Nuclear Deal May Lead to U.S.-Iran Direct Banking Channel
November 20, 2014, Washington, D.C. – Recent media reports indicate that a direct banking channel for authorized transactions between the U.S. and Iran may be part of the final negotiated nuclear deal this November. PAAIA supports the establishment of a direct banking link between the U.S. and Iran, as it would benefit the Iranian American community by facilitating safe and transparent transactions.
Last year, PAAIA wrote a letter to the Obama administration urging for the establishment of direct banking links between the U.S. and Iran to promote humanitarian trade and strengthen people-to-people ties. The letter was based on recommendations from the Atlantic Council’s report, Time to Move from Tactics to Strategy on Iran. The report, released in April 2013, acknowledges the need to ensure the effectiveness of the sanctions against Iran while also minimizing, as far as possible, their negative effects on the Iranian people. To help accomplish this, the report recommends that the Treasury Department designate a small number of U.S. and private Iranian financial institutions and/or third-country banks as channels for payment for humanitarian, education, and public diplomacy-related transactions. PAAIA, in conjunction with the Atlantic Council, worked to educate policy makers about this issue in 2013.
In light of the current nuclear negotiations between the P5+1 and Iran, a more recent policy memo published by the National Iranian American Council (NIAC) argues that establishing a direct banking channel with Iran could help secure a nuclear deal with Iran and help effectuate transactions related to legitimate activities that the U.S. has authorized.
While current U.S. sanctions law allows for exports of humanitarian goods (food, medicine, etc.), certain communication technology, and personal and family remittances, U.S. and international efforts have caused many banks to shy away from making shipments of non-prohibited items to Iran. These restrictions have given rise to an underground economy where legitimate transactions are pushed toward illicit transfer methods and contribute to criminal and terrorism financing.
The banking link would help create a reliable channel for the flow of humanitarian aid as well as communication technology to Iran. In addition, it would facilitate secure family remittance transactions in a manner that is more transparent and safe. Iranian students in the U.S. would be able to receive money from their parents more easily, and Iranian Americans would find it more convenient to help relatives back home and transfer personal assets or inheritances to the U.S. Lastly, a banking link will bolster U.S. national security by stemming the rise of illicit transfer methods and reducing the amount of resources expended on investigations and prosecutions.
PAAIA believes that a direct banking link for authorized transactions would be beneficial for Iranian Americans and for the United States as a whole. If implemented, this could have a far-reaching impact on U.S. attempts to reach out to ordinary Iranians.
Reports of a possible direct banking channel between the U.S. and Iran are consistent with the Joint Plan of Action (JPOA) put into effect one year ago, which agrees to establish a financial channel for humanitarian trade and would permit the Iranians access to oil revenues held abroad. As the November 24th deadline approaches for the P5+1 and Iran to reach a comprehensive nuclear agreement, PAAIA welcomes a negotiated settlement that would include a direct banking link between Iran and the U.S.