President Hassan Rouhani in a speech to the UN General Assembly on Sept.28 heralded the Joint Comprehensive Plan of Action as a new chapter in Iran’s relations with the outside world.
After more than a decade of near financial isolation, Iran is set to reengage with the global economy and trade is expected to increase exponentially. Under the JCPOA, signed between Iran and the six world powers, all UN sanctions and most of the US and EU sanctions will be lifted after the International Atomic Energy Agency verifies that Tehran has respected its part of the deal, says an article in the website Conversation.
In 2014, for example, the US levied a record-setting US$9 billion fine against French bank BNP Paribas after the bank failed to stop transactions that were in violation of Iranian, Cuban and Sudanese sanctions imposed by Washington.
Lifting sanctions will pave the way for Iran to reconnect to the global economy. Interest in new trade and investment opportunities with Iran is high. At a two-day seminar last week in Geneva, the Europe-Iran Forum held its second event this year to discuss challenges with finance and investment in a post-sanctions world. Phillippe Delleur, president of French multinational energy company Alstom International, was among the impressive list of speakers. So was Gholamali Kamyab, the vice governor of the Central Bank of Iran.
Iran’s reconnection to the global banking system can potentially increase financial transparency. Its financial isolation forced much of its economy to use alternative, less efficient financial payment methods. In many cases, these methods were subject to less regulatory oversight and scrutiny.
But as global trade and commerce with Iran begins to normalize, international banks’ need for financial transparency, from a regulatory perspective, will increase. This is good news for agencies responsible for detecting potential violations of the agreement.
Economic integration may also encourage Iran to adopt international anti-money laundering norms and standards. The Financial Action Task Force, which is the intergovernmental body responsible for setting policies to protect the integrity of the global financial system, continues to cite serious concerns about gaps in Iran’s anti-money laundering laws. Until Iran addresses these issues, banks will take a cautious approach in handling Iranian transactions.
