NEW YORK (Dow Jones)–A former McKinsey & Co. management consultant was arrested Thursday on charges he operated an unlicensed money-transfer business between the U.S. and Iran, violating a U.S. trade embargo, prosecutors said Thursday.
Mahmoud Reza Banki, 33, was charged with conspiracy, violating the International Emergency Economic Powers Act and conducting an unlicensed money-transmitting business. He faces up to 20 years in prison on the IEEPA violation count.
Banki, of Manhattan, pleaded not guilty to the charges at a hearing before U.S. District Judge John F. Keenan in Manhattan on Thursday.
He remains in custody. A bail hearing is scheduled in his case for Monday.
“Our laws recognize a national emergency based upon the threat Iran poses to the security of the United States,” U.S. Attorney Preet Bharara said in a statement. “Banki allegedly paid no heed to the dangers of breaking laws designed to protect our country’s citizens, moving and spending illicit millions.”
Prosecutors from the U.S. Attorney’s office in Manhattan alleged Banki, from January 2006 and September 2009, provided money-transmitting services to residents of Iran by operating a “hawala,” a type of informal value transfer system in which money doesn’t physically cross international boundaries through the banking system.
In the hawala system, funds are transferred by customers to a hawala operator in one country and corresponding funds, less any fees, a…