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HomeNEWSIRAN NEWSWestern banks cold-shoulder Iran trade finance scheme: report

Western banks cold-shoulder Iran trade finance scheme: report

Despite a diplomatic thaw, Western banks are steering clear of attempts by Iran to get them involved in financing humanitarian transactions, fearing they could be penalized under U.S. sanctions, bankers and government officials told Reuters.
Iran was never barred from buying food or other humanitarian goods under sanctions imposed because of its disputed nuclear program, but measures by the European Union and the United States have made trade generally more difficult over the past two years by hindering payments and shipping.
As part of talks in Geneva over the nuclear question, Tehran is pressing world powers to speed up trade finance arrangements on humanitarian deals involving both Western and Iranian banks, according to an Iranian government document seen by Reuters and sources familiar with the initiative.
A U.S. Treasury official said the United States is working with banks and governments in Asia and Europe to establish mechanisms for humanitarian trade with Iran, and multiple channels were ready for Iran to purchase humanitarian goods.
A different U.S. official told Reuters separately that Washington was having trouble persuading some big banks to work on the issue.
“Some banks are willing to play a part here. But not all of them. There are a lot of big banks that have been subject to fines for engaging in transactions that were in violation of U.S. sanctions that aren’t willing to do anything – even humanitarian,” the official said.
“They just are not willing to do business with Iran. And we are not in a position to say, you have to.”
Banks may well feel the need for caution in this area.
Regulators in New York and Washington are looking at potential violations by France’s Credit Agricole <CAGR.PA> and Societe Generale of U.S. sanctions imposed against countries like Iran, a person familiar with the investigation said.
In 2012 New York regulators threatened to revoke Standard Chartered’s <STAN.L> banking license after it broke sanctions on Iran. HSBC <HSBA.L> was fined $1.92 billion by U.S. regulators for various violations including doing business with Iran. In February, BNP Paribas <BNPP.PA> set aside $1.1 billion for a possible fine for breaching U.S. sanctions on countries including Iran.
Several banking sources, speaking on condition of anonymity due to the sensitivity of the subject, said Western banks were wary of getting involved in the latest initiative. One said banks would need cast-iron assurances that they would not face exposure before even considering it.
“It is only natural that banks will be cautious to what the political world offers. It changes so quickly, as events in Ukraine can attest,” the banker said.
“What we could be looking at is very short-term financings or involvements and structures, so you will have optionalities to exit should anything go wrong,” he added. “Banks will need more clarity.”
spokeswoman for Standard Chartered said the bank was not involved and would not get involved in any transaction with any party from Iran.
Unicredit said the group was “not aware of, and hence is not participating in any international initiative involving financial institutions related to Iran subsequent to the P5+1 (major powers) accord”. BHF Bank said it was “not offering or providing any financial services with links to Iran”.

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