Bangladeshi entities alerted about risks of Iran trade loans

Bangladesh's central bank has stressed exercising caution about receiving loan from Iranian companies to avert possible external restrictions, especially US sanctions or fines stemming from their bilateral diplomatic spats.

Official sources say Bangladesh Bank thinks that such fines and sanctions might lead to uncertainty in accessing corresponding banking services across the world.

But the central bank has opined that it will be logical to take decision through state level, including foreign affairs ministry, for receiving loan from the EGFI as regards export trade.

Currently, the Office of Foreign Assets Control (OFAC) of the United States has imposed sanctions on a large number of individuals and companies for different reasons, including nuclear programme and Iranian military firms.

US. economic and trade sanctions are administered by the OFAC, an agency of the US Treasury Department.

"During completing any future transaction through the US dollar with Iranian companies/firms listed by the OFAC, International Emergency Economic Powers Act (IEEPA) and Iranian Transactions and Sanctions Regulations (ITSR) including OFAC directions should be taken into consideration," a source said.

Such fears were aired in a reply prepared by the Bangladesh Bank on receiving loan from the export guarantee fund of Iran (EGFI) under guarantee for export credit.

It is considered a clear violation of OFAC instructions if individual or firm operates a commercial transaction through the US dollar with any Iranian individual/company placed on the OFAC-designated Nationals List, according to the BB note.

Presently, more than 80 percent international transactions of Bangladesh with the rest of the world are completed with the US currency.

Iran showed interest in providing short- and medium-term credits to Bangladeshi Importers from EGFI or EGFI-recognized Iranian bank at the fifth meeting of the Bangladesh-Iran Joint Economic Commission (JEC).

The oil-rich gulf country also showed interest in providing long-term loan under state guarantee of Iran.

The note has been prepared according to the instructions by relevant state authority, a senior official of the commerce ministry said.

Earlier, OFAC imposed fines against individuals and persons of different countries because of breaching OFAC instructions, reads the BB paper in respect of possible knock-on effect of the taboo from the economic superpower.

City Bank, New York, blocked an export-bill price because of Iranian involvement. Habib American Bank also blocks an export bill of Bangladeshi Standard Bank due to Iran connection, according to Bangladesh Bank.

Earlier, the Asian Clearing Union asked Bank of Japan (BoJ) and Sonali Bank to make payment of U$S 0.75 million to the Export Development Bank of Iran (EDB).

Besides, the Asian Cleaning Union section also tried to make the payment through Bank of Japan in February 2017. But the bank failed to execute the payment to Iran for lack of approval from the relevant authority with the BoJ.

Besides, Deutsche Bundesbank also failed to make the payment through EURO to the EDB. But drives repeatedly by the ACU mechanism failed to execute the transaction.

Resumption of transaction with Iran through banking channels was on the lists of topics at meetings of the ACU standing technical committee On April 12 and May 20, 2021 and at the recent meeting of ACU board.

In the meeting, representative concerned of Iran informed that the Iranian government has been trying through diplomatic channels to resolve the present situation, likened to Gordian knot particularly in trade and economic matters of nations.