizens through the scheme.
CBI industry monitors report that Turkey is now one of the most attractive countries in the world for investors looking for a new nationality.
By Hannah Lucinda Smith and Kaveh Nematipour, The Times, 30 March 2020
Read more at The Times
RiskScreen: Eliminating Financial Crime with Smart Technology
Advance your CPD minutes for this content, by signing up and using the CPD WalletFREE CPD Wallet