Iran’s new financial channel with Europe is linked to sanctioned entities
The following is an excerpt:
In April, Tehran created the Special Trade and Finance Instrument (STFI) as a counterpart to the European SPV, formally known as the Instrument for Supporting Trade Exchanges (INSTEX). Set up by Germany, France, and the UK, INSTEX would avoid U.S. sanctions by enabling trade without using the U.S. dollar or going through U.S. banks. STFI was registered in April in Tehran’s Davudieh near the CBI’s headquarters.
The EU would be wise not to enter into any transaction with the STFI given its connection to sanctioned entities. Non-U.S. firms that are involved in legitimate trade with Iran can conduct it through Iranian banks that are not on the SDN list or not subject to secondary sanctions. Treasury can clarify the risks of dealing with the STFI by adding it to the SDN list, and issuing guidance related to the risks of doing business with proliferators and terrorist sponsors through the STFI. If the EU persists, Treasury could go a step further by threatening to apply secondary sanctions to the STFI.