Bridging Business With Iran

On our web site, you will find information about doing business with Iran, the role of The British Iranian Chamber of Commerce, our counterpart in Tehran, as well as details about services and membership.

A Message From Our Chairman

Lord Lamont, UK Trade Envoy to Iran

Activity on both sides of the US - Iran divide has ramped up since my last message in August.

Iran applied to the International Court of Justice (ICJ)for a ruling against America's re-imposition of sanctions on the grounds that the sanctions breached a long- standing treaty of amity between the two nations. The ICJ heard the case in late August and on 3 October announced provisional measures requiring the US to remove any impediments to the supply of medicines and medical devices, foodstuffs and agricultural commodities and parts and services necessary for the safety of civil aviation. While this amounts to a provisional moral victory in a very limited area for Iran, the general feeling amongst most commentators is that the US will not adhere to the court's provisional ruling.

If true, America's non-compliance would amount to a repudiation of statements posted on the OFAC website promising continuing general exemptions for medical and agricultural products. It would also be a retraction of the verbal commitments which we understand have been made by US officials to the UK government.

There is perhaps a parallel in the latest developments relating to the Financial Action task Force (FATF) and the Iranian banking system. As we have reported separately, Iran had been working to introduce Anti Money Laundering and Counter-terrorism financing legislation required by the FATF to guarantee the further suspension of counter measures against Iran. In June 2016 The FATF 'welcomed Iran's high-level political commitment to address its strategic AML/CFT deficiencies, and its decision to seek technical assistance in the implementation of the Action Plan. Given that Iran provided that political commitment and the relevant steps it has taken, the FATF decided in June 2018 to continue the suspension of counter-measures.' At the end of its deliberations on 19 October, last week, the FATF observed that the majority of the Action Plan remains outstanding, but gave Iran until February 2019 to complete and implement all necessary reforms. The FATF community of 35 nations (including the US) was prepared to give Iran the benefit of the doubt and more time to achieve full compliance.

It was therefore somewhat surprising that on the 16 October while FATF deliberations were still underway, the US announced the re- imposition of sanctions on Parsian Bank. The reactions to this development have been various: some legal commentators have noted that the grounds for this new sanction was a remote connection between Parsian and another sanctioned body, a connection so remote that it would not have been possible to uncover the connection with any reasonable amount of due diligence. Others have observed that the designation of Parsian as an entity supporting terrorism will prevent Parsian from carrying out transactions connected with the supply of humanitarian goods. It is unlikely that the latter point by itself will carry much weight in the international community, partly because there are plenty of other banks in Iran willing to handle such transactions and only the designation of all of them would amount to a truly repressive measure. But, the timing of the imposition of sanctions on Parsian will almost certainly be construed as an attempt to influence the FATF deliberations, a tactic which does not seem to have succeeded.

Much more concerning - and from the American point of view, effective - is the continuing refusal of commercial European banks - among them the British clearing banks - to handle humanitarian transactions with Iran.

Lord Lamont of Lerwick - October 2018

Transacting with Iran - New Initiatives

BICC understands the Government and its European partners are working on three initiatives to support transactions with Iran and for this purpose, the E3 and Iran have formed a number of working groups.

The first initiative relates to consumer goods and would seek to enhance existing commercial banking relationships between Europe and Iran to maintain payment for consumer goods including food, medical and agricultural goods. The idea is to facilitate European banks processing payments of certain chosen identified Iranian banks. The Government is working with the US to get additional assurances for banks and bring some legal certainty into the situation. This would focus on the Iranian banks most active in consumer goods, are connected to SWIFT and have active correspondent banking relationships to Europe. All this would be done in accordance with regulatory standards particularly relating to AML and CFT.

The second initiative is a Special Purpose Vehicle (SPV), essentially a netting mechanism, which will reduce the number of cross-border payments by enabling businesses to settle debts and payments from Iran between themselves. This could be of particular use to Iran in getting paid for its oil.

The third initiative is a development of the second and is a larger SPV that will still be a netting mechanism but will have a banking licence to process payments itself. The SPV would eventually become a paying agent or bank, in which EU businesses could have an account, and it would have relationships with Iranian banks. It would be open to Non-EU companies as well and would be regulated and supervised. The UK is fully involved in these discussions, will be a participant and it is assumed will continue to be so even after the UK leaves the EU.

Healthcare Conference 4th July 2018

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Trade Restrictions on Iran

BICC requires all Members, as a term of Membership, to observe applicable UN, EU and UK sanctions and recommends that they take account of US and other sanctions law where it might affect them directly or indirectly.

BICC is able to provide understanding of the sanctions and help in compliance.

For a comprehensive view on this subject, please go to our trade restrictions page.

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Iran and the Financial Action Task Force (FATF)

An important plenary session of the Financial Action Task Force (FATF) will take place in October during which Iran's compliance with FATF requirements will be considered. The FATF had set out 9 actions which Iran had to complete to avoid being blacklisted by FATF. These actions 'range from specific elements of enhanced due diligence and systematic reporting of transactions involving the jurisdiction, to a limitation or prohibition of financial transactions within the jurisdiction.'

There has been substantial media coverage on these requirements because failure to comply could further reinforce Iran's isolation from the international financial systems. At the time of writing (27th September 2018), a high - level Iranian delegation was in Rome to present to the FATF its progress report on these requirements.

Broadly speaking, the actions relate to the following Iranian national laws and international agreements.

Amendments to Iran's national law:

  1. CFT (countering the financing of terrorism) Law. This completed its way through the legislative process 2-3 months ago.
  2. AML (anti-money laundering) Law. This had previously been debated and accepted in parliament, but rejected by the Guardian Council (GC). The Majlis incorporated the guidance of the GC into revised legislation and ratified this yesterday. This now goes back to the GC for its approval.

    In Iranian official circles, it is believed that given that its opinions have been incorporated into the revised legislation, the GC will approve and ratify this; this could require a further 2-3 weeks, taking it into the middle of October. The legislation will also require the assent of the Expediency Council; however, its comments will not require its being returned to the Majlis, so will not result in further delays.

Iran is required to ratify the following two international agreements:

  1. Palermo Convention (covering transnational organised crime). As above. Ratified by the Majlis yesterday.
  2. International Convention for the Suppression of the Financing of Terrorism. After rejection by the Majlis and a two-month pause to allow for a review to be conducted by the Majlis National Security and Foreign Policy Commission, this is now back on the floor of the Majlis for debate and will be subjected to the above process.

Some reports from within Iran have indicated that the Supreme Leader has approved these amendments. Although there are still details to finalised under points 2 and 4 above, it is clear that the Iranian side is making strenuous efforts to complete these tasks and to conform to FATF requirements within the timeline.

It is expected that the FATF will make its decision on Iran's compliance on the 19th October, the final day of the plenary session.