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US to Banks: "Be Very, Very Careful with Iran"

SPIEGEL | October 3, 2006

In addition to the threat of Security Council action, the US is also pressuring Iran in the banking sector. SPIEGEL spoke with US Deputy Secretary of the Treasury Robert M. Kimmitt about the dangers of doing business with Iran and accusations that the treasury department is spying on business.

US Deputy Secretary of the Treasury Robert Kimmitt would prefer banks avoid doin business with Iran.

SPIEGEL: Mr. Deputy Secretary, for months, the US Department of the Treasury has warned corporations and banks all over the world regarding their business relations to Iran. Is this a first step to imposing sanctions outside the United Nations Security Council?

Kimmitt: No, we think that the Treasury Department and finance ministries overseas have a responsibility to keep the world's banking system safe, sound, and secure. We want to make sure that the system is not abused by terrorists, weapons proliferators, organized crime, narco-traffickers and kleptocrats. This is our consistent position for many years, not just with regard to Iran.

SPIEGEL: Nevertheless, your focus is now on Iran.

Kimmitt: The message we have conveyed is that banks have to be extremely careful about any business that they do with the government of Iran or any Iranian entity because it is very hard to know your customer, to know exactly with whom you are dealing. Very often banks and front companies are very actively involved in advancing the Iranian government's current policies, two key parts of which are terrorism and weapons proliferation. Some of them act at that very dangerous intersection between terrorism and proliferation, and that is one reason I think German banks, indeed any bank, would be well advised to be quite, quite careful in doing business with Iran.

SPIEGEL: Could you be a little bit more specific about what that means from a practical point of view?

Kimmitt: We just cut off Bank Saderat, one of the largest state-owned banks in Iran, from the US financial system. They have provided hundred of millions of dollars in banking services to Hezbollah, a strong destabilizing force in the Middle East. The Iranians use very sophisticated methods, so that sometimes even the most diligent banks, even those with the strongest compliance programs, cannot be sure of the true identity of the organization with which they are dealing. Therefore our message has been: you have to be very, very careful. Banks have to do a very careful risk analysis before engaging in business with Iran.

\SPIEGEL: So your recommendation is to cut off all financial relations with Iran?

Kimmitt: I think the solution at this point is for banks and others to weigh very carefully the risks of doing business in Iran to their overall business interests, including their reputations, and that is really the decision that we are asking them to face at this time. A number of European banks have already moved in that direction. There have been announcements by Credit Suisse, by UBS, by HSBC, and others. They have determined that the safest course for themselves and their shareholders is to either terminate or cut back significantly their relationships with Iran.

SPIEGEL: The president of the Association of German Banks, Klaus-Peter Müller, observed recently that one can hardly expect banks to terminate long-cultivated business relationships based on vague suspicions.

Kimmitt: We are very explicit in our conversations with banks, even more detailed than with governments. We think it would be in the banks' best interests to consider information from us and their own governments very carefully when they decide what business, if any, they do with Iran. We and other governments, and we and banks, should have no difference of opinion in the area of illegal conduct. No bank would say that it wants to be involved in activities that could fund terrorism or could fund proliferation.

SPIEGEL: Since Iraq, though, there is a certain amount of mistrust when it comes to American intelligence information.

Kimmitt: After 9/11, the Treasury Department created an Office of Terrorism and Financial Intelligence, which is part of the intelligence community. What we are saying to governments and banks is: Here is the best information we have about what the Iranians are doing, but they are clever. They use deception. They use denial. But we do everything to make sure that there is good information.

SPIEGEL: Some in the business community think that part of that effort includes spying on them.

The US treasury is trying to isolate Iran economically as well as politically. But with huge oil reserves, is it possible?

Kimmitt: What we are doing is focusing on dangerous illegal conduct, and those entities in Iran and elsewhere who would abuse the world financial system. I don't see that as spying on banks and their customers. On the contrary, we have a common interest in making sure that banks are not used for illegal purposes.

SPIEGEL: Can the idea of economic sanctions actually work with one of the most oil-rich countries in the world?

Kimmitt: The question of broader sanctions is not on the table at this point. Our hope is that Iran will back away from its dangerous nuclear weapons program. We would like to see them do it as a result of skillful diplomacy. What is important now is that the world financial system is not abused to advance weapons programs. And if the world community joins together, whether subject to a UN Security Council resolution or simply because of its obligation to keep the banking system secure, I think that will send a very powerful message inside Iran. It shows that there are consequences, even short of a UN resolution, if Iran uses the banking system for terrorism or proliferation.

 

 

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