The online magazine of the Swiss Bankers Association
June 21, 2017


The US sanctions against Iran: uncertainty for banks

The US sanctions against Iran: uncertainty for banks

The historic nuclear deal with Iran was reached last year. Among other countries, the US, the EU and Switzerland subsequently relaxed their sanctions. Under certain conditions, the US now allows transactions associated with Iran. In practice, however, the execution thereof is problematic, and the election of President Donald Trump is giving rise to uncertainty.

On 16 January 2016, the International Atomic Energy Agency (IAEA) announced that Iran had fulfilled its commitments. As a result, a number of sanctions were gradually lifted, also sanctions relating to international payment transactions.

A list of conditions

Last year, while Barack Obama was still in office, the US once again permitted transactions with Iran, albeit only under certain conditions. For non-US banks, meeting these conditions is difficult. 

Under the terms of the US, transactions are now permitted as long as

  • they are not associated with a person who is on the Specially Designated List,
  • they are not carried out in US dollars and not cleared in the US or they are conducted through a correspondent bank that is subject to US law,
  • they are not conducted in, out of, or through the US and there are no applicable US exemptions or if so no special licences to do so,
  • no US-person is involved,
  • the transaction is in no whatsoever way conducted with or for the Islamic Revolutionary Guard Corps,
    the transaction is not related to goods that are still sanctioned, for example goods for the production and delivery of weapons of mass destruction,
  • the transaction does not serve to support international terrorism,
  • they do not involve transactions to clients who themselves in the end through a third party import or export goods in the end from the US to Iran,
  • they do not result in the export of US goods to third countries if the parties are aware that Iran is the final destination.

The devil is in the details

One of the primary problems lies in the definition of a US person, who, according to the US, may not be involved in transactions with Iran. If a US person is an employee or decision-maker at a Swiss bank, that person may not execute an otherwise legitimate transaction. This means that the banks must ensure that no US persons work in any such roles (e.g. board, management, compliance, payments, etc.). The American Office of Foreign Assets Control (OFAC), which is responsible for the US sanctions, stipulates that affected employees should be protected: "Wall them off entirely from transactions with connections, involvement or ties to the Iran related transaction– no US person shall/may facilitate Iran business."

Banks must ensure that no US persons work in any such roles.

You should have known that…

If banks want to participate in the Iran business, they must exclude US persons from any such transactions, which requires substantial efforts. There is no room for interpretation: a bank is already in violation of the sanctions if a bank employee who is a Swiss-American double citizen authorises the payment or in any other way is involved in the transaction, for example as a compliance employee who were to approve this payment. Even such involvement would be considered as "facilitating" the relevant transaction. The problem is further aggravated by the fact that simple negligence is enough to qualify as a violation, in going with the motto "you should have known".

An uncertain future

This was the case at least up until the inauguration of President Trump. Since then, the Trump administration has expressed its unhappiness about Obama’s deal with Iran on several occasions. President Trump even tweeted about this, calling the agreement a "terrible deal".

Simple negligence is enough to qualify as a violation.

With the inauguration of Trump, there has therefore been even greater uncertainty for banks surrounding the future of the transactions that are currently permitted, because Trump could reinstate sanctions on these at any time. How the US’ relationship develops with Iran should therefore be closely monitored.

Babak Asadi says:
February 02, 2018 10:48 PM

Car en tant qu'un entrepreneur, je suis dans le pétrin car aucune banque ne voudrais en venir à l'aide.

Donc if se dire que les sanctions sont d'actualités.
Et on y peut rien.


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