The requested deportation of Mahmoud Reza Khavari, a former Iranian foreign national, and a Canadian citizen living in Toronto, seems to be at the centre of the arrest of a Canadian professor from Montreal, Homa Hoodfar, also an Iranian foreign national and equally a Canadian citizen, who was visiting Iran.
Professor Hoodfar was arrested by the Revolutionary Guard in Tehran just before Norwuz and is alleged to be incarcerated in Evin prison in Northern Tehran. The Canadian government has sought her release from Iran. The government of Iran has countered with its renewed requests for the deportation of Khavari.
Some background on Mahmoud Reza Khavari. He was prosecuted in Tehran for participating in the embezzlement of US$2.6 billion from the Melli Bank, a state-owned bank in Iran (Washington Post). It is the largest bank theft in Iran and its largest money laundering case, although it was not prosecuted on the basis of money laundering.
Khavari fled Tehran and came to Canada. Prior to that, however, he was granted citizenship of Canada in circumstances that seem unclear since he appears to have been living full-time in Tehran running a state bank and could not therefore have met the residency requirements under the Immigration and Refugee Protection Act to earn the right to citizenship.
Khavari purchased a mansion on the Bridal Path in Toronto, which is like having a mansion in Elahiel in Northern Tehran, only with a yard.
According to court filings, Khavari is alleged to have told a Toronto friend that he has “vast financial resources”. It turns out that Khavari was actively investing in Toronto – he invested $14.2 million in the construction of two Toronto luxury condominium buildings (Financial Post) and he has interests over them (they are at 131 Hazelton Avenue, 195 Davenport Road and part of 145 Davenport Road in Toronto) (2011 ONSC 101).
Also according to those court filings, Khavari assumed the name “Khalili” when he moved to Canada to conceal his true identity.
The US$2.6 billion taken from Iran was never recovered.
The government of Iran has sought the deportation of Khavari for many years from Canada without success; prosecutors in Tehran omitted to charge Khavari with money laundering in Iran, which would have accelerated his removal. While Iranian agents have visited Canada and physically searched for Khavari in Ontario, also without success, it now turns out that his address has been published in Court documents filed in Ontario in connection with a civil litigation in which he is embroiled (Financial Post). Iranians in Toronto say he lives openly in the community in a mansion in Toronto.
Iran has called the refusal of Canada to return Khavari to Iran as “one of the biggest hostilities of Canada towards Iran” (Fars News Agency), in part because allegedly Canadian officials misled Iran as to the whereabouts of Khavari, claiming that he was no longer living in Canada when he was in Toronto.
Anti-money laundering law & sanctions law
Khavari was the Chairman of the Melli Bank, hence he and all his family members are foreign politically exposed persons, subject to anti-money laundering heightened due diligence that required that the source of all their wealth be ascertained when they opened bank accounts in Toronto.
Salaries in Iran are about 30% what they are in Canada so salaries on bank applications that don’t reflect that are of concern to banks. Iran was subject to sanctions after 2010 which prohibited any bank or brokerage firm, in fact any person, from doing anything but freezing funds of Khavari that originated from Iran after 2010 unless it was approved by the Canadian government. To avoid sanctions, Iranians typically move their money through Dubai. Obfuscating the original of money from Iran through banks in Dubai does not make the funds sanctions-free — it does the opposite, it makes them proceeds of crime, the predicate criminal offense being sanctions avoidance.
Dual citizens with dual passports
Iranians often have two passports to facilitate their travel and often it is so that they can enter the United States as Canadians, without disclosing to US border agents the existence of their Iranian passports, and enter Iran as Iranians, without disclosing the existence of their Canadian passports to Iran’s border control agents.
The political situation between Canada and Iran became more complicated and tense because of the $13 million judgement against Iran awarded by a Toronto Court last week (National Post) for American plaintiffs.