US authorities say they are turning their focus to Asia to strangle financial transactions with Iran after closing off money flows through European banks.
The shift underscores the current US administration’s disdain for a landmark nuclear deal which should have paved the way for Iran’s reconnection to the international banking system.
After milking billions of dollars from European banks for processing Iranian transactions, US enforcers are reportedly targeting lenders in South Korea, Taiwan, China and elsewhere.
At least two South Korean banks are facing legal action in Alaska and New York courts over Iran-related business, Bloomberg reported on Tuesday, citing court documents and testimony.
State-owned Woori Bank and Industrial Bank of Korea which are among the largest lenders in the country are being sued for allegedly transferring $1 billion of Iranian funds from escrow accounts, the financial news and information provider said.
Those accounts held revenues from Iranian oil exports and were effectively locked up in different countries, theoretically limiting the amount of hard currency Tehran could receive. The money held in escrow accounts could be used for purchase of local goods because Iran was cut off from the global financial system.
However, global transaction network SWIFT reconnected Iranian banks to its system in early 2016, allowing them to resume cross-border transactions with foreign banks after the lifting of sanctions on Tehran.
The nuclear deal says non-US banks may resume trading with Iran, but Washington especially under the Trump administration has been using a combination of scare tactics and a convoluted legal regime to discourage them from engaging with the Islamic Republic.
Tehran is on Washington’s radars again for fresh restrictive measures despite vociferous opposition from Europe and other countries.
On Sunday, US National Security Advisor H.R. McMaster openly called on the international community to reconsider business deals with Iran in spite of the international nuclear deal. He singled out Russia and China as Iran’s biggest trading partners, but also included Japan, South Korea and Germany.
The US retains sanctions against Iran that predate the nuclear crisis and were imposed over other issues such as human rights. Hence, bankers are uncertain of the legal basis for business and worry they could still be targeted by US officials.
Years of Washington’s scrutiny of European banks’ transactions with Iran have resulted in nearly a dozen enforcement cases which have extracted more than $16 billion in fines for the US government.
In May 2015, France’s largest bank BNP Paribas was ordered by a US judge to pay a record $8.9 billion fine over claims that it violated sanctions against Sudan, Cuba and Iran.
That focus is now turning to Asian banks, according to several former US Treasury Department officials who specialize in sanctions work.
“The regulatory gaze and enforcement attention is facing east,” Bloomberg quoted Juan Zarate, a former Treasury Department and White House official, as saying.
Feed for Trump’s case
According to the report, New York’s Department of Financial Services has taken action against several Asian banks in the last two years, including the Agricultural Bank of China, NongHyup Bank of South Korea and Mega International Commercial Bank of Taiwan.
In 2013 and 2014, Bank of Tokyo-Mitsubishi UFJ paid more than $560 million in two settlements with New York banking regulators over its relationship with Iran, the report said.
Over the last year, the US Treasury Department has blacklisted 20 people and entities in Asia for trade with Iran.
The newly-publicized cases are said to be in line with the Trump administration’s efforts to feed into the US president’s claims that Iran cannot be trusted and his threats to scrap the nuclear agreement.
US reports said on Monday that officials at the Trump administration were using a case against an Iranian airliner to thwart a multibillion-dollar deal between Boeing and flag carrier Iran Air for the sale of new passenger planes.
US President Donald Trump has taken an aggressive stance on Iran, and pledged to ditch a landmark nuclear agreement which made the Boeing deal possible.
With his May deadline for a revision of the nuclear deal looming large, “administration officials indicated that he would oppose the deal”, the Jerusalem Post reported from Washington.