Japan’s biggest bank, Mitsubishi UFJ Financial Group Inc (MUFG), will halt all Iran transactions to comply with the reimposition of US sanctions against Tehran later this year, according to a document seen by Reuters on Thursday.
The banking unit of Mizuho Financial Group Inc said later on Thursday it would take the same action. Sumitomo Mitsui Banking Corp will carefully consider its response in compliance with the law and based on US sanctions, it said in a statement emailed to Reuters.
The move by MUFG is likely to force a halt in Iranian crude oil purchases by Japanese companies, as its banking unit handles the bulk of those imports, industry sources said.
According to Financial Tribune, the bank was fined hundreds of millions of dollars in 2014 for misleading US regulators about its transactions with sanctioned countries including Iran.
“The bank is afraid of US sanctions, so cannot handle trade transactions. Other Japanese banks are likely to be in the same position,” said a Japanese analyst who declined to be identified due to the sensitivity of the issue.
Trump in May withdrew the United States from a multi-party deal on Iran’s nuclear program and ordered the reimposition of US sanctions against Tehran that were suspended under the 2015 agreement.
Washington later told countries to stop buying Iran’s crude oil, that nation’s most important export item, by Nov. 4 or face financial consequences.
Japan’s oil refiners have said they may stop loading Iranian crude oil from October if they cannot get an exemption from US sanctions to allow imports to continue.
Beyond oil, trade between Japan and Iran is minimal.
MUFG Bank Ltd has informed customers in Japan about its decision, given that dealings with Iranian financial institutions will be prohibited after a 180-day wind-down period, which ends on Nov. 4, the document showed.
MUFG may revise its policy, if additional guidance is provided by the United States, the bank said in the document.
Disrupting Finance Operations
Also on Thursday, Sigal Mandelker, undersecretary for terrorism and financial intelligence at the US Treasury Department, announced efforts by Washington to constrict Iran’s finance operations in UAE and its trade in general.
Mandelker made the statements while visiting the UAE after making similar trips to Saudi Arabia and Kuwait to win support for the US effort to squeeze Iran.
But as reported by Reuters, Washington may struggle to achieve a sharp reduction of Iranian business with the UAE. Dubai has traditionally served as a hub for exports to Iran and received Iranian investment in its businesses and real estate market.
UAE exports to Iran totaled $19.9 billion in 2017, or about 5% of the UAE’s gross domestic product, according to International Monetary Fund data.
Asked about this, Mandelker said Washington had an “excellent partnership” with the UAE.
“There’s no question in my mind that working together, we can take significant action [against Iran] to disrupt their ability to fund themselves,” she said.