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January 2019, No. 90


Banking

16 Iranian Banks Excluded from Sanctions


With the start of the second round of US sanctions against Iran, concerns over Iran’s financial and trade ties with the world have become more serious.


The new round of the US sanctions against Iran has begun and the US Treasury has updated the list of legal and real persons subjected to the sanctions. By November 4, some 354, real persons and legal companies were on the US sanctions list, and the figure has now reached 549; that is in seven days the US Treasury has added the names of 195 individuals, banks and companies to the sanctions list and has banned any kind of partnership and financial transactions with these people.

Among the names in this list, some individuals and companies are only identified by the label SDN (Specially Designated Nations and Blocked Persons); it means that they are prohibited from doing any business with American individuals and partners, however they are authorized to forge financial and business links with countries and business partners except for America. Central Bank of Iran (CBI), Bank Maskan and Refah Bank (a total of 16 banks) are on the list, but some other banks, companies and individuals are also included on the US secondary sanctions list.

This sanctions list has been specified with SDGT (Specially Designated Global Terrorists) and IFSR (International Financial Reporting Standard) labeling and includes people identified by the US for “money laundering and lack of transparency” and “support for terrorist groups”. Bank Saderat Iran, Bank Mehr, Mellat Bank and Sina Bank (a total of 12 banks) are on this list; the list includes individuals and companies accused of supporting militia and terrorist groups, their assets are blocked, and if an individual or company in the world established economic and commercial exchanges it will be removed from the USD cycle and will be placed on the US initial sanctions list.

In other words, apart from the 12 banks that are subject to strict triple sanctions, 16 other Iranian banks are only on the US sanctions list and will be able to trade with the rest of the world. Experts say there is hope that those in the US initial sanctions list would not cut off commercial and financial link with the world (minus the US), but those on the secondary list (SDGT) would certainly face a lot of difficulties, with no entity, company or foreign person able to do business with them.

Which banks are out of USD cycle?

With the start of the second round of US sanctions against Iran, concerns over Iran’s financial and trade ties with the world have become more serious. Also, the US Treasury within several days has added 195 real and legal cases to the sanctions list and has practically cut off Iran’s trade and financial institutions with the outside world.

But this does not mean absolute sanctions against Iran; According to the US Treasury list, although Iranian banks, companies and individuals are out of USD cycle, if Europe continues to fulfill its promises on commitment to the Joint Comprehensive Plan of Action they can do business with countries and trade partners other than the United States.

The sanctions imposed by Washington against Iran can be divided into two primary and secondary groups. The initial sanctions are punishments targeting Iran directly, namely sanctions it directly imposes on Iranian individuals or companies, and all American individuals and corporations must comply with them.

These sanctions are labeled SDN and include individuals and companies whose assets are blocked and the Americans cannot do business with them. This list is under the control of the US Treasury, and no bank, company or individual can enter into financial and business relations with the real and legal persons on the list. The people of this list, although left out of the USD cycle, can continue to cooperate with non-US citizens.

CBI, Bank Maskan, Refah Bank, Bank Keshavarzi Iran, EN Bank, Karafarin Bank, Saman Bank, Ayandeh Bank, Hekmat Iranian Bank, Tourism Bank, Qarz Al-Hasaneh Mehr Iran Bank, Iran Zamin Bank, Tose’e Ta’avon Bank, Middle East Bank, and Mehr Eghtesad Bank are the ones receiving the SDN label only. Although they are out of the USD cycle they can have financial links with non-Americans.

Of course, four banks namely the Middle East Bank, Hekmat Iranian Bank, Mehr Iran Bank and Tose’e Ta’avon Bank had been mentioned in the list of secondary sanctions but after the second round of the sanctions on November 4th they were moved to the list of initial sanctions.

Early in November, SWIFT financial messaging service announced that it was suspending “some unspecified” Iranian banks’ access to its messaging.

In a brief statement, SWIFT made no mention of US sanctions coming back into effect on some Iranian financial institutions.

The SWIFT statement said suspending the Iranian banks’ access to the messaging system was a “regrettable” step but was “taken in the interest of the stability and integrity of the wider global financial system.”

Now, with the update of the US Treasury listing, it is hoped that “some unspecified” banks can maintain financial links with non-US citizens.

Banking Members of Secondary Sanctions

But in the secondary sanctions punishments can include real and legal persons of other countries who have had exchanges with Iranian individuals or companies in the sanction list and they too should avoid business with Iranian individuals and firms in order to skip US sanctions. Otherwise, they will face different penalties. The main portion of the secondary sanctions are in the financial and banking spheres, meaning that any international bank and financial institution that has financial transactions with the Central Bank of Iran or other Iranian banks, will be sanctioned by the US Central Bank and will be deprived of opening of a broker account in the US for access to its financial system.

In fact, those labeled “SDGTs” on the US Treasury list are individuals and companies accused of supporting militia groups and terrorism; if a person or company anywhere in the world does business with the members of this list they will be ousted from the USD cycle and moved to the list of initial sanctions (SDN).

Tejarat Bank, Export Development Bank of Iran, Bank Day, Bank Sepah and Bank Melli Iran are included in this list. These are banks whose access to any foreign trade partner, whether American or non-American is blocked and their assets are frozen in all banks outside Iran.

Meantime, sanctions have also been re-imposed on Iran’s shipping lines, namely the National Iranian Tanker Company (NITC) plus more than 60 planes owned by Iran Air (the airliners of the Islamic Republic of Iran) with their details and serial numbers.

 

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  January 2019
No. 90