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Chancellor announces new financial restrictions against Iran
The Government has today imposed tough new financial restrictions against Iran which cut off all financial ties with Iranian banks. This follows the International Atomic Energy Agency’s (IAEA) latest report on Iran, which highlights fresh concerns about the possible military dimensions of Iran’s nuclear programme.
This is the first time that the UK has used these powers to cut an entire country’s banking sector off from our financial sector. This underlines the severity of the Government’s concerns about Iran’s activities. From 15:00 Monday 21 November 2011, all UK credit and financial institutions are required to cease business relationships and transactions with all Iranian banks, including the Central Bank of Iran, and their branches and subsidiaries.
Iran’s activities that facilitate the development or production of a nuclear weapon pose a significant risk to the national interests of the UK and countries across the region. Iranian banks play a crucial role in providing financial services to individuals and entities within Iran’s nuclear and ballistic missile programmes, as companies carrying out proliferation activities require banking services. London is an important global financial centre and the UK’s financial restrictions will make it more difficult for Iranian banks to utilise the international financial system in support of Iran’s nuclear and ballistic missile programmes. This measure will protect the UK financial sector from being unknowingly used by Iranian banks for proliferation related transactions.
The case for action is underlined by the recent calls from the Financial Action Task Force (FATF) for countries to apply effective counter-measures to protect their financial sectors from money laundering and financing of terrorism risks emanating from Iran.
These actions are being taken in coordination with other partner countries, who will make their own announcements separately.
The Chancellor, George Osborne, said:
“I have today taken action to impose further financial restrictions against Iran. This follows the International Atomic Energy Agency’s report uncovering evidence of Iran’s development of nuclear weapons technology. It is also a response to calls from the Financial Action Task Force for countries to strengthen safeguards to protect their financial sectors from money laundering and financing of terrorism risks emanating from Iran.
“We believe that the Iranian regime’s actions pose a significant threat to the UK’s national security and the international community. Today’s announcement is a further step to preventing the Iranian regime from acquiring nuclear weapons.”
The Foreign Secretary, William Hague, said:
“The IAEA's report last week provided further credible and detailed evidence about the possible military dimensions of the Iranian nuclear programme. Today we have responded resolutely by introducing a set of new sanctions that prohibit all business with Iranian banks.
“We have consistently made clear that until Iran engages meaningfully, it will find itself under increasing pressure from the international community. The swift and decisive action today coordinated with key international partners is a strong signal of determination to intensify this pressure.”
Notes for Editors
1. The Written Ministerial Statement on the Order is available here: http://www.hm-treasury.gov.uk/written_ministerial_statement_comsec211111.pdf
2. Schedule 7 to the Counter-Terrorism Act 2008 contains financial restriction powers to address risks posed by money laundering, terrorist financing or the development of nuclear, radiological, biological or chemical weapons in another country, or where the Financial Action Task Force has called for measures to be taken in relation to a country.
3. Schedule 7 is available here: http://www.legislation.gov.uk/ukpga/2008/28/schedule/7
4. There are existing financial sanctions in place in the UK against Iran, including asset freezes against certain Iranian individuals and entities, requirements on the transfer of funds to or from an Iranian person, entity or body, and restrictions on the provision of insurance.
5. The International Atomic Energy Board of Governors Report on Iran was published on 18 November 2011 and sets out the Agency’s “concerns about possible military dimensions to Iran’s nuclear programme”. The IAEA report is available here: http://www.iaea.org/newscenter/focus/iaeairan/bog112011-65.pdf.
6. The FATF, the global standard setting body for anti-money laundering and combating the financing of terrorism, has made repeated calls for countries to apply effective counter-measures to protect their financial sectors from money laundering and financing of terrorism risks emanating from Iran. The FATF renewed these calls with urgency on 28 October 2011 and noted its particular and exceptional concern about Iran’s failure to address the risk of terrorist financing and the serious threat this poses to the integrity of the international financial system.
7. The FATF public statement is available here: http://www.fatf-gafi.org/document/55/0,3746,en_32250379_32236992_48966519_1_1_1_1,00.html
8. The Order contains a Direction requiring UK credit and financial institutions to cease all business with banks incorporated in Iran and their branches and subsidiaries. This means that UK credit and financial institutions are prohibited from entering into transactions or business relationships with these entities and from continuing existing transactions and business relationships with them, unless licensed to do so by the Treasury.
9. UK exports to Iran in 2010 totalled £286 million and UK imports from Iran in 2010 totalled £189 million. Current statistics show that UK trade with Iran has declined by 46% in January to August 2011 compared to exports in the same period in 2010. The Government actively discourages trade with Iran and does not provide any support for such trade.
10. The Treasury has issued six general licences, which authorise UK credit and financial institutions to participate in certain transactions or business relationships which the Treasury believe it is appropriate to exempt from the Direction. The general licences cover humanitarian activities; personal remittances; provision of insurance and reinsurance exempt under the EU Regulation; UK banks holding accounts of asset frozen banks; UK banks holding accounts of designated persons; completion of existing transactions.
11. Any affected party can apply to the Treasury for a licence.
12. Detailed guidance on the restrictions is available here: http://www.hm-treasury.gov.uk/fin_restrictions_under_cta2008.htm
HM Treasury Press Office (Media)
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