US SENATE PASSES BILL THAT WOULD CLOSE CORRESPONDENT ACCOUNTS OF FOREIGN BANKS WHO DEAL WITH IRAN'S CENTRAL BANK

Last week, the United States Senate passed the bill* that would give the President the authority to sanction any foreign bank that was engaged in any transactions with the Central Bank of Iran, including the right to close correspondent accounts located in the US, which could threaten those bank's ability to service their international clients. If passed into law, and applied, that sanction could put those banks so affected out of business forthwith, as all of their clients with international trade with the US would head for their competition.

Here is the complete text of the provision, Section 1245, Imposition of Sanctions with respect to the Financial Sector of Iran:
"The President
 (A) shall prohibit the opening or maintaining, in the United States, of a correspondent account, or payable-through account, by a foreign financial institution that the President determines has knowingly conducted or facilitated any significant financial transaction with the Central Bank of Iran, or another Iranian financial institution designated by the Secretary of the Treasury for the imposition of sanctions, pursuant to the International Emergency Economic Powers Act; and
(B) may impose sanctions, pursuant to the International Emergency Economic Powers Act, with respect to the Central Bank of Iran."

Will correspondent accounts of major foreign banks in the US actually be closed ? We cannot say; first, the bill must become law, and then we will look at enforcement. Stay tuned.
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*Senate Bill 1867.