Media Coverage
Source: Trade & Export Finance
Media Coverage
Press Contacts: Erik Cummins, Matt Hyams, Olivia Thomas
05.17.16
After the United States struck a nuclear deal with Iran that lifted sanctions on the Middle Eastern country, many expected a flood of financial transactions to follow. The SWIFT banking system reopened to Iranian banks, allowing the country to process international payments. Yet, banks are still hesitant to pursue transactions in the country due to fears of incurring large fines for sanction evasion, according to Trade & Export Finance.
International Trade counsel Matthew Oresman says the general risks of Iranian transactions have not improved much since the sanctions were lifted.
“Many Iranian entities remain subject to sanctions,” he said. “Despite the fact some sanctions have dropped, doing business with Iran can still be very risky for banks.”
It is still forbidden to use the U.S. dollar in Iranian transactions, which complicates international commodities trading since those trades typically use U.S. dollars, Oresman explains. And Iranian export rules are similarly complicated.
“Any item being exported from Europe that contains more than 10 percent U.S. origin technology is still subject to U.S. export controls and requires an export license,” he said.
Experts say that the biggest fear for banks right now is the chance that sanctions might be put back in place suddenly. This could be the case if Iran continues to act against the interest of national security for western allies.
“The ball is really in Iran’s court. If Iran remains compliant with the deal, there won’t be a snapback,” Oresman said.
He adds that banks are likely to remain cautious as they figure out the rules they need to follow to stay compliant.
“Banks will go where the customer goes, and if their larger customers start demanding that service, the banks will likely adopt,” he said. “But it’s a big world out there, and there’s plenty of other ways to make money, so there’s not a huge appetite for risk in the near term.”