The Joint Comprehensive Plan of Action (Iran’s nuclear deal with the six world powers) has had a “tangible” effect on Tehran’s international banking relations as it helped remove curbs on domestic lenders’ interaction with their overseas peers, says Parviz Aqili Kermani, CEO of the privately-owned Middle East Bank.
“After the implementation of JCPOA, correspondent relations with foreign banks – mostly European – have been on the rise. Banks that refused to start correspondent relations before the nuclear agreement have expressed willingness to do so now,” he said in an interview with IRNA.
However, it will take “another year or so” before the Iranian banking system is able to establish full ties with the major international financial institutions, he said.
In January, Iran and the six powers (the US, Britain, France, Russia, China and Germany) implemented an agreement reached in July 2015 wherein Tehran agreed to scale down its nuclear activities in return for lifting of some sanctions.
But the continuation of other US restrictions related to other issues, namely alleged sponsorship of terrorism and human rights violations have made the major western banks wary of working with Iranian institutions and businesses.
This has caused frustration among officials in Iran, the US and Europe about the slow pace with which Tehran is being reconnected to the global financial networks. It also has prompted opponents of the nuclear accord in Tehran to question the premise of the entire deal and its benefits for the country.
Calling the effect of the JCPOA on banking relations “tangible”, the senior banker cited the rise of correspondent relations, issuance of letters of credit and payment orders as direct positive impacts of the new development.
“Also as a result of the deal, cost of money transactions and price of raw material for the manufacturing sectors have decreased,” he said.
Kermani noted that there are two crucial factors that all major foreign banks focus on: anti-money laundering and countering terrorism financing. “Fighting money laundering is a decisive factor that influences how the major banks work with banks of other countries including those in Iran.”
Regarding the second factor, he said fortunately Iran has laws in place that prevent banks and financial institutions from breaching the CFT laws. “Given the high level of sensitivity of major overseas banks about the issue, we have strived to prove that the Iranian banking sector is clear of any wrongdoing.”
