There was an article today that came out on Zaywa which states that Bank Saderat, which is becoming privatized this month, will seek to talk with the United States Department of Treasury Office of Foreign Control (“OFAC”), about having a ban against it removed. Currently, U.S. persons are not allowed to engage in any (even normally excepted) transactions with Bank Saderat lest they be penalized under the Iranian Transactions Regulations (“ITR”).

There are some exceptions in the ITR which permit certain types of transactions with Iran or the Government of Iran. However, because of Bank Saderat’s alleged past facilitation of the financial activities of Hezbollah, these exceptions no longer apply to the bank.

Bank Saderat’s Chairman, Hamid Borhani, plans to fly to the United States after the bank is fully privatized. According to Borhani, if the United States is really serious about change, then they will remove the sanctions against Bank Saderat. Nice plan Mr. Borhani, but I just can’t see OFAC removing any ban or sanctions against Bank Saderat. If it is simply based on the bank’s privatization, I would say that makes little difference given the fact that the bank will likely continue to be susceptible to facilitating future transactions between individuals who the U.S. sees as terrorists or terrorist organizations.

While Mr. Borhani’s plan may not work, what is interesting to me is the fact that Bank Saderat has actually publicly made it known that they will seek to have the ban against them in the ITR removed. This in my opinion shows that OFAC’s actions against the Bank probably have had a significant impact on the bank. As I have written in the past it is often difficult to ascertain how effective sanctions are. Here, however, we have a particular entity targeted by OFAC stating that they will seek to normalize their relationship with OFAC and have the ban against them removed. This could signal the fact that they have really suffered since 2006 when OFAC banned them from engaging in certain transactions which are excepted under the ITR.

My initial reading of this action is that it is good for OFAC. It may very well show that their policies are having a real world effect on those they target. I don’t think the ban will be removed, however, I think this announcement by Bank Saderat is a win for OFAC.