Iran Sanctions: Why Banks Still Need a Comprehensive Sanctions Programme

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When world leaders struck a nuclear deal with Iran back in July, it really hit the headlines. And quite rightly so. Under the deal, Iran agreed to limit its nuclear activity and in return, international sanctions would be lifted. Opinion has been divided over whether or not it was a good deal and whether or not sanctions should be lifted.

Here, in the first of a series of blog posts on the lifting of sanctions against Iran, we look at why banks still need to maintain a comprehensive sanctions programme. We think there are three compelling reasons why banks’ sanctions programmes need to remain firmly in place.

Firstly, sanctions will be lifted gradually. It is not an overnight process so it will take a little while for the sanctions on Iranian entities to be lifted. When the deal was struck, the agreement was that sanctions would come off within 90 to 120 days so there is still a bit of time to go. Banks need to keep a watchful eye on the situation.

The US Treasury’s Office of Financial Assets Control (OFAC) issued a statement on 14th July 2015 outlining a phased sanctions relief program. It extended the previous terms negotiated by the agreement, known as 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.

Secondly, it should not be assumed that all sanctions relating to Iran 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. They also need to be aware that the scope of sanctions being lifted varies from one country to another, with the US being the most stringent.

The third reason is that the sanctions could be reinstated. 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.

All of this means that it is crucial that banks keep their sanctions programmes in place and regularly review their compliance policies to ensure they are in line with this ever-evolving environment.

Looking ahead:

Post 2. Which sanctions will be lifted?

Post 3. The differences in scope between the regulators

Post 4. The AML policy implications of the deal

Post 5. What happens when Iranian banks reconnect to SWIFT? 



At this stage, nobody knows exactly what changes will take place when Iranian sanctions are lifted. The definitive list will come from the regulators, including the big four (OFAC, EU, UN, HMT) as well as the other agencies which are involved. While the circumstances evolve and the world awaits clarification, Accuity’s infographic aims to break down the sanctions lists and make some predictions based on Accuity’s extensive risk data.