Last week, I wrote about a seeming divergence between the U.S. State and Treasury Department regarding the scope of a foreign bank’s due diligence obligations regarding Iran-related dealings. Speaking at Chatham House, Secretary of State John Kerry had suggested that OFAC is telling foreign banks and companies that they need only exercise “normal due diligence” when dealing with Iran or Iran-related parties – a fact that, if true, would contradict much of OFAC’s post-JCPOA messaging regarding expected due diligence.

Well, it turns out that the Secretary may have “misspoke.” According to press reports, the State Department issued the following notice two days after the Secretary’s remarks: “We expect banks and other businesses to exercise due diligence in any overseas investment or transaction, tailored to the particular environment. For a high-risk jurisdiction like Iran, the norm is enhanced due diligence.”

The issue was likewise raised in the State Department’s press briefing on November 3. According to the State Department Deputy Spokesperson Mark Toner:

I think the Secretary was just making the point that – and we’ve made an effort to explain this – you’re all well aware of some of the engagement efforts that we’ve made with regard to financial institutions and companies explaining what sanctions have been relieved – have been lifted as a result of the JCPOA and the fact that – what business can be done with Iran going forward.

That is a fine correction. Here’s the problem, though: the U.S. Secretary of State is taking part in a global “roadshow” with the aim of re-instilling confidence in foreign parties so that these parties will facilitate commercial engagement with Iran. Yet, the Secretary seems to be under a false impression as to what the current U.S. policy is on critical matters like due diligence obligations. Moreover, he is communicating that false impression in public settings and later is being corrected on the record by his own State Department. Sympathetic as I am with the Secretary’s efforts to ensure that the United States lives up to its JCPOA-related obligations, this can’t give too much confidence to foreign parties as to the risks associated with reengaging Iran.