All in Finance

China Unexpectedly Gambles on European Mechanism to Sustain Iran Trade

◢ China has halted its financial transactions with Iran as part of an unexpected gamble on the future of its trading relationship with the Islamic Republic. According to Majid Reza Hariri, deputy president of the Iran-China Chamber of Commerce, China is hoping to sustain its trade with Iran without putting its financial system in the crosshairs of US authorities by joining the special purpose vehicle being devised by Europe for this purpose.

Parsian Bank CEO: US Treasury Made ‘Mistake’ in Iran Sanctions Designation

◢ In an exclusive interview with Bourse & Bazaar, CEO of Iran’s Parsian Bank, which was sanctioned last week by the US Treasury, has described the designation of the bank as a Specially Designated Global Terrorist (SDGT) a “mistake.” The move against one of Iran’s leading private sector banks by has many in Iran’s banking sector worried about the ongoing viability of humanitarian trade.

New Sanctions on Iran’s Parsian Bank Threaten Humanitarian Trade

◢ On Tuesday, the US Treasury Department’s Office of Foreign Assets Control (OFAC) applied new sanctions on “at least 20 corporations and financial institutions” associated with Bonyad Taavon Basij. While the designation of bonyads has been a common feature of US sanctions policy for over a decade, yesterday’s action reflects a significant break with sanctions policy under the Obama administration. Included among the targeted entities is Parsian Bank, one of Iran’s leading private sector banks and a vital conduit for trade with Europe, especially humanitarian trade.

Europe Can Use Local Currency Bonds to Sustain Economic Ties with Iran

◢ For over a year, European governments have been struggling to determine how they can create a financing facility for projects in Iran. But what if it is a mistake to focus on “external” finance? One underreported effect of Iran’s currency crisis has been the rapid expansion of liquidity in the market. In this environment, a local currency bond offered by a European-owned, Iranian-registered development bank would be highly appealing.

Europe's SWIFT Problem

◢ German foreign minister Heiko Maas recently penned an article in which he said that "it’s essential that we strengthen European autonomy by establishing payment channels that are independent of the US, creating a European Monetary Fund and building up an independent Swift system." So what exactly is Maas's quibble with SWIFT, the Society for Worldwide Interbank Financial Telecommunication? SWIFT is a proprietary messaging system that banks can use communicate information about cross border payments. This November, U.S. President Trump has threatened to impose sanctions on SWIFT if it doesn't remove a set of Iranian banks from the SWIFT directory. 

Despite Political Drama, Iran's Private Sector Banks Continue March on Compliance

◢ The political drama surrounding the FATF action plan has overshadowed the role of Iran’s private sector banks in improving their compliance protocols while actively pushing for stronger regulatory requirements. Banks such as Bank Pasargad, Middle East Bank, and Saman Bank enjoy both large market capitalizations and a crucial role as intermediaries with the international financial system, lending these relatively young institutions considerable influence. But policymakers in Europe, scrambling to preserve banking ties with Iran in the face of returning U.S. sanctions, have overlooked the imperative of engaging Iran’s private sector banks as agents for change.

Europeans Beat Back Americans as FATF Gives Iran More Time on Financial Reforms

◢ At its plenary meeting in Paris, the Financial Action Task Force (FATF) opted “to continue the suspension of countermeasures” related to Iran’s inclusion in the so-called “blacklist” of countries with deficiencies in anti-money laundering (AML) and combating financing of terrorism (CFT) standards.  The suspension will be in place until October 2018. The suspension can be seen as a victory for European and Iranian multilateral cooperation in the face of the increasingly hostile American posture. 

FATF Faces Test of Fairness on Iran at Plenary Meeting

◢ Iran is facing the end of a four month extension given by the Financial Action Task Force (FATF) for the reform of the country’s AML/CFT regulations. Iran will be hoping for a further extension of the suspension of countermeasures at the June plenary of the FATF. Some FATF members have sought to characterize such extensions as exceptional. However, extensions are a common procedure, and FATF ought to treat Iran’s case in fair recognition of this fact.

Iran’s Currency Crisis Spurs Action in Financial Reform Efforts

◢ Forced to respond by Iran’s recent currency crisis, the Central Bank of Iran is approaching regulatory reform in the financial sector with new energy. A critical deadline to meet standards set by the Financial Action Task Force is forthcoming in June. Iran needs to demonstrate progress in tackling financial crime estimated to include at least USD 27 billion in transactions annually.

British Business in Iran: Time To Set Sail

◢ British businesses are now receiving advice to explore Iran opportunities —albeit in accordance with standing sanctions regulations — in order to prepare for a Iran's reentry into the global economy.

With the door having been opened, British companies risk losing a key business advantage to their competitors in other Western states such as France and Germany if they do not act quickly.