Those wondering about Iran’s ability to confidently defy the sanctions that the Obama administration has belatedly imposed on the rogue regime have previously pointed to the lax enforcement of the regulations. The Treasury Department has granted over 10,000 exemptions to companies desirous of avoiding the sanctions. The U.S. has also given Iran’s largest oil customers a pass on having to give up purchasing Tehran’s supplies. But it turns out that even those sanctions that are enforced aren’t working and this time the fault can’t be pinned on President Obama’s lack of will.

The New York Times reports that federal prosecutors say Chinese banks and other international institutions have been playing the role of middleman in a con game allowing Iranian banks and corporations to conduct business in the West that ought to be curtailed by the law. Through their U.S. branches, the Chinese institutions have reportedly funneled billions of dollars to Iran’s coffers. When added to the president’s timorous diplomacy, this fraud helps explain why the Iranians are going full speed ahead with the nuclear program with few worries about the sanctions that Secretary of State Clinton claimed would be so tough it would bring them to their knees.

The Times named two London-based banks with extensive Asian operations, HSBC and Standard Chartered, as being under investigation for complicity in helping Iran evade sanctions. But the ability of Western law enforcement agencies to stop Chinese shenanigans may be limited. It may be that as banks come under scrutiny, the Justice Department will gain cooperation and stop more such schemes. But the impression given by the Times piece is that of an unending game of “Whack a Mole” in which one Iranian scam can pop up as quickly as another is put out of business.

While the Justice Department is to be commended for pursuing these banks and hopefully seeing that they are severely punished, the case also illustrates the futility of a U.S. Iran policy that is based on the hope that diplomacy and sanctions will stop Tehran. And as long as billions are flowing into Iran’s treasury, there is no chance that economic measures will suffice to halt their nuclear ambitions.