By Annalisa Girardi
The Italian bank Unicredit SpA might get a $900 million fine for carrying on bank transactions with Teheran. Judicial negotiations have been going on for years and specifically regards contacts between the German bank Hvb, which was then taken over by Unicredit, and Iranian entities which had been sanctioned by the United States. Over the next few weeks, the two parts might reach a final agreement. It was 2011 when a New York court first mentioned the German institution and its business with Iranian enterprises. Since then, the bank went under the control of the Italian Unicredit, which might now have to pay one of the highest fines imposed by Washington to European banks. If the parts finally come to an agreement, which should not be far away, it would be the end of the investigations from the U.S. Justice Department, the Treasury Department’s Office of Foreign Assets Control, the Fed and New York’s Financial Services Department.
As said, the figure, which was anticipated by Bloomberg but has not been commented by the bank, represents one of the most expensive agreements reached following a violation of U.S. sanctions laws. The accord would spare Italy’s biggest bank of criminal persecutions. Higher settlements only occurred in cases violations of commercial sanctions with Société Générale SA, Commerzbank AG and HSBC Holdings Plc. The highest one ever was put on BNP Paribas SA for $8.9 billion. The French bank was accused of conducting illegal financial transactions with several countries hit by U.S. sanctions, including Iran. Totally, 15 European banks have paid over $18.5 billion since the beginning of the 2000s for violations of U.S. sanctions on third countries.
When Donald Trump withdrew from the Joint Comprehensive Plan Of Action (JCPOA), also known as the Iran nuclear deal, Washington renovated sanctions on Teheran that the agreement put on a hold and added new ones. European parts, especially the United Kingdom, France and Germany, which are the EU actors that signed the deal, have tried to convince Iran to stick with the agreement. When Teheran threatened to pull out of the JCPOA as well if the European powers did not grant some economic relief to contrast the difficulties brought by the sanction’s regime, the EU signatories promised to find a way to keep business with Iran alive. The only condition was to remain within the deal framework which, until now, has always been respected by the parts that continued in the JCPOA.
At the beginning of the year, the UK, France and Germany announced the opening of a new channel for non-dollar trade that would allow EU entities of doing business with Iran, bypassing the U.S. sanctions. The new mechanism is called Instrument In Support of Trade Exchanges, INSTEX, a clear statement that enshrines the EU position in favor of the deal. From the European perspective, the nuclear agreement is fundamental to keep stability in the region and president Trump’s decision to leave the JCPOA has always been openly disapproved by the European allies. INSTEX, which is not yet operative, provides a channel that enables transactions with Iran in the absence of SWIFT, the main international paying system. Even if SWIFT is a Belgian company, and thus not subject to U.S. sanctions or jurisdiction, it has decided to remove Iranian banks from its networks under pressures from Washington. This decision has not only cut off the middle eastern country from international transactions, isolating its economy, but it has also proven how high the extraterritorial political and economic influence of the U.S. still is.
After the removal of Iranian banks from the international system and the reimposition of U.S. sanctions, the EU decided to revive its 1996 blocking statue, which forces companies of member states not to respects extraterritorial sanctions from Washington. This first response to U.S. political choices regarding the matter is now followed by a strategy that is estimated to have a bigger impact, not only within the Union’s borders but potentially everywhere. At first, the use of the channel will be used only for non-sanctionable trade, for example of humanitarian goods and foods, but it is not impossible for it to become a wider system. And even if INSTEX will not prove to be as successful as the remaining signatory members of the deal hope, it will still be an important message to Iran, showing how much effort the EU is ready to make in order to save the JCPOA.