In an official notice of the bank outlining its new strategy for Iran that was reviewed by the Financial Tribune, the bank makes clear that it will handle “only humanitarian and non-sanctioned goods and services for bilateral trade between Iran and China."
"We hereby inform your good bank that our bank is able to resume business cooperation with Iranian banks, which are not subject to secondary sanctions by OFAC," reads the text of the notice sent to Iranian lenders.
The notice cautions Iranian lenders that according to OFAC provisions, key sectors such as the automotive sector in Iran, petrochemical companies, Iran's energy, shipping and shipbuilding sectors and semi-finished metals such as aluminum steel remain sanctioned, according to Financial Tribune.
With the new round of US sanctions last month, Bank of Kunlun also suspended its Iran business.
Iranian businesses and industries contacted by the Tribune had a mixed response to China's move, with some sounding grateful that China, after all, had resumed business with Iran. Others were disappointed saying that Beijing is no longer willing to bypass US sanctions.
"Even Europe's special trade mechanism will work similar to China's and we should not stress the negative only in China's case," one business official said asking not be named.
A critical tweet by the vice president of Iran Chamber of Commerce, Industries, Mines and Agriculture, Pedram Soltani last week took a dim view of the situation, saying bluntly that it is a sign that "Iran has no strategic partners."
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Bank of Kunlun, which has been the main official channel for money flow between China and Iran since before the last round of sanctions in 2012, is majority owned by CNPC’s listed financial arm CNPC Capital.
Reuters reported on Friday that CNPC may stop its banking unit from conducting most of its Iranian-related financial services because of concerns over the mounting US restrictions.
It said that with the US increasing pressure on global institutions to not trade with Iran, CNPC now views the bank’s Iran business as a liability that is hindering the company’s other regular financial services that cover insurance and leasing, the source said.
The source said CNPC is lobbying Beijing to let one or smaller Chinese commercial banks take over the business, or put it directly under a government agency.
The special trade mechanism set up by India's UCO Bank for processing oil import payments from Iran also became operational on Friday.
As part of the payment mechanism, UCO bank has opened rupee Vostro accounts with five Iranian banks so they can deposit the oil money in those accounts.
The Financial Times reported last week that Switzerland is close to launching an initiative to let companies sell food, medicine and medical devices to Iran using a payments channel that would be the first such mechanism to win Washington’s approval since it re-sanctioned Tehran.