Employees at HSBC plc "fully knew" that China telecommunications company Huawei Technologies Co. Ltd conducted business in Iran through affiliate companies, a lawyer for Huawei chief financial officer Meng Wanzhou has told a Vancouver court.

The Canadian court is hearing arguments in Meng's extradition hearing at the request of the U.S. Meg is accused there of defrauding the bank by lying about Huawei's connection to Skycom, a company active in Iran, which could make HSBC vulnerable to violating American sanctions on Iran.

The allegations are based on U.S. records of meetings between Meng and HSBC bankers that are "manifestly unreliable," defense counsel Frank Addario said.

The records suggest that Meng met with 'Witness T,' an HSBC employee, in Hong Kong in 2013 and led the banker to believe Huawei had sold Skycom to a third party. 'Witness T' then passed this information on to his superiors.

But another HSBC banker, 'Peter Z', "fully knew" that Skycom had been bought by Canicula Holdings - a company controlled by Huawei - Addario said.

Any suggestion the bank was unaware is "very misleading," Meng's lawyer told the court. 'Peter Z' was a part of the risk committee that in 2014 decided HSBC should continue its involvement with Huawei.

"Canicula was no mere third party, it was a non-arm's-length affiliate whose bank accounts were managed by Huawei (and this) was never a secret," Addario said.

But Justice Heather Holmes said fraud could still be committed against HSBC even if lower level staff had knowledge of it.

Meng's lawyers said there had been an abuse of process - given interference by American authorities including former President Donald Trump - and the allegations against her should be dismissed.

Following her arrest in December 2018, then-U.S. president Trump said he would "certainly intervene" in the case if it would help smooth relations with China.

Addario plans to introduce affidavits to this effect - an attempt to "distract" the judge, according to Robert Frater, a lawyer representing the U.S. government.