U.S sanction restoration
WASHINGTON—The U.S. took a step toward cutting Iran off from the global economy on Thursday, levying sanctions on a financing network and accusing the country’s central bank of helping funnel U.S. dollars to the blacklisted elite military unit known as the Quds Force.
Acting jointly with the United Arab Emirates, the U.S. Treasury Department imposed sanctions on several Iranian companies, individuals and officials it said are operating an illegal currency-exchange network in the U.A.E.
The sanctions were the first since President Donald Trump this week pulled out of the landmark Iran nuclear deal and announced a return to economy-crippling sanctions against Tehran, and represented a move toward cutting off the Middle East country’s access to dollars.
The actions Thursday foreshadow the return of greater U.S. economic penalties as Washington reimposes sanctions that were lifted as part of the 2015 nuclear agreement. Iran’s central bank wasn’t formally sanctioned in Thursday’s actions, but will be in the coming months, under Mr. Trump’s plan to reimpose U.S. penalties.
The Trump administration is leveraging the U.S.’s economic heft and the dollar as the world’s reserve currency to pressure Iran, European countries and other nations into reaching a new nuclear agreement. The administration wants a deal that not only permanently restricts Iran’s nuclear program but also stymies its ballistic-missile efforts and curbs Tehran’s support for militants fighting across the region.
To press its case, the administration is planning to send interagency teams of U.S. officials to Asia, Europe and the Middle East to urge nations to agree to reimpose sanctions and step up pressure on Iran.
U.S. officials insist that the objective isn’t to collapse the Iranian economy but rather to drive Iran to the negotiating table to discuss a broad new pact.
“You are going to be seeing teams going out very soon,” said a senior State Department official. “They are going to be at all levels.”
In the Treasury actions taken Thursday, the U.S. blacklisted an Iranian company, Jahan Aras Kish, that it said is a front company for the sanctioned Islamic Revolutionary Guard Corps’ elite military unit, the Quds Force.
“Countries around the world must be vigilant against Iran’s efforts to exploit their financial institutions to exchange currency and fund nefarious actions of the IRGC-QF and the world’s largest state sponsor of terror,” Treasury Secretary Steven Mnuchin said.
Israel’s government blamed the Quds Force for rocket attacks from Syria on Wednesday night, an action that triggered strikes by Israel’s military against Iranian targets in Syria, escalating the risk of a wider regional war.
The Treasury said the Iranian company received oil revenues from Central Bank of Iran accounts and gave that money to couriers who exchanged it for millions of U.S. dollar notes in the U.A.E. through two Iranian firms, Khedmati & Co. and Rashed Exchange.
That cash was then taken back to the Quds Force and distributed to Iran’s regional proxies, the U.S. said. To hide the activities from U.A.E. authorities, the Treasury Department said the network used forged documents.
Three companies and six Iranians who either worked for the firms or the Quds Force have been blacklisted by the Treasury Department and U.A.E.’s government in the joint action.
The Iranian mission to the U.S. didn’t return repeated requests for comment. The companies involved didn’t respond to requests for comment or couldn’t be reached.
U.S. officials have said Iran needs dollars to fund its regional proxies, including Lebanon’s Hezbollah, the Houthis in Yemen and Assad forces in Syria, because its currency is in crisis.
The rial has fallen to fresh lows in recent months as Washington threatened new sanctions, and Tehran has instituted capital controls, in some cases arresting Iranians waiting in line to exchange currency.
The U.S. action is in part a signal to other countries, including Western allies, as the U.S. challenges its trans-Atlantic allies to comply with its sanctions regime and agree to a new Iran deal.
“The Central Bank of Iran is complicit with the Quds Force for use by its proxies—that should send a very powerful message,” Sigal Mandelker, Treasury’s undersecretary for terrorism and financial intelligence, said in an interview. “We’re going to use all of our authorities to disrupt these networks.”
Western governments and companies are trying to figure out how aggressively Washington plans to enforce its new sanctions regime against Iran, wary of the Treasury sanctioning European bank and companies, for example, if they continue to do business with Iran beyond Treasury deadlines for compliance approaching over the next six months.
European officials have said they plan to stay in the nuclear deal with Iran, which may not only give license to their companies to maintain ties to Iran, but could set up a diplomatic rift between the U.S. and its closest allies.
Multibillion-dollar fines against European banks in the last comprehensive sanctions regime that led up to the 2015 nuclear deal still loom large in the minds of compliance officers, executives and board members.
Although Thursday’s action targets only one network, it is a model of how the administration plans to implement a complete ban on dealings with the Central Bank of Iran and dollar transactions coming due over the next several months.
“There are secondary sanctions consequences for doing business with these entities,” said Ms. Mandelker, referring to the currency-exchange network. Secondary sanctions are actions against companies that interact with blacklisted entities.
Because of Mr. Trump’s decision on Tuesday to reimpose broad U.S. sanctions, the use of U.S. dollar bank notes by Iran is banned after August, “and you can expect that we’re going to take that authority very seriously,” she said. “Foreign financial institutions, governments all over the world need to be on high alert to make sure that they understand the pattern and practice that these networks use to try to gain access to the USD.”
Compliance could pose difficulties for the U.S. The last time Washington tried a similar strategy, during the Obama administration, other countries were largely on board with coercing Iran to the negotiating table. But now, the other signatories to the deal, notably the Europeans, believe Tehran is fully complying with the terms of the 2015 agreement.
Tying the Central Bank of Iran to illicit activity of the Quds Force—a U.S. and European Union-sanctioned group—is in part an effort by the administration to show Tehran isn’t the good-faith actor it is trying to portray itself as.
Source : Wall Street Journal by
Michael R. Gordon in Washington & Asa Fitch in Dubai
contributed to this article.