Daily Management Review

Large European banks are uptight about working with Iran


05/09/2016


International sanctions on Iran began to take off, so many foreign companies are showing growing interest to work with Iran. Yet, some of Europe’s largest banks are still in no hurry to establish contacts with this country. Those are institutions, which in recent years have undergone heavy fines for violation of US sanctions. It is reported that the bankers want more clarity on the US position towards Iran.



yeowatzup via flickr
yeowatzup via flickr
Among the banks that are not yet ready to do business with Iran are such leading finance companies as French Societe Generale, German Deutsche Bank, Swiss Credit Suisse, Dutch ING Groep and British Standard Chartered. Financial Officer of another French bank, BNP Paribas, Lars Machenil said that his company would like to have more clarity in the understanding of the situation before starting to do business with Iran. In turn, Societe Generale said it has no plans to renew relations with Iran. "The difference in the European and US regulatory positions carries high operational risks", - noted the bank’s representative. 

As is known, several large European banks recently has undergone heavy fines for violating the US sanctions against Iran. In December 2009, the US Justice Department imposed a fine of $ 536 million on Credit Suisse for working with Libyan, Iranian, Sudanese, Myanmarian clients. In June 2012, the US Treasury ordered the Dutch ING Bank to pay a fine of $ 619 million for violating sanctions imposed on several countries. It was found that between 2002 and 2007, ING Bank deliberately removed details of more than 20 thousand transactions in the amount of $ 1.6 billion. Thus, the institution allowed customers from Iran, Cuba, Myanmar, Sudan and Libya to transfer funds with the help of the US financial system. In July 2014, the French bank BNP Paribas pleaded guilty to a violation of the sanctions regime against Iran, Sudan and Cuba and agreed to pay a record fine of $ 8.9 billion. According to the investigation, the bank worked with the Sudan, having illegally serviced transactions for $ 6.4 billion. Above that, operations of $ 1.7 billion were carried out in the interests of the Cuban legal entities, and more than $ 650 million - in the interests of Iran. The events took place in the period from 2004 to 2012. In March last year, the German Commerzbank reached an agreement with US regulators on the settlement of claims. The bank was accused in multiple violations of the US government’s sanctions, as well as in helping long-term help to a Japanese fraudster company Olympus. Total amount of the fine reached $ 1.71 billion. In November the same year, Deutsche Bank agreed to pay US regulators a fine of $ 258 million for violating US sanctions against several countries, including Iran and Syria.

Experts point out that the current situation does not seem inviting to many banks, especially those that have already been fined by the US. They are not in a hurry to resume contacts and participate in any financial transactions with Iran. 

While many large financial companies prefer to take a wait and see attitude, smaller European banks or banks from Asia are not going to wait. For example, the Belgian KBC Bank said that it "decided to support reliable European customers in their trade with Iran with a view of regulating the US and EU standards." In early April, Omani Bank Muscat SAOG announced receipt of all necessary permits required to open its office in Iran.

source: bloomberg.com






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