The US is intensifying its financial pressure on Iran, slapping sanctions on the head of its central bank and barring anyone from doing business with him.
The US intensified its financial pressure on Iran on Tuesday, slapping anti-terror sanctions on the head of its central bank and barring anyone around the world from doing business with him. That dealt a further blow to European hopes of salvaging the Iranian nuclear deal in the wake of President Donald Trump’s withdrawal.
Valiollah Seif, the governor of the Iranian central bank, was named a “specially designated global terrorist” along with another senior official, Ali Tarzali, who works in the central bank’s international division. The Treasury Department accused the men of secretly funneling millions of dollars through an Iraqi bank to help Hezbollah, the terror organization that the US considers a terrorist group.
Although the sanctions do not technically extend to the central bank itself, they could significantly increase Iran’s isolation from the global financial system. Seif, whose role is equivalent to the Federal Reserve chairman in the US, oversees major financial decisions in Iran. Any transactions that involve his signature could potentially run afoul of the sanctions, creating a strong disincentive for governments or businesses considering deals involving Iran’s central bank.
“The United States will not permit Iran’s increasingly brazen abuse of the international financial system,” Treasury Secretary Steven Mnuchin said. “The global community must remain vigilant against Iran’s deceptive efforts to provide financial support to its terrorist proxies.”
Typically, when the US punishes individuals with sanctions, it prohibits Americans or US companies from doing business with them. In this case, the US chose to also impose “secondary sanctions,” which also apply to non-Americans and non-US companies. That means that anyone in any country who does business with Seif or Tarzali could be punished.
The latest move comes as Britain, France and Germany are working to salvage the nuclear deal. Their top diplomats met Tuesday in Brussels with Iranian Foreign Minister Mohammad Javad Zarif in a bid to keep Iran from bailing.
Whether the deal can survive without the US depends on whether Tehran continues to receive sufficient economic benefits by way of business with the Europeans. Not only is Trump re-imposing sanctions on Iran, but he’s also threatening to take the dramatic step of punishing European businesses that don’t wind down their dealing there. That has left the Europeans in the undesirable position of having to decide whether to call his bluff.
The new sanctions on central bank officials created another avenue by which anyone doing business in Iran could risk being cut off from New York, the beating heart of the global financial system.
There was no immediate comment Tuesday night from Iranian officials.
The sanctions were expected to be followed by additional U.S actions in coming weeks, as the Trump administration works to dismantle the main banking conduits exploited by Iran and its Revolutionary Guards (IRGC) to convert Iranian rials into euros or dollars. Those Western “hard currencies” can be used to fund terror elements, including terrorists in Lebanon and Syria.
Routing millions for terrorism
Seif, a career banker, became the head of Iran’s Central Bank in 2013 under President Hassan Rouhani, who shepherded the nuclear deal. Seif frequently visits Washington to attend meetings of the International Monetary Fund.
He has helped guide Iran’s economy through the web of previous sanctions placed on that country. In the aftermath of the 2015 international accord, in which nuclear sanctions on Iran were lifted, Seif was a prominent voice complaining that Iran was still being kept out of the global financial system and not receiving the economic benefits it was promised in exchange for curtailing its nuclear program.
In a 2016 meeting of the Council on Foreign Relations in Washington, Seif said Iran achieved “almost nothing” from the deal.
The US Treasury said Seif undermined the central bank’s credibility by routing millions of dollars from the Quds Force, the expeditionary unit of Iran’s Revolutionary Guards, to al-Bilad Islamic Bank, which is based in Iraq. Those funds were then used to “enrich and support the violent and radical agenda of Hezbollah,” Treasury said.
Al-Bilad Islamic Bank and its CEO and chairman, Aras Habib, were also hit with US sanctions, as was Muhammad Qasir, who the Treasury said is a Hezbollah official who has been a “critical conduit” for transferring funds to Hezbollah. US officials were reaching out Tuesday to central banks in other countries in the Middle East and Europe to inform them of the sanctions and encourage them to immediately freeze assets the bank has overseas.
Lebanon’s Hezbollah, the Shiite terror group, has long helped carry out Iran’s foreign policy objectives in the Muslim world
Although it is rare to sanction central bank officials, the US has done it before. Earlier this year, the Trump administration ordered sanctions on the deputy governor of Russia’s central bank, Alexander Torshin. And in 2015, the US targeted the governor of Syria’s central bank.