The Financial Times have recently reported that European banks have started to tentatively re-engage with Iran as it slowly emerges from the
sanctions that have kept the country in economic isolation for years.
According to the Financial Times, some European Banks have confirmed that they began handling transactions of European clients doing business in Iran, and others are preparing to do so in the near future. They have also started handling payments via Iranian corresponding banks, in accordance to standard procedures.
Despite the positive responses of some banks, there are others that still cautious after being imposed big fines for earlier sanctions breaches in Iran, causing concerns about the slow pace of Iran being reconnected to the global financial system. In addition, there are concerns regarding to the continuation of US sanctions relating to other issues.
According to an official press release by the Cyprus Ministry of Foreign Affairs regarding the Lifting of Restrictive Measures against Iran, the problems that the banking system of the EU is facing are mainly due to the original sanctions of the US for US persons trading with Iran.
Although some banks have decided to show their support to genuine trade with Iran, the support is restricted to trade only and are always subject to screening of each transaction. In order to help the situation, the central bank is encouraging Iranian Banks to use “know your customer” and proper sanction compliance procedures.
As political pressure on European banks to support corporate clients that wish to do business with Iran is growing, there is hope that better relationships will be established in the future between Iran and international banks.
Source: The Financial Times Ltd, Martin Arnold, 3 April 2016