Former Treasury Department official Michael Jacobson writes on new financial warnings for Iran:

... Although no additional Iranian financial institutions were formally blacklisted, the UN and [Financial Action Task Force] FATF moves could nonetheless increase financial pressure on Tehran. Global financial institutions -- risk-averse by nature, particularly with regard to "reputational risk" -- are already leery about dealing with Iranian banks, and this new warning may reinforce their cautiousness.

In fact, according to U.S. Treasury undersecretary Stuart Levey, all of the global financial executives that departmental officials have met with over the past two years have either cut off or reduced their institutions' exposure to Iran. The number of foreign banks operating in Iran has sharply declined since 2006, dropping from forty-six to twenty. Surprisingly, even Chinese and United Arab Emirates banks seem to be exercising greater caution in their business dealings with Iran in recent months.

Reports that two British banks -- Lloyds TSB and Barclays -- are under investigation by the U.S. Justice Department and the Manhattan district attorney for possible violations of the Iran sanctions regime should only heighten the financial sector's concern. Financial institutions are particularly eager to avoid being the "next ABN Amro" -- the Dutch bank fined $80 million by the United States in 2005 for having an inadequate program in place to ensure compliance with U.S. sanctions against Iran and Libya. The Financial Times noted that the fine sent "seismic waves through the international banking system," and that the "reverberations are still being felt today."

How the Europeans respond to the new resolution will be crucial. Following the two previous resolutions, the European Union went further than the UN required, freezing the assets of not only the designated fifty individuals and entities, but also twenty others. The EU has also enacted a more comprehensive arms embargo and travel ban against Iran and its officials than required by the UN.

Now that the UN has spoken, perhaps it will free the EU to act further. ...

Posted by Laura at March 6, 2008 04:19 PM