The Bush administration is seeking to broaden the scope of its enforcement tools to rein in Iran’s nuclear programme, including greater scrutiny of global banks that may be violating US export control rules by financing prohibited transactions.
Mario Mancuso, undersecretary of commerce for industry and security, told the Financial Times that banks faced a “legal risk” if they provided trade finance for, or in other ways supported, activities prohibited by US export control regulations.
Mr Mancuso said: “Historically, the trade control regime has been less relevant to financial services providers, but it is an area they [now] have to be mindful of. These are not new legal regimes, although it is fair to say we are applying them more vigorously and in new ways in light of changes in the national security environment.”
That message is expected to be made clear in Lon- don today at a workshop organised by the Export Compliance Training Institute and co-sponsored by the Institute of International Bankers. Mr Mancuso is expected to both thank financial services firms for their “constructive assistance” in national security matters and emphasise the threat posed by Iran in Iraq and in the region.
He said: “There have been cases of controlled US technology being used in IED’s [improvised explosive devices] against US forces and coalition forces inside Iraq. We will do everything we can to stop that and there is a legal risk to banks supporting – providing trade financing to – transactions that are prohibited.”
He declined to comment when asked whether there was evidence that banks were involved in financing the export of US technology that has allegedly been used in IEDs.
“We don’t think it is a huge problem for the banks of the calibre that I will be addressing, but we feel it is incumbent upon us to be as transparent as possible about what is on our minds,” he said.
A broader US drive to convince other countries to sign up to formal financial sanctions against Iran has failed to win as many adherents as Washington wanted and over the past two years Iran has managed to expand steadily its nuclear programme.
While the Bush administration charges Iran with seeking a nuclear bomb, Tehran insists its nuclear programme is purely peaceful.
The US Congress has in recent years increased fivefold the potential fines and penalties companies and banks face if they flout US export control laws. The laws are enforced by the commerce and state departments.
Wendy Wysong, an attorney at Clifford Chance and former commerce official, said US civil and criminal enforcement authorities could be expected to have “little sympathy” for transactions, particularly in regard to Iran, involving banks that have provided letters of credit or other finance in support of illegal exports or re-exports of US-origin goods.
“The absence of compliance controls or procedures could be deemed negligent in this context and increase the risk that US authorities would seek to prosecute the providers of trade finance as well as the actual transaction parties,” said Ms Wysong.
Additional reporting by Daniel Dombey in Wash- ington
