CBI Sees No Restriction to Int’l Banking Collaboration

Officials from the Central Bank of Iran and the National Bank of Ukraine met at the CBI headquarters in Tehran to discuss expansion of banking relations with deputy governors of both banks in attendance.

Financial Tribune- Officials from the Central Bank of Iran and the National Bank of Ukraine met at the CBI headquarters in Tehran to discuss expansion of banking relations with deputy governors of both banks in attendance.  

“Under the new circumstances and after secondary sanctions were lifted, it is now possible for all kinds of banking operations between Iranian and international banks to be carried out without limitations or concerns” Gholamali Kamyab, CBI’s vice-governor for foreign exchange affairs said in reference to last year’s landmark nuclear deal, the official CBI website reported.

Kamyab said Iran’s banking procedures allow for opening accounts overseas and transferring funds in euro and other major currencies except for the US dollar.

Tehran has established correspondent relations with 230 foreign banks since January following the implementation of the nuclear deal.  Iranian banks opened letters of credit worth $17 billion in the first seven months of the current calendar year (started in March), according to the CBI.

Emphasizing the role of effective banking relations in order to expand trade and business, Kamyab said as a result of CBI efforts a significant part of the problems created due to the restrictions have now been addressed. Iranian banks have built over 614 correspondent relations with 230 international peers.

 “According to statistics released by the Trade Promotion Organization of Iran, the average annual volume of business deals between Iran and Ukraine has been $321 million during the 10 years ending in 2016,” Kamyab said.

He proposed both countries’ banking card systems to be connected further suggesting that the two central banks open accounts with each other. “Doing so will facilitate banking connections and empower banking channels that are used to make payments.

 “Furthermore, using national currencies in the form of a Banking Practice Agreement (BPA) is another way of easing business two-way deals”, he added.

His Ukrainian counterpart backed collaboration between the central banks of both countries and their lenders in general.

 “Based on the approval of Ukrainian authorities, now there is no restriction to the establishment of correspondent relations with Iranian banks,” Oleg Churiy said.

Pointing to the benefits of the decision by the Financial Action Task Force (FATF) to suspend Iran’s name from its blacklist, the Ukrainian banker said it will help further ease the expansion of ties and “eliminate earlier concerns related to combating money laundering and financing of terrorism in Iran.”

The intergovernmental FATF was founded in 1989 and is currently tasked with issuing guidelines to counter the financing of terrorism and money laundering. In late June, it decided to keep Iran on its blacklist of high-risk countries but welcomed Iranian promises to improve and called for a one-year suspension of some restrictions on Tehran.

On the exchange of the banking knowledge and experience between the two countries, Churiy expressed readiness to assist Iran when it comes to the rating of its banks and financial institutions by global agencies.

The CBI had announced earlier that it is negotiating with international credit agencies over the issuance of a sovereign credit rating for the country. A domestic plan is also underway to introduce a rating system for lenders based on which weaker banks would have to be treated differently than their high-performing peers.

 “We also hope to establish full-fledged banking ties between the two countries in all categories including combating money laundering and fighting terrorism financing,” he concluded.

The vice-governors of the CBI and the NBU signed a Memorandum of Understanding aimed at fostering banking ties between Iran and the Eastern-European nation.

Financial Tribune
Publish Date: Nov 26, 2016