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Iran withstood western sanctions by utilising clandestine banking system

A currency trader prepares to exchange Iranian rial notes, right, for US dollar notes, left, at a currency exchange in Tehran, Iran. Photographer: Ali Mohammadi/Bloomberg

A currency trader prepares to exchange Iranian rial notes, right, for US dollar notes, left, at a currency exchange in Tehran, Iran. Photographer: Ali Mohammadi/Bloomberg

Published Mar 18, 2022

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Washington - Iran managed to weather the long-lasting economic war with the West by utilizing an underground banking and financial system that allowed Tehran to have a leverage in negotiations on its nuclear program, The Wall Street Journal reported on Friday.

The system used foreign bank accounts and proxy companies outside Iran that were involved in coordination of the banned trade as well as a transaction clearing house in the country to buy time to advance its nuclear program and resist the Biden administration pressure to rejoin the 2015 nuclear agreement, the report said, citing intelligence officials and diplomats.

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The key nexus that allowed Iran to trade its oil for years was the proxy companies that conducted transactions with Western buyers on behalf and in the interest of Iranian companies placed under US sanctions.

The trade provided the influx of dollars and euros to Iran through accounts in foreign banks, the report said.

The oil revenues are being smuggled into Iran by couriers who carry cash withdrawn from foreign accounts while the main part of the profits remains in the bank accounts, the report said.

Iran will be able to quickly increase oil production if the nuclear agreement is concluded, which will positively affect the supply of oil on world markets amid the surging energy prices. But Western banks and business will not be as quick to re-engage with Iran in light of potential risks related to sanctions, the report said.

The Iranian authorities intend to continue using such financial schemes that have shown their effectiveness in the fight against Western sanctions and provided the country with the opportunity to trade with foreign countries without problems, the report said.

Moreover, Iran's success has demonstrated the limits of global financial sanctions amid the recent restrictive measures the West imposed on Russia, the report said.

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The officials also said that following the release of two UK nationals in recent days, the Iran nuclear agreement, formally known as the Joint Comprehensive Plan of Action (JCPOA), is expected to be signed within days.

The JCPOA was concluded by China, Russia, France, Germany, the United Kingdom, the United States and Iran, as well as the European Union, in 2015, and provided for the easing of sanctions in exchange for Iran limiting its nuclear program.

In 2018, then US President Donald Trump unilaterally withdrew from the JCPOA and reinstated comprehensive sanctions against Iran. In response, Iran scaled back its commitments under the agreement, removing restrictions placed on nuclear research and uranium enrichment.

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Sputnik

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