US says banks won't be punished for lawful business in Iran

US Secretary of State John Kerry tried today to reassure European banks they won't be penalised for conducting or facilitating business with Iran, as he worked to address Tehran's grievance that businesses are still staying away despite the nascent nuclear deal.

London: US Secretary of State John Kerry tried on Thursday to reassure European banks they won't be penalised for conducting or facilitating business with Iran, as he worked to address Tehran's grievance that businesses are still staying away despite the nascent nuclear deal.

At an unusual meeting in London, the top US diplomat joined Britain's top commerce official to challenge what Kerry called "misinterpretations or mere rumors" about US sanctions on Iran, the most sweeping of which were lifted in exchange for Iran rolling back its nuclear program.

The list of banks whose leaders attended was a Who's Who of powerful financial institutions based in Europe, including HSBC, Deutsche Bank, Barclays and BNP Paribas.

"We want to make it clear that legitimate business, which is clear under the definition of the agreement, is available to banks," Kerry told reporters after the meeting.

"As long as they do their normal due diligence and know who they're dealing with, they're not going to be held to some undefined and inappropriate standard here."

American officials have been fanning out across the globe in recent weeks to address Iran's complaints that it hasn't received the sanctions relief it was promised in exchange for slowing down its nuclear program.

Under the deal, broad US sanctions on Iran's economy were removed, clearing the way for foreign companies to do business with most Iranian companies.

Yet some specific Iranian entities, including companies associated with Iran's Revolutionary Guard, are still off-limits under sanctions punishing Iran for other behavior.

And the US maintains a prohibition on Iran accessing the American financial system or directly conducting transactions in US dollars, fueling confusion and practical impediments given that international transactions routinely cross through the US banking system.

"In some cases, there has been a reluctance in some places to take risk or what they think is a risk," Kerry said.

Hammond, Kerry's British counterpart, said the goal was to bridge the disconnect between the political intentions of the countries that negotiated the nuclear deal and the "banking world reality." He said if world powers are to ensure their objective of normalizing relations with Iran and ending its global isolation, they must succeed in persuading banks that it's safe to invest in the Islamic Republic. "Essentially, it's the first hurdle in the race," Hammond said.

"If we fall at this one, then we'll never get the chance to demonstrate all the other benefits that can flow from this agreement that we spent so much time and energy delivering last year."

European and Asian governments and companies, primarily banks, have sought written clarification about what current US laws and financial regulations allow. Essentially, they want a promise that the US will not prosecute or punish them for transactions involving Iran a step the US has so far been reluctant to take.