May 5, 2011 | Wall Street Journal

Senators Criticize Draft Rule On Iran Sanctions

A group of Republican senators slammed bank reporting requirements proposed by the U.S. Treasury, saying they fall short of the comprehensive Iran sanctions intended by Congress.

The draft rules stem from a law passed last July requiring U.S. financial institutions to disclose whether their foreign bank clients do business with blacklisted Iranian entities.

Treasury has proposed that U.S. banks only provide the information upon written request from the Financial Crimes Enforcement Network, the U.S. government’s financial intelligence unit.

The senators, a group that includes Jon Kyl (R., Ariz.) and Mark Kirk (R., Ill.), said in a recent letter to acting Undersecretary for Terrorism and Financial Intelligence David Cohen that the law was not intended to be discretionary.

U.S. financial institutions should regularly require foreign banks for which they maintain correspondent accounts to disclose their ties to Iran — whether Fincen asks or not, they wrote.

They also criticized Treasury for taking nearly a year to draft the rules and said the the reporting requirements should apply to all “domestic financial institutions,” not just U.S. banks.

The Tuesday letter, reported earlier by The Cable, was also signed by Sens. Mike Johanns (R., Neb.), Roger Wicker (R., Miss.), David Vitter (R., La.), Jerry Moran (R., Kan.) and Mike Crapo (R., Idaho).

A Treasury spokeswoman declined to comment on the letter.

Under the draft rule, U.S. banks would have to tell Fincen whether foreign bank customers maintain correspondent accounts for sanctioned Iranian banks or processed fund transfers for them in the past 90 days.

The senators said they would withhold their votes on Cohen’s nomination to Undersecretary for Terrorism and Financial Intelligence until they receive his assurance that the sanctions law will be “fully” enforced.

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