Previously, I have written about how the major enforcement actions against global financial institutions for Iran sanctions-related violations should not be the determining factor as to whether banks decide to re-engage with Iranian parties in the coming period, as U.S. and European sanctions are lifted in response for Iran taking certain key steps to constrain its nuclear program. Instead, global banks should take a more discerning look as to whether the risks inherent in dealing with Iranian parties are too burdensome to resume handling transactions with Iran.

I am not alone. Last week, in widely-shared remarks at the ABA/ABA Money Laundering Enforcement Conference, the Acting Under Secretary for Terrorism and Financial Intelligence, Adam Szubin, stated in passing during a broader discussion of the steps the U.S. Treasury Department is taking to address the problems associated with “de-risking”:

We know that financial institutions, like humans in general, are not infallible. Infallibility was not the problem in the major bank enforcement actions over the past decade – the problem in those institutions was rampant and willful violation of the law. I invite everyone to read these enforcement actions, if you haven’t already. Those actions were not taken for one-off mistakes or singular slip-ups; rather this was egregious activity that was knowingly carried out over long periods of time.

Acting Under Secretary Szubin was speaking about the broader problems associated with “de-risking” – meaning, in Treasury’s parlance, “instances in which a financial institution seeks to avoid perceived regulatory risk by indiscriminately terminating, restricting, or denying services to broad classes of clients, without case-by-case analysis or consideration of mitigation options” – and the steps that the U.S. Treasury Department is prepared to take to address the issue.

Nonetheless, the point is clear: major global financial institutions should not avoid a jurisdiction like Iran out of fear that a single slip-up in handling transactions of Iranian clients will invite a vigorous enforcement response from U.S. sanctions authorities. That has not proven the case in these past cases, as is evident from reading the enforcement actions that have been taken against sanctioned banks, and is now unlikely to prove the case in future cases as well.

To be clear, there might be strong reasons to avoid re-engaging in correspondent relations with Iranian banks or handling transactions for Iran-based clients, including the fact that Iran will remain a heavily sanctioned jurisdiction post-JCPOA, but basing such a decision solely on past enforcement actions taken against global banks is neither a correct nor a coherent one. A more judicious way of thinking about the issue is required.