(photo credit: JPOST STAFF)
LONDON - Using European Union powers to ban banks in the bloc from complying with US sanctions on Iran would be of "limited" use given the global reach of finance, the EU's financial services chief said on Thursday.
US President Donald Trump decided on May 8 to revive Iran-related sanctions, including sanctions aimed at Iran's oil sector and transactions with its central bank.
European Commission Vice President Valdis Dombrovskis said the EU executive was assessing the economic impact and potential effect of U.S. sanctions on Iran, including their effect on EU companies and the financial sector.
The EU wants to salvage the Iran nuclear deal, which offers the Islamic Republic relief from economic sanctions in exchange for curbs on its nuclear program and Europe sees as an important element of international security.
The EU's so-called blocking statute bans any EU company from complying with US sanctions and does not recognize any court rulings that enforce American penalties.
But it has never been used and is seen by European governments more as a political weapon than a regulation because its rules are vague and difficult to enforce, serving mainly as a warning to the United States.
"Indeed the EU blocking regulation could be of limited effectiveness there, given the international nature of banking system and especially the exposure of large systemic banks to US financial system and US dollar transactions," Dombrovskis told the European Parliament.
"There are some difficult issues which we will need to address. We are working on how to exactly address those issues," Dombrovskis said.
He also told parliament it was important to have a "credible and coordinated" anti-money laundering system at the EU level without waiting for action from the United States, Dombrovskis added.
Earlier this year, the United States accused Latvia's third biggest bank, ABLV, of money laundering and breaking sanctions on North Korea, prompting its closure and triggering the Baltic state's worst financial crisis in a decade.
It raised questions about Europe's ability to monitor money laundering on its own turf.