Germany sanctions Iran’s Bank Sepah

Germany’s Federal Financial Supervisory Authority (BaFin) has announced that it has imposed a credit ban on Iran’s Bank Sepah for violating the country’s credit law.

Bank Sepah was previously sanctioned for its role in aiding Tehran’s missile program.

Sabine Reimer, a BaFin spokeswoman, told The Jerusalem Post on Friday that “a credit ban against Bank Sepah’s branch in Frankfurt was imposed because the institution violated the requirements of the rules of a business organization according to paragraph 25a of the lending law.”

She said that she could not provide additional information on account of the obligation of secrecy. The ban on credit went into effect on October 13, according to BaFin.

On Saturday, Amir Hosseini, the head of Sepah’s directorate general of international affairs, denied the sanctions via Iran’s state-controlled media Press-TV and its German- language IRNA outlet. “Bank Sepah’s connection with Germany has been expanding with the consent of the country’s authorities, and more than €52 million of foreign currency transfers were made at the branch only yesterday,” he said.

The UN, US and EU previously sanctioned Sepah because of its role in Iran’s illicit missile procurement activities. The sanctions were lifted in 2016 as part of the Iran nuclear agreement.

The Iran deal, formally known as the Joint Comprehensive Plan of Action, outlined restrictions on its nuclear program in exchange for sanctions relief.

“Bank Sepah is the financial linchpin of Iran’s missile procurement network and has actively assisted Iran’s pursuit of missiles capable of carrying weapons of mass destruction,” said Stuart Levey, the US Treasury’s former under secretary for terrorism and financial intelligence, in 2007.

In addition to Frankfurt, Bank Sepah has branches in Paris, Rome and London.

Bank Sepah is a state-owned bank that the Treasury has said is the “bank of choice” for Iran’s Aerospace Industries Organization (AIO).

According to the Treasury, the “AIO, a subsidiary of the Iranian Ministry of Defense and Armed Forces Logistics, oversees all of Iran’s missile industries and is the overall manager and coordinator of Iran’s missile program.”

The bank operates 1,700 branches in Iran.

Large European banks have not initiated business with Iran’s financial system because of high risk and terrorism finance concerns.

The Financial Action Task Force, an intergovernmental body, wrote in June it is “concerned with the terrorist financing risk emanating from Iran and the threat this poses to the international financial system.”

Benjamin Weinthal is a research fellow at the Foundation for Defense of Democracies. Follow him on Twitter @BenWeinthal.

Follow the Foundation for Defense of Democracies on Twitter @FDD.