Sanctions remained on paper: The scheme funneling billions to Tehran

A Reuters investigation reveals a complex mechanism through which Iran converts oil revenues into Chinese credit, bypassing international sanctions. The arrangement allows China access to discounted Iranian oil and provides protection for Chinese banks and companies from penalties. The deposits cover purchases of military equipment, medicines, and infrastructure, and are transferred through a Hong Kong-based company linked to the Iranian oil company.

A Reuters investigation reveals a complex financial mechanism through which Iran bypasses international sanctions and funnels billions of dollars into its economy. According to the investigation, Iran converts oil revenues into Chinese credit, using it to purchase advanced military equipment, medicines, and infrastructure. The arrangement allows China, the world's largest importer of crude oil, to maintain access to discounted Iranian oil, while providing a shield for Chinese banks and companies exporting to Iran from international scrutiny. The deposits cover purchases coordinated with a company registered in Hong Kong and linked to Iran's national oil company. About 70% of Iranian oil revenues handled by this entity are allocated to infrastructure projects, and the remainder is transferred to accounts of a special legal entity, managed by parties connected to China's Ministry of Commerce and Iran's Central Bank. The investigation is based on the 25-year strategic partnership agreement signed between the countries in 2021.