November 12, 2014

NIAC Urges President Obama to Establish U.S.-Iran Banking Channel

Washington, DC – With a potential nuclear deal only weeks away, the National Iranian American Council is urging that a direct banking channel be established between the U.S. and Iran. Such a channel would allow for humanitarian transactions, the sale of licensed goods like phones and computer software, and the transfer of personal remittances and inheritances between the U.S. and Iran. While the channel would be limited to transactions that are currently permitted under the U.S. trade embargo on Iran, it could eventually provide for a broader opening of trade relations between the two countries.

In a letter sent to President Obama last week, NIAC wrote, “Many Iranian Americans have family and friends in Iran and are in need of a financial channel to engage in authorized transactions. A direct financial channel would help facilitate legitimate transactions and would also boost the role Iranian Americans can play bridging the divide between the two countries.”  A NIAC Policy Memo on the topic further outlines the benefits of such a channel, as does a 2013 report by the Atlantic Council.

According to a U.S. official close to the negotiations, a direct banking channel is “on the table” in the nuclear talks. If established, a direct channel between the two countries would be a significant development. U.S. sanctions have long prohibited most contacts between the U.S. and Iran and the lack of a direct banking channel has frustrated U.S. and Iranian parties’ attempts to engage in legal transactions between the two countries, such as the transfer of inheritances or even the sale of food and medicine to Iran. To perform these activities right now, U.S. and Iranian parties have to route funds through third-country banks, many of which refuse to process the transactions. This has brought U.S.-Iran trade to its lowest levels ever, U.S. census bureau data shows

Moreover, a direct banking channel could facilitate a broader opening with Iran, as U.S. businesses would be able to take advantage of existing trade opportunities to enter Iran. For instance, reports suggest that Apple is in talks with Iranian distributors regarding the sale of its products in Iran. However, Apple is concerned about being able to receive payments from its Iranian customers and is consulting with the U.S. government over the matter at present. Establishing a direct banking channel would resolve this issue.

NIAC will continue to work to alleviate the burdens of sanctions on Iranian Americans and, in this vein, urges both the U.S. and Iranian negotiating parties to agree to a deal that includes a direct banking channel between the two countries. This will not only ease the burden of conducting transactions between the U.S. and Iran, but will also pave the way for both countries to steer a different course in their relations. 

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