LONDON: At least $1 billion in cash has been smuggled into Iran as it seeks to avoid Western sanctions, a bigger figure than previously reported, Iranian officials and Western intelligence and diplomatic sources say.

Sanctions imposed by the West over Iran’s nuclear programme have shut Tehran out of the global banking system, making it hard to obtain the US dollars it needs for international transactions.

In December, the US Treasury said the Iranian government had obtained hundreds of millions of dollars in bank notes using front companies.

Interviews by Reuters with Iranian officials and Western diplomatic and intelligence sources show a bigger smuggling effort by Tehran, as well as the routes and methods used — details not previously reported. These sources said at least $1bn in US bank notes had been smuggled into Iran in recent months, with the Iranian central bank playing an important role.

Three Western diplomatic sources and three Iranian government officials, who all declined to be identified citing the sensitivity of the issue, said Tehran had been working on ways to obtain dollars since March last year.

The sources said the cash was hand-carried by couriers on flights from Dubai or Turkey, or brought across the Iraq-Iran border.

Before it reached Iran, the cash was passed through money changers and front companies in Dubai, in the United Arab Emirates, and Iraq, they added.

A Western diplomat who follows Iranian affairs said the central bank was a driving force in efforts to obtain dollars.

Western and Iranian sources said Iran’s central bank had in recent months worked with other entities, including other sanctioned Iranian companies, to find ways to obtain US dollars, including using front companies and their networks. They said the central bank had given the orders to the front companies abroad to buy dollars.

The Central Bank of Iran declined comment, as did government officials in Turkey. Authorities in the United Arab Emirates made no immediate comment when contacted, while the UAE central bank declined comment.

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