|Iran’s head of Atomic Energy Organisation Ali Akbar Salehi (L) and the head of the Central Bank of Iran, Valiollah Seif, on January 17 after international sanctions on Iran were lifted|
The big moment arrived. On January 17, after the European Union said it had implemented regulation to remove sanctions against Iran, Swift was turned back on in Iran. And, in some cases, appeared not to work.
Well, you know how it is when your computer has been switched off for a while. Apparently, reconnecting to Swift itself is a straightforward process, but the problem has arisen with the Cisco systems that are instrumental to its effective running. Some banks in Iran report either that their licences had expired while under sanctions and now need to be reissued; or that their software is no longer up to date after all the years in the wilderness.
Swift confirms to Euromoney that many Iranian banks are now exempt from the financial messaging restrictions that the EU imposed on them in March 2012.
“Swift has informed the relevant stakeholders about the necessary measures that need to be put in place to make it possible for those banks that are delisted by the implementing regulation to reconnect to Swift,” it says. “Those banks that are delisted by the implementing regulation will now automatically be able to reconnect to Swift, following the completion of our normal connection process.”
This is understood to include administrative and systems checks, connectivity and technical arrangements.
“The implementing regulation does not repeal all EU sanctions on all Iranian banks, therefore Swift remains prohibited from providing specialised financial messaging services to the EU-sanctioned Iranian banks that remain listed under EU regulation,” Swift says, adding that it is incorporated under Belgian law and has to comply with all related EU regulation as confirmed by the Belgian government.
Swift declines to comment on any specific problems with reconnection in Iran, nor on its arrangements with Cisco; Cisco did not respond to requests for comment.
These are purely teething problems but Euromoney understands that in the long-awaited relative freedom that has followed the implementation of the nuclear agreement, some banks are still transacting payments through intermediary banks in Oman and Turkey.
We do know, though, that most banks are at least permitted to rejoin the international banking fold.
“One of the first steps following implementation was the official removal of restrictions on most banks in the Iranian banking system,” says Radman Rabii at Firouzeh Asia Brokerage in Tehran. “The Central Bank of Iran announced on Wednesday [January 20] that restrictions on using the Swift network have been lifted, and reconnection by Iranian banks is expected in the coming days.”
The central bank then came out with a list of newly reconnected banks – including some surprising names. Several of the big private banks, such as Saman, Pasargad and Parsian, reconnected first, with two of the smaller state-run banks, Maskan and Keshavarzi, all as expected. Then the central bank named 12 further state banks that are now reconnected, among them the big names of Bank Mellat, Bank Melli, Tejarat Bank and Bank Sepah.
The last of these names is the one raising eyebrows both within and outside Iran. Sepah is the Persian word for army. Its capital was originally provided by the Army Pension Fund. It has been under US sanctions since 2007, with the US claiming then that the bank actively assisted Iran in developing missiles that could carry nuclear weapons (which the bank fervently denied).
It had always been assumed that Sepah, with such clear links to the military, would be excluded at least from the first round of sanctions relief, and indeed, when the Joint Comprehensive Plan Of Action (the nuclear agreement) was announced, Sepah was on the list of banks that remained under sanction. Now, it appears, it no longer is.
One thing rapidly becoming clear as Iran’s international banking devices start up again is that the flow of capital is at first going to be with the east, not the west. Just as the tankers leaving Iran, on the morning after the sanctions were lifted, were headed for India rather than the Suez Canal, it is thought that the first foreign bank to resume full banking lines with Iran was China’s ICBC. Then, on January 21, the Central Bank of Iran said that ICBC had formally requested the right to open branches in Iran, both on the mainland and within the free trade zone of Kish Island.
Hossein Yaqoubi Miab, the director for international affairs at the central bank, also told local media that he had received similar requests to open branches from banks in Australia, Italy and Lebanon. Now comes the next phase of Iran’s rehabilitation: guessing who they are.