Iranian bank back in business Friday

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Iranian bank back in business Friday

The only Iranian bank in Korea will start operating again on Friday, with the government deciding not to extend a two-month suspension of its operations, a diplomatic source said yesterday.

In October, the Financial Services Commission, Korea’s top financial watchdog, imposed the suspension on the Seoul branch of Bank Mellat as part of international moves to sanction Iran for its suspected nuclear weapons program. The measure expires Friday.

“The suspension was made to implement UN Security Council resolutions sanctioning Iran’s nuclear development,” the source said. “For now, the government is not reviewing an additional measure to suspend its operations.”

The source said the bank will remain under “strong” regulation that requires the Bank of Korea to approve most of its financial transactions in Seoul.

The FSC decided at an Oct. 6 meeting that Bank Mellat violated a local foreign exchange trade act that requires banks operating in Korea to receive approval in advance from the head of the BOK to make a foreign currency transaction.

In September, the government imposed sanctions against Iran, joining international actions led by the United States and the European Union to protest the country’s suspected nuclear weapons program.

Bank Mellat was suspected of making transactions that could be funneled to Iran’s nuclear and military programs.

The source said the measure to lift the sanctions on the bank, however, could trigger disapproval from the international community.

He said the international community believes suspension of the branch, which Iran hoped to develop into a financial hub, is key to Seoul’s sanctions on Iran and hopes Korea will shut it down indefinitely.

But the source said officials in related government agencies believe there is no legal ground that justifies the indefinite expulsion of a financial institution.

Korean firms trading with Iran were opposed to the sanction on Bank Mellat, saying it could harm their businesses. Around 20 local companies exported $4 billion worth of goods to Iran last year.

Some observers said that how Seoul deals with the bank could affect its efforts to garner international support in condemning North Korea for its recent provocations.

By Kang Chan-ho, Moon Gwang-lip []
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