Historic Iranian Nuclear Deal: Why Banks Still Need a Comprehensive Sanctions Program

News of the historic Iranian nuclear deal has been dominating headlines over the last week, with many different viewpoints emerging on the pros and cons of the situation. Henry Balani analyses the recent developments, offering three compelling reasons why banks must keep their sanctions programs firmly in place.

  1. The sanctions will be lifted gradually

Assuming this deal is passed by the US Congress and Iran’s parliament, the sanctions on Iranian entities will gradually be lifted over the next 90 to 120 days.

OFAC issued a statement on 14th July 2015 outlining a phased sanctions relief program, extending the previous terms negotiated by the Joint Comprehensive Plan of Action (JCPOA) until the implementation date of the ratified deal. When the implementation begins, a number of sanctions will be lifted beyond those identified in the JCPOA.

  1. Not all sanctions relating to Iran will be lifted

It should not be assumed that all sanctions on Iranian entities will be lifted. The JCPOA specifically addresses sanctions relating to the nuclear proliferation blacklist; other sanctioned entities that are concerned with terrorist, human rights or drugs related actions will still be in effect, as will entities based in other countries.

While OFAC and EU regulators will continue to provide guidance on the sanctioned entities being lifted, banks will also need to monitor the situation closely.

  1. The sanctions could be reinstated

It is important to note that lifted sanctions can easily be rolled back, depending on the progress of the nuclear disarmament activities.

While there will be new banking and business opportunities as a result of this deal, the rapidly changing conditions mean it is essential for banks to keep a close eye on the developments to understand what they can and can’t do.

The bottom line? It is crucial that banks keep their sanctions programs in place and regularly review their compliance policies to ensure they are in line with this ever-evolving environment.

Article by Henry Balani, Head of Innovation at Accuity