A local lender was reprimanded for illegal money transactions involving an account held by the Iranian central bank, officials at the South Korean financial watchdog said Wednesday.

An inspection on the state-run Industrial Bank of Korea by the Financial Supervisory Service in September discovered major discrepancies in the senders and receivers of remittances for trade that were not properly reported to local authorities, according to the officials.

A South Korean trading company had imported $996 million worth of marble goods from a United Arab Emirates firm between February and July 2011 and resold them to an Iranian firm, records obtained by the FSS showed. The company received payment for the sales from the Iranian firm through an Iranian central bank’s account opened with the IBK, but sent the money to several unrelated countries instead of to the UAE firm, the records indicated.

According to the local foreign exchange law, Korean banks are required to check whether a local importer or exporter gives or receives payment to its counterpart. Remittances to or from unrelated third parties have to be reported to the Bank of Korea, which the IBK failed to do, officials said.

“The FSS has reprimanded the IBK last year for illegal transactions involving the Iranian account,” an official at the watchdog said.

The manager of the implicated Korean company was convicted of illegal transactions by a Seoul court.

Despite a U.S.-led ban on engaging in any capital transactions with Iran, South Korean companies are allowed to use the Iranian central bank’s account for trading in consideration of the nation’s energy dependence on the Middle East country.

Iran’s central bank receives won-denominated payments from South Korean oil importers and deposits the money in its accounts with the IBK and Woori Bank. South Korean exporters to Iran are also paid from the money deposited into these accounts.

An earlier Japanese news report had claimed that Petrosina Arya, a Tehran-based company owned by the Iranian Revolutionary Guard Corps, has won-denominated savings worth $1.3 billion in an account at a major South Korean bank.

Citing a diplomatic source, Kyodo News said IRGC is suspected of laundering money through the bank account in South Korea. The FSS denied the suspicions, saying its inspection has found nothing that points to such laundering.

“There has been no problem since the IBK was reprimanded last year,” said an FSS official. (Yonhap)