New U.S. Business Guide on Iran is a 'Green Light' for Banks

Several former U.S. officials on sanctions and legal experts have told Reuters that the newly published guidance from the U.S. Treasury regarding financial transactions with Iran provides banks with 'reassurance' about conducting dollar transactions. The U.S. Treasury Department released the guidance on October 8, which is said to aim at addressing existing ambiguities regarding transactions of major foreign companies and banks with Iran. This guidance comes after Iranian officials have criticized what they describe as 'U.S. breach of promises' related to the nuclear deal. The U.S. government has previously dismissed these criticisms, stating that it remains committed to its obligations and that Washington's commitments will be upheld as long as Tehran adheres to nuclear restrictions. The new guidance mentions, for example, the permissibility of certain transactions that were previously prohibited, provided that the proceeds do not enter the U.S. financial system. The issue of dollar transactions with Iran is one of the main obstacles preventing major Western banks from engaging with Iran. Analysts and financial advisors have expressed concerns that such transactions will inevitably pass through the U.S. banking system over time, creating the possibility that some of the remaining non-nuclear sanctions on Iran could be violated. Melvin Ashwachter, a senior financial advisor working in Washington, stated that he had previously publicly advised against dollar transactions with Iran. He told Reuters, 'But now, they (U.S. officials) have given banks the green light to cooperate with Iran whenever there is assurance that their dollar transactions will not impact the U.S. financial system.' According to this legal expert, this 'green light' also serves as 'a message against the criticisms from the Iranian government, which claims that no benefits have arisen from the nuclear agreement.' Similar sentiments have been expressed by David Martelok, a former government official on sanctions, who told Reuters that the U.S. government is 'definitely' seeking ways to clarify and specify methods of dealing with Iran: 'This [guidance] is a message from the Office of Foreign Assets Control (in the U.S. Treasury) that they want to assist this process.' However, this guidance has also elicited reactions within Iran that are not as optimistic. For instance, Hossein Ghazavi, Iran's Deputy Minister of Economy, stated on October 10 to ISNA that 'the changes in the Q&A section of the guidance related to the nuclear deal are very minor and not significant enough to expect remarkable changes in Iran's financial relations with major world banks.' This guidance has also faced criticism from some opponents of the nuclear agreement in the U.S. The Associated Press previously reported that despite the Treasury's statements and those of some legal experts that sanctions other than those lifted remain in place, opponents of the agreement with Iran have a different view. This group claims that the guidance clearly facilitates foreign transactions with certain Iranian companies that are, for example, under the control of the Revolutionary Guard.