Under U.S. Threats, European Banks Limit Deals Involving Iran

Prodded by the United States with threats of fines and lost business, four of the biggest European banks have started curbing their activities in Iran, even in the absence of a U.N. Security Council resolution imposing economic sanctions on Iran for its suspected nuclear weapons program.

Top U.S. Treasury and State Department officials have intensified their efforts to limit Iran-related activities of major banks in Europe, the United States and the Middle East in the past six months, invoking antiterrorism and banking laws. They have also traveled to Europe and the Middle East to drive home the risky nature of dealing with a country that has repeatedly rebuffed Western demands over suspending uranium enrichment, and to urge European countries to take similar steps.

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It is not clear how curbed business with four of Europe's biggest banks could adversely affect Iran. But some outside political and economic experts say it is unlikely to do much damage considering Iran is one of OPEC's leading producers and is earning hundreds of millions of dollars worth of windfall profits daily from $70-a-barrel petroleum.

The American prodding has not yet resulted in any fines or other punishment. But UBS and ABN Amro are no strangers to the sting of American financial penalties for dealing with countries that the United States has wanted to isolate. UBS was fined $100 million by the Federal Reserve two years ago for the unauthorized movement of dollars to Iran and other countries like Libya and Yugoslavia, which were subject to American trade sanctions at the time. Last December, ABN Amro was fined $80 million for failure to comply with regulations against money laundering and with economic sanctions against Libya and Iran from 1997 to 2004.

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