International financial firms with U.S. operations may face difficult questions over business with Iran if President Trump pulls out of a nuclear accord with the country.
Trump is set to announce his decision on the deal, which he has criticized repeatedly, on Tuesday. A pivotal point for lenders is whether he reinstates restrictions on transactions with the country that existed prior to former President Barack Obama’s negotiation of the pact. During that time, American regulators punished several overseas banks with U.S. operations for violating sanctions and covertly providing financial assistance to Iran.
BNP Paribas, for example, was fined $8.9 billion in 2015 for its dealings with Iran, Sudan and Cuba. Credit Suisse was fined $536 million in 2009 to settle similar allegations. The firms, which are headquartered in Europe, were accused of stripping information on funds transfers that would have shown the money originated in Iran and other sanctioned countries.
“If the U.S. withdraws and then enforces sanctions on European and Asian banks and entities that do business with Iran, then the deal is dead in the water,” Hossein Askari, an international business professor at George Washington University, said in a recent interview. “Europeans would be very reluctant to get involved if the U.S. withdraws.”
Questions have also arisen over the future of manufacturing deals negotiated under the agreement, such as aircraft purchases by Iranian airlines from Chicago-based Boeing.
Those transactions might survive a U.S. exit, but financial firms would face much more significant challenges.
“That’s the one place where the U.S. action could have some spillover effect in other countries,” said Philip Nichols, a professor of legal studies and business ethics at the Wharton School of the University of Pennsylvania.
European and Chinese banks, whose political leaders have lobbied for the Iran deal to continue unimpeded, could band together to push back against any additional sanctions imposed by the Trump administration.
“If the U.S. withdraws, the deal that Iran has with the Europeans and with others is not necessarily dead,” Askari said. “It all depends how much the Europeans are willing to stand up with the United States.”
