Iran is managing to sneak around heavy economic sanctions using other countries' private trading houses, fake identities, and something called hawala, the US Treasury tells reporters. The sanctions have left the country "almost without recourse through ordinary banking channels," says a spokesman. So Iranian officials are in some cases turning to hawala, an illegal system used in the Middle East and Asia that transfers cash via couriers, the New York Times reports.
Hawala is tough to track, and Iran is sticking to smaller transactions—in the tens of thousands of dollars—to keep things under the radar. Still, "hawalas are even less perfect substitutes for banks," says the US official. "It’s a mechanism that only works if you have absolute trust of the individuals involved." The Treasury rep called hawala and other practices "an evolving and emerging threat," noting, "two years ago we saw little of this because Iran was able to find banks that were able to handle its business." Lately, Iran has acknowledged the effectiveness of the sanctions: Its oil minister this week said exports and revenue had dropped by 40% in 2012 compared to 2011. (Read more Iran stories.)