Banks Face Compliance-Related Headaches From Iran Deal

The White House is attempting to undo decades of sanctions to halt the Iran war.

And this has created a problem for banks as they try to figure out the new compliance landscape, Bloomberg News reported Sunday (June 28).

The pace and scale of this effort, the report said, has left sanctions observers stunned, as the U.S. has promised to unblock billions in frozen funds and permitted the sale of Iranian oil.

And a memorandum of understanding signed by Trump and Iranian President Masoud Pezeshkian on June 17 calls for the removal of all U.S. sanctions on Iran on “an agreed upon schedule,” while directing the Treasury Department to issue 60-day waivers on existing sanctions as technical negotiations continue.

The change will be tough to implement in a way that appeals to risk-averse American financial institutions, the report said, citing former Treasury officials, sanctions attorneys and industry sources following the process.

“You want to be 100% sure that you’re within compliance,” said Adam Smith, a former senior adviser to the director of the Treasury’s Office of Foreign Assets Control, which oversees U.S. sanctions.

“One-off transactions that close within the 60 days could work but there may be challenges finding banks and other intermediaries willing to process transactions.”

Michael Huneke, a trade and national security lawyer at Morgan, Lewis & Bockius, added that financial institutions tend to be more adverse to risk than their clients when seeing sanction programs wind down.

“I would expect them to be very cautious here as well,” he said.

The Bloomberg report noted that moving too quickly and incurring a violation isn’t an attractive prospect for banks. The report cited the example of BNP Paribas, which paid a nearly $1 billion settlement to the U.S. in 2014 for allegedly violating sanctions against Iran and Sudan.

In other compliance news, PYMNTS wrote last week about the shift in this area triggered by the rise of agentic artificial intelligence systems capable of reasoning, investigating and executing workflows autonomously.

“Most firms think AI is an efficiency upgrade, they think they will run the same processes with fewer people. We think that framing is wrong,” Madhu Nadig, co-founder and CTO at Flagright, said in an interview with PYMNTS.

Instead of helping companies process larger alert queues, today’s agentic AI systems are beginning to transform the very architecture of financial compliance work.

“The more context a system of record plus a system of action can have, the more use cases we can serve and the deeper the use cases,” Nadig said.