Western banks remain reluctant to resume normal letter of credit (L/C) business with Iran, despite Tehran's moves to restore international relations and global banking ties by assuring the world that its nuclear ambitions are peaceful.

Earlier this month, the governor of the Central Bank of Iran said talks were advancing to restore banking relationships to allow the Islamic republic to write L/C business on a normal basis (DC World News, 12 March 2014)

Banks reluctant

Despite improved diplomatic relations, some banks are still concerned about possible penalties under US sanctions, according to the Reuters news agency.

It was reportedly told by a US official that some banks are willing to play a part in restoring financial relations within Iranian counterparties, but others are "just are not willing to do business with Iran," he said.

"There are a lot of big banks that have been subject to fines for engaging in transactions that were in violation of US sanctions that aren't willing to do anything," the official added.

Sanctions violations

Regulators in the US are reportedly looking at potential sanctions violations by France's Credit Agricole and Societe Generale.

In 2012, New York regulators threatened to revoke Standard Chartered's banking licence for breaking sanctions on Iran while HSBC was fined US$1.92 billion by US regulators for doing business with the Islamic Republic.

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