Sanctions imposed by the US on an Iranian bank do not contravene foreign exchange rules according to an International Monetary Fund (IMF) spokesman. He was responding to a request from Tehran asking the IMF to determine whether Washington's actions were legal.

Iran made its request after the US Treasury last year banned US banks from dealing with state-owned Bank Saderat, which the US accused of terrorist financing and which writes a significant amount of letter of credit (L/C) and other trade finance business.

Iran's argument

Iran said during its talks with the IMF that since the US embargo on Bank Saderat, it had been unable to issue L/Cs in dollars, which was affecting deposits.

The Iranians also said that several Bank Saderat correspondent banks in Europe and Asia that have ties to the US had refused to allow the bank to operate in other currencies.

IMF decision

The IMF was apparently unmoved by Iran's arguments. "We advised the authorities that the new US measures do not give rise to an exchange restriction," IMF spokesman William Murray said.

Iran brought up the issue of possible foreign exchange rule contraventions in the US ban on Bank Saderat during consultations with the IMF during November 2006.

Previous events

On 8September 2006, US officials alleged that Iran was supporting terrorism via Bank Saderat; therefore, the US Department of the Treasury announced that the state-owned bank would be cut off from all access to the US financial system, direct or indirect. (DC World News, 18 September 2006).

The measure came in the wake of pressure earlier in 2006 on European and international banks to reduce their business links with Iran. This led the likes of Swiss banks UBS and Credit Suisse as well as global giant HSBC to reduce their L/C and other business with Iran. (DC World News, 14 June 2006).

One of the measures taken by Bank Saderat in its endeavours to counter US financial sanctions imposed on it has been to open L/Cs in other currencies. (DC World News, 7 December 2006).

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