If Iran Wants Business, It's Up to Iran to Change

If Iran Wants Business, It's Up to Iran to Change
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There is a lot of complaining these days about businesses and banks being reluctant to welcome Tehran with open arms and invoices. UK officials point the finger at the United States for British banks being hesitant to enter the Iranian market, and the vice president of the European Parliament’s Delegation for Relations with the United States recently told the New York Times that “Europe is being taken hostage by American policy.” Ayatollah Khameini accused the United States of creating “Iranophobia.” (Ha, of course I have Iranophobia - but I didn’t need the United States to create it.) Businesses and banks aren’t avoiding Iran because of the United States; they are apprehensive because they’re swimming at their own risk. They are afraid that dealing with Iran – a country that actively supports terrorism and lacks even the most basic anti-money laundering/counter-terrorist financing (AML/CFT) controls – could land them into troubled waters and undermine their reputations. And quite frankly, they’re right. The only move that could help bring on the business is for Tehran to change its foreign policy and improve its financial transparency measures.

Europe and Iran claim that the United States is not living up to its end of the bargain of the Joint Comprehensive Plan of Action. From the start of the nuclear negotiations, however, the United States was clear: these negotiations were focused specifically on preventing Iran from obtaining a nuclear weapon, and the success of those talks would result in the lifting of nuclear-related sanctions. And from the beginning, the United States stressed that sanctions related to Iran’s support for terrorism, human rights abuses, and destabilizing regional activity would remain. The USA PATRIOT Act Section 311 action against Iran as a jurisdiction – the key regulation that prevents U.S. businesses and banks from dealing with Iran – remains in place and the United States never implied it would be withdrawn. But that’s how the United States wants to do (or not do) business with Iran.

If European businesses and banks want to do business in a jurisdiction, the government of which actively sponsors terrorism and is deficient on internationally accepted AML/CFT measures, then they should be our guests (they should also probably invest in iron-clad compliance systems). But if they don’t, then it’s neither the United States’ fault nor is it up to the United States to ask them to do so. Notably, HSBC Holdings Chief Legal Officer and former Treasury Under Secretary for Terrorism and Financial Intelligence Stuart Levey recently argued in an op-ed in the Wall Street Journal that HSBC would make its decisions based on financial risk. Though that may be in part due to U.S. regulations, it’s ultimately because Iran’s support for terrorism, its deceptive practices, and lack of a transparent legal and regulatory business framework inherently make it a high-risk client.

While it is true that it is in our interest that Iranians see the benefits of this deal, it is unrealistic for Europe or Iran to assume businesses would flock to Tehran without measures that would protect them from significant liability. So it’s time to stop crying foul and pointing the finger at the United States. If Iran wants to push its ‘Woe is me!’ propaganda to garner support among its own citizens, then the Europeans should be smarter than to become Iran’s echo chamber. The only step that could help businesses and banks run to Tehran isn’t a change in U.S. regulations or pleas by the United States – it’s a change in Iran’s own foreign policy and an improvement in its AML/CFT deficiencies.

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