EU banks, businesses 'still avoiding Iran'

European institutions wary of legal tangles as some US sanctions against Iran still in force

DUBAI • Iran complained on Saturday that European banks and companies were too wary about renewing business ties following the lifting of economic sanctions and said it had asked the International Monetary Fund (IMF) to ease their concerns.

In January, world powers led by the United States and the European Union lifted most sanctions on Iran in return for curbs on its nuclear programme.

But some US sanctions remain, and US banks remain prohibited from doing business with Iran directly or indirectly because Washington still accuses Iran of "supporting terrorism".

That has deterred European institutions, which fear they could face US legal problems if they re-establish banking links.

"There is still 'Iranophobia' in the banking sector that we're trying to overcome," Mr Hamid Tehranfar, a vice-governor of Iran's central bank, was quoted as saying by state news agency IRNA.

"We have asked the International Monetary Fund to review our regulations so other countries' banks feel reassured. The IMF will announce its assessment in 2018," he added, without explaining why it would take two years.

As part of sanctions relief, most of Iran's banks were reconnected to the Swift international payments network last month, allowing them to resume cross-border transactions with foreign banks. But because of foreign institutions' legal fears, actual activity has remained very limited.


There is still 'Iranophobia' in the banking sector that we're trying to overcome.

MR HAMID TEHRANFAR, a vice-governor of Iran's central bank

Mr Alex Thursby, chief executive of National Bank of Abu Dhabi, the emirate's biggest bank, said this week that in reality, no banks could conduct transactions with Iran in US dollars under current conditions.

That is a political and economic headache for the administration of President Hassan Rouhani, since his conservative parliamentary critics have complained the nuclear deal is not delivering the expected benefits to Iran.

Deputy Foreign Minister Majid Takhteravanchi, a negotiator of the nuclear deal, also criticised the "cautious behaviour" of European banks in resuming transactions.

"There is no legal obstacle in the way of expansion of Iran-Europe relations," IRNA quoted him telling European businessmen at a forum in Teheran on Saturday. He also said the Iranian central bank was implementing new rules against money laundering and terror funding.

The central bank's governor, Mr Valiollah Seif, told the forum that Iran's market was ripe for co-operation between Iranian and European banks. "Transparency is the prerequisite of international transactions. Iran has taken primary steps to make the financial information of Iranian banks as transparent as possible."


A version of this article appeared in the print edition of The Straits Times on March 07, 2016, with the headline 'EU banks, businesses 'still avoiding Iran''. Print Edition | Subscribe