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Lawmakers in U.S. are frustrated that in spite of the declaration of U.S. economic sanctions on Iran, with the first round of sanctions coming into effect on Wednesday, foreign banks seem to be escaping unscathed leaving only U.S. banks to bear the backlashes of the sanctions.
A congressional aide recently informed Reuters that “There is growing suspicion that European and Asian banks are not fully disclosing sanctionable activity and that the Treasury Department may not have enough information available to build the legal case to designate such institutions.”
President Obama signed the first phase of sanctions in December, but those sanctions only apply to those foreign banks, which use Iran’s Central Bank for transactions unrelated to the purchase of oil.
However, lawmakers have been quick to mark the discrepancies and are pressing the Obama administration for penalizing banks that continue to deal with Tehran.
A second round of sanctions and penalties are being planned that would disconnect countries and foreign institutions from the U.S. financial system if they do not significantly reduce their purchases of Iranian oil.
The new legislation, as reported by Reuters, would include clauses to compel foreign banks with U.S. accounts to submit regular reports to the U.S. Treasury. These banks would need to describe their activities with Iranian companies including that of services provided and the funds held for Iranian companies.
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The legislation attempts to enforce U.S. law on those foreign banks which have accounts in U.S. Though the U.S. Treasury already has the powers to ask international companies having U.S. accounts to hand over documents, the Treasury is reluctant to use its authority in this matter.
Democratic Representative Brad Sherman said, “The executive branch has been extremely loath to impose secondary sanctions.” According to Sherman, who is working on the new legislation, “the executive branch cringes at” the prospect of pushback from U.S. allies who may not agree with U.S. in allowing U.S. legislations to affect their internal businesses.
Lawmakers in US are trying to place the amendment to the Iran bill before the Senate by next week. The proposed amendments would require European and Asian banks with U.S. accounts to report directly to the U.S. Treasury on transactions with financial institutions and companies from Iran.
