January 10, 2014 | Policy Brief

The Banking Provisions in the Joint Plan of Action Between Iran and the P5+1

January 10, 2014 | Policy Brief

The Banking Provisions in the Joint Plan of Action Between Iran and the P5+1

Co-authored by Saeed Ghasseminejad

Sanctions against Iran’s banking sector have restricted Iran access to financial markets and services. Iran’s exclusion has had an impact on its ability to procure materials for its illicit nuclear program. The Joint Plan of Action (JPA) signed in Geneva on November 24, 2013, if implemented, promises to relax banking sanctions in the following ways:

Western diplomats say that only ‘non-sanctioned’ entities will benefit. But the challenge will be identifying Iranian banking institutions that are private, independent or able to withstand regime manipulation.

Iran’s Supreme Leader, Ayatollah Khamenei, controls three of the 10 banks listed on the Tehran Stock Exchange (TSE) – Karafarin Bank, Parsian Bank, and Sina Bank. Most Karafarin shareholders are companies belonging to the Supreme Leader's financial empire, including Tadbir Investment, Tose'e Eqtesad Farda, the US-sanctioned Tose'e Eqtesad Ayandesazan, Negin Ganjineh Iranian (an IRGC-owned company), Mehr Afarinan Doran, and Sarmaye Gostar Door Andish. 

Khamenei controls Parsian Bank, through various subsidiaries of Setad Ejrayi, the US-sanctioned Imam Khomeini Foundation, alongside Iran Khodro, the government-controlled car manufacturer, whose main shareholder, IMIDRO, is also under sanctions.  Khamenei also controls Sina Bank through the Foundation of the Oppressed (Bonyad-e Mostazafan), Sina's main shareholder.

Iran’s Revolutionary Guard Corps (IRGC) controls one of the TSE-listed banks, Ansar Bank, through a cooperative company, Bonyad Ta'avon Sepah, headed by IRGC Commander Morteza Rezai.

Iran’s executive branch controls the remaining four banks — Bank Mellat, Bank Saderat, Tejarat Bank, and Post Bank – which are all under sanctions for their role facilitating proliferation activities.

In other words, government entities directly involved with Iran's nuclear program control at least 70 percent of the banking sector's market value. Most other banks remain under US sanctions.

Smaller banks not traded on the stock exchange, present similar challenges. For example, the Basiji, the IRGC paramilitary branch, owns Mehr Eqtesad Bank. Parsian Bank's new CEO, Ali Soleimani Shayesteh, represents Tose'e Eqtesad Ayandesazan, a US-sanctioned entity controlled by Imam Khomeini Foundation.

Iran’s banks are not truly independent. None escapes regime control. The responsible implementation of the JPA will therefore be no easy endeavor.

Emanuele Ottolenghi is a Senior Fellow at the Foundation for Defense of Democracies; Saeed Ghasseminejad is a Ph.D. Candidate in Finance at City University of New York. This analysis is the eighth in a series from FDD’s Iran Sanctions Project’s ongoing assessment of sanctions relief on Iran’s economy.


Iran Iran Sanctions