Despite the lifting of some sanctions, US banks are currently not permitted to do business with Iran as part of a trade embargo that remains in place - effectively blocking U.S. dollar transactions. Whilst some Iranian banks have been reconnected to the SWIFT system in January 2016, several banks in Europe still have policies in place not to accept payments from Iranian companies or individuals due to the strict fines imposed in the past by the US through OFAC, FATF or similar bodies and the complexity of the remaining sanctions relating to alleged human rights violations and support of terrorism. Whilst a 50-page guidance document has been provided to banks by OFAC (the US treasury`s Office of Foreign Assets Control) this is reported to be not clear and concise enough for the compliance departments of major European banks to confidently change their policies. In addition, it is extremely difficult to obtain reliable due diligence with regards to Iranian entities due to a lack of available information. Despite the assurances of Chris Backemeyer, Principal Deputy Coordinator for Sanctions Policy at the U.S. Department of State that Washington would not penalize foreign banks for doing business in currencies other than US dollars, the lack of credible information on the background of companies and individuals from Iran means that banks are not willing to take the risk that they are not doing business with sanctioned entities. According to media sources, Iran plans to use billions of dollars of its blocked assets - that are expected to be released soon after the removal of sanctions against the country - for imports of essential goods.
Iran has reportedly requested that payments blocked when the latest sanctions relating to the country`s nuclear program were imposed (reported to be around $30 billion) be made in Euros and the funds will possibly kept outside of Iran to pay for imported goods. There are also apparently up to $100 billion in Iranian assets, that had been frozen by the sanctions, in foreign bank accounts. So, despite all the hype and the willingness of some governments and European businesses in particular to engage in trade with Iranian companies, it would be wise to check first with your bank whether your company can actually receive payments from or related to Iranian customers before rolling out any costly sales or marketing program or exporting goods or services to the country. The situation may indeed be different for those based in Russia or Asia. In fact, after President Putin`s visit to Iran last year, Russia was ready to extend $5 billion of credit for joint Russian-Iranian projects. If any EU or other banks are
accepting payments from Iranian entities I am certain that each case will be subject to thorough, time-consuming and expensive due diligence and scrutiny. From Iran to Bahrain, we have extensive coverage of the business sector throughout the MENA region, make sure to read more articles here
. Written by Christina Massaad, Managing Director *** The sole purpose of the article above is to generate public discussion, it has no intention to constitute legal advice. *** Please follow our company page on Linked In to get regular update