NZ exports to Iran held back as banks fear hefty penalties
New Zealand's export trade with Iran hasn't picked up as hoped following the lifting of sanctions in February because the country's banks are wary of potential fines or exclusions from the US banking system should they fall foul of a quagmire of regulations and restrictions.
Along with other Western countries, New Zealand lifted sanctions against Iran in February after the country agreed to roll back its nuclear ambitions. However, New Zealand's export trade to the Middle East's second-largest economy hasn't stepped up despite the lifting of sanctions because banks are fearful they or their parent companies could face penalties in the US, which would outweigh any benefits from doing business with Iran.
"Global sanctions on banks creates a complex environment for our members and the sanctions relating to Iran are no exception," New Zealand Bankers' Association chief executive Karen Scott-Howman told BusinessDesk. "Despite the easing of UN sanctions against Iran and the work that the government has already undertaken to help enable business between our countries, banks are currently of the view that the situation requires them to proceed very cautiously."
New Zealand's banks have been in talks with the government and the US Treasury's Office of Foreign Asset Control on the issue, however the roadblock isn't unique to New Zealand, with many international businesses, banks, and governments also looking to see how some of the larger deals that have been slated with Iran can be transacted.
"An inadvertent breach of US, New York State, EU or other jurisdictions' sanctions or anti-money laundering laws could have significant consequences for a New Zealand bank and its US operations as well as correspondent banking relationships," Scott-Howman said. "New Zealand banks are mindful that Iran has the potential to be a significant market for some of their customers and are actively working closely with the government and the Ministry of Foreign Affairs and Trade to identify potential solutions."
Merchandise trade data from Statistics New Zealand shows trading in some goods such as dairy products, wool, and seafood continued throughout the sanction period. Some businesses have been able to export to Iran because their products fell outside the old sanctions regime or because their banks have been able to conduct significant due diligence.
"Banks continue to monitor the global situation closely and are well positioned to respond should it change," Scott-Howman said. "If customers are looking to export or do business in Iran they should talk to their bank who will work with them on a case by case basis."
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