The Obama administration released a guide Friday on how foreign bank banks can do business with Iran, the world’s top terror sponsor, using U.S. dollars.
The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued a guide for banks explaining that they can do U.S. dollar trades with Iran, so long as the transactions do not go through financial institutions located in the U.S. OFAC’s guidance follows several months of complaints from Iran claiming U.S. sanctions have scared away potential business partners it was expecting after signing the Joint Comprehensive Plan of Action (JCPOA, or Iran nuclear deal) last year.
Despite a loosening of sanctions since the Iran nuclear deal, many banks continue to stay away from doing business with the Islamic Republic, which is still considered by the U.S. Department of State to be the world’s premier state sponsor of terrorism.
“I’ve generally advised people to stay away from dollar transactions in Iran,” Melvin Schwechter, a sanctions attorney at Baker & Hostetler LLP, told Reuters Monday. “But here they are giving banks a green light to go forward as long as they make sure the dollar-denominated transactions don’t affect the U.S. It’s a signal to blunt the criticism of the Iranian government that they aren’t getting any benefit from the nuclear deal.”
A Treasury spokeswoman noted that the guidelines are meant to “clarify the scope of sanctions lifting” due to the Iran nuclear deal, but they do not equate to sanctions relief themselves.
Despite the administration’s efforts, Iran continues to be skeptical of U.S. intentions.
“The problems that existed before are still there,” Hossein Ghazavi, vice-minister of Iran’s ministry of economy, told Reuters Monday. “Previously … non-American financial institutions could not have 100 percent confidence that while providing brokerage services, creating accounts or maintaining U.S. dollars for Iranian banks and customers, they wouldn’t face unpredictable risk. This ambiguity has still not been resolved.”
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