Trump Pours More Misery On Iranians He’s Claiming To Support

Trump pulling out of the JCPOA

By Tyler Cullis

The Trump administration has sounded the death knell for humanitarian trade with Iran. By designating Iran a jurisdiction of primary money laundering concern and imposing additional restrictions on foreign banks maintaining accounts for Iranian financial institutions, the United States Department of the Treasury has imposed a prohibitive bar for parties seeking to facilitate humanitarian trade with Iran—one that will further put the squeeze on the Iranian people and limit their access to food and critical medicines.

By designating Iran a jurisdiction of primary money laundering concern, Treasury finalized a rule requiring U.S. banks to conduct “special due diligence” on accounts maintained on behalf of foreign banks if those foreign banks themselves maintain accounts for Iranian financial institutions. The practical consequence is that U.S. banks will urge their foreign correspondents to terminate any accounts maintained on behalf of Iranian banks so as to eliminate sanctions risk and mitigate the need to apply additional resources to monitor their foreign correspondents. This will further sever Iran from the global financial system, as Iran’s few non-designated banks find it increasingly difficult to maintain accounts abroad.

Absent the maintenance of accounts at foreign banks, Iran’s financial institutions will prove increasingly unable to facilitate humanitarian-related transactions, including in food and medicine. This will compound a problem first exacerbated by the Office of Foreign Asset Control’s (OFAC) recent designation of Iran’s central bank. The designation of Iran’s central bank made it sanctionable for foreign banks to facilitate humanitarian trade with Iran if the Central Bank of Iran was involved. Because Iran’s central bank maintains Iran’s stock of foreign currency and because cross-border trade in humanitarian goods requires Iranian importers to pay the foreign exporter in a designated foreign currency, OFAC’s designation of Iran’s central bank created a serious problem as to how Iranian importers would pay for the import of humanitarian goods into the country. OFAC’s failure to exempt humanitarian trade from U.S. sanctions or provide guidance as to this matter in the weeks since the designation provided clear signal that the Trump administration is little concerned about the issue.

Now, Treasury’s designation of Iran as a primary jurisdiction of money laundering will make it increasingly difficult for Iranian banks to maintain what limited overseas accounts remain available to it. If foreign banks shutter the remaining correspondent accounts held on behalf of Iranian financial institutions, Iran will have no effective mechanism by which to make payment for the import of humanitarian goods such as food and medicine. Treasury will have cut off both the channel by which Iran undertakes humanitarian trade (i.e., the central bank of Iran’s foreign currency reserves) and through which Iran undertakes humanitarian trade (i.e., Iranian banks’ overseas accounts).

To save face, the Trump administration simultaneously announced the creation of a so-called “humanitarian mechanism” through which foreign banks could facilitate humanitarian trade with Iran and receive assurance that such trade would not be sanctionable. Yet, this “mechanism” is no mechanism at all: Treasury is merely requiring that—if foreign banks wish to receive written assurance that they will not be subject to sanctions—they must provide Treasury with far-reaching monthly reports regarding their Iran-related transactions. Instead of providing a financial channel, new licenses or authorizations, or clear interpretive guidance as to how parties may lawfully conduct humanitarian trade with Iran, Treasury has created an information-collection vehicle whose effect—if not purpose—is fundamentally to dissuade foreign banks from partaking in humanitarian transactions with Iranian parties at all. Because, even though foreign banks need not use the so-called “humanitarian mechanism” to permissibly facilitate humanitarian trade with Iran, its promulgation signals to foreign banks that any humanitarian-related transactions conducted outside of this newly-prescribed channel may incur significant sanctions risk.

This action—considered in tandem with the recent designation of Iran’s central bank—provides clear and convincing evidence that the Trump administration is deliberately targeting humanitarian trade with Iran as part and parcel of its so-called “maximum pressure” strategy. The Iranian people are no longer collateral damage to the Trump administration’s economic war against Iran, but are increasingly in this administration’s crosshairs. As Trump’s “maximum pressure” strategy continues to fail to pay the hoped-for dividends, hawks in the Trump administration will continue to resort to the ugliest of tactics—including targeting humanitarian trade—in order to provoke Iran into a conflict with the United States.

Print Friendly, PDF & Email
avatar

Tyler Cullis

Tyler Cullis is a D.C.-based attorney specializing in the practice of U.S. economic sanctions. His writings have been published in the New York Times, the Washington Post, CNN, and Foreign Affairs, and he is frequently asked to comment on U.S. sanctions developments for major U.S. publications, including the Wall Street Journal, Financial Times, and the Washington Post, amongst others. He can be found on Twitter at @tylercullis.

SHOW 10 COMMENTS

10 Comments

  1. The Iranians and rest of the world would not sit and watch. The inventions are result of restrictions. And these inventions would create an alternative economic network to become a rival for the US based one. On the other side, it would be usefull for revealing the real “facist” nature of the so-called “liberalism” which tries to choke the opposite voice by every means! These are the alternate faces of one entity in fact.

  2. Does the author trust the Ayatollahs with his money? Would he lend money to them? Of course not. He is anti-US. Not that US is good, but why does he not criticize the Ayatollah sanctions on innocent non-violent secular Iranians?

    Stop giving credit to the Ayatollahs just because you don’t like the US administration.

  3. The desperate emperor is running NAKED! It’s too late and the stupid destructions no longer work.

  4. Mr Cullis – It is noteworthy to understand the following:
    As you may have understood by now – What sets Iran & it’s people fundamentally apart from President Trump, his blue-colour constituency & the average American “Mc Donald’s hamburger-worshiper” is the seven millennia history of our people!
    In that, throughout the seven thousand years, the Iranians – past & present, have gone through co-existing with empires, wars, disease, droughts, hunger & destitution. But – never did our people, either in calamity or in our ancestral-Persian Imperial triumphalism, have our people lost the trait of our motherland’s history, culture and ultimately, who we are as a durable community of nation:
    In that- Be it the first initiator of “the Rights of Men” – Cyrus-the, twenty-six centuries ago or the Islamic Republic, today: Iran & Iranians shall, in the end, overcome & out-last their adversaries.
    Please take a note: This time too, the great people of Iran, shall out-manoeuvre & triumphantly overcome this little American Mafioso-clown: The President of the United of America – Donald Trump!

  5. All:

    Americans care not one whit about Justice, Truth, or History.

    They are using all elements of their power to crush Shia Islam’s power as well as Iran’s.

    That they will fail in their efforts is aforegone conclusion but it will take more than a decade for the failure to become apparent and another 2 decades before Americans would or could admit defeat.

    In the meantime, there is a Shia Cresent to forge, a new nation to build in Yemen, and a country to heal in Syria.

Comments are closed.