ICYMI: Chief Legal Officer of HSBC Bank Stuart Levey Says U.S. Government Can't Pressure Private Sector to Conduct Risky Iran Business

May 13, 2016

For Immediate Release
May 13. 2016
Contact: [email protected]

ICYMI: Chief Legal Officer of HSBC Bank Stuart Levey Says U.S. Government Can't Pressure Private Sector to Conduct Risky Iran Business 

Levey: "HSBC has no intention of doing any new business involving Iran."

New York, NY - In an op-ed published in the Wall Street Journal today, Stuart Levey, the chief legal officer of HSBC Holdings and the former U.S. Treasury undersecretary for terrorism and financial intelligence, responded to the U.S. State Department's push "to persuade major non-U.S. banks that doing Iran-related business is not only permitted following the relaxation of Iran sanctions, but is actually encouraged."

On May 11, responding to U.S. Secretary of State John Kerry's remarks in London to European bankers about doing business in Iran, UANI Chairman Sen. Joseph I. Lieberman and CEO Ambassador Mark D. Wallace said, "Just because Iran is broadcasting that it is open for business does not mean it is smart or legal business." Led by a group of former leading diplomats and lawmakers, UANI is in the midst of raising global awareness of the corporate risks of doing business with Iran, warning hundreds of international companies that are eyeing Tehran as a new investment opportunity.

In the op-ed, Levey observed, "No one has claimed that Iran has ceased to engage in much of the same conduct for which it was sanctioned, including actively supporting terrorism and building and testing ballistic missiles. But now Washington is pushing non-U.S. banks to do what it is still illegal for American banks to do. This is a very odd position for the U.S. government to be taking."

Levey warned, "There are no assurances as to how such [business] activity [with Iran] would subsequently be viewed by U.S. regulatory and law-enforcement authorities, which might seek to take enforcement action against banks that enter the Iranian market and run afoul of complicated U.S. restrictions. The State Department neither controls nor plays any meaningful role in the enforcement decisions of these authorities."

He concluded by saying that HSBC's "decisions will be driven by the financial-crime risks and the underlying conduct. For these reasons, HSBC has no intention of doing any new business involving Iran. Governments can lift sanctions, but the private sector is still responsible for managing its own risk and no doubt will be held accountable if it falls short."


Kerry's Peculiar Message About Iran for European Banks 
Why is Washington pushing banks like mine to do what is still illegal for American banks?

By Stuart Levey
The Wall Street Journal
May 13, 2016

U.S. Secretary of State John Kerry met Thursday in London with a group of European financial institutions for a discussion about "Iranian banking matters." The meeting, which followed repeated complaints by Iranian officials that they aren't getting the benefit of the bargain under the nuclear deal, was an effort by the State Department to persuade major non-U.S. banks that doing Iran-related business is not only permitted following the relaxation of Iran sanctions, but is actually encouraged.

The irony will not be lost on these financial institutions. Most of them were similarly gathered almost 10 years ago by U.S. Treasury Secretary Henry Paulson to discuss Iranian banking matters, but that discussion focused on protecting the integrity of the global financial system against the risk posed by Iran.

In the decade that followed, the George W. Bush and Obama administrations, as well as the U.K. and other governments, the European Union and the United Nations, all imposed extensive sanctions targeting Iran's illicit and deceptive conduct. Banks were briefed extensively and repeatedly by the U.S. Treasury Department on the details of Iran's conduct. The Financial Action Task Force (FATF), the global standard-setting body for anti-money-laundering and counterterrorist financing, warned about the financial-crime risks posed by Iran as a jurisdiction. The result: Iran became a financial pariah.

No one has claimed that Iran has ceased to engage in much of the same conduct for which it was sanctioned, including actively supporting terrorism and building and testing ballistic missiles. But now Washington is pushing non-U.S. banks to do what it is still illegal for American banks to do.

This is a very odd position for the U.S. government to be taking.

On the one hand, Washington is continuing to prohibit American banks and companies from doing Iran-related business. In February, FATF reaffirmed its prior concerns about the "serious threat" Iran poses to the international financial system, urging countries to apply effective countermeasures. The U.S. Treasury Department's designation of Iran, including its central bank and financial institutions, as a primary money-laundering concern also still stands. As part of that designation, Treasury determined that "the international financial system [is] increasingly vulnerable to the risk that otherwise responsible financial institutions will unwittingly participate in Iran's illicit activities."

On the other hand, Mr. Kerry wants non-U.S. banks to do business with Iran without a U.S. repudiation of its prior statements about the associated financial-crime risks. There are no assurances as to how such activity would subsequently be viewed by U.S. regulatory and law-enforcement authorities, which might seek to take enforcement action against banks that enter the Iranian market and run afoul of complicated U.S. restrictions. The State Department neither controls nor plays any meaningful role in the enforcement decisions of these authorities.

Washington has warned repeatedly that the Islamic Revolutionary Guard Corps controls broad swaths of the Iranian economy. The IRGC remains sanctioned by both the U.S. and the EU because of the central role it plays in Iran's illicit conduct. When the U.S., EU, and U.N. removed sanctions from several hundred Iranian banks and companies, there were no assurances that the conduct of those banks and companies had changed.

This will present a challenge for European banks. HSBC is endeavoring to implement consistent and high standards across its global operations, designed to combat financial crime and prevent abuse by illicit actors. We have more work to do, but achieving that objective is one of our highest priorities. This approach is rightly expected by our regulators, including in the U.K. and the U.S.

Our decisions will be driven by the financial-crime risks and the underlying conduct. For these reasons, HSBC has no intention of doing any new business involving Iran. Governments can lift sanctions, but the private sector is still responsible for managing its own risk and no doubt will be held accountable if it falls short.

Mr. Levey is chief legal officer of HSBC Holdings, and was the undersecretary for terrorism and financial intelligence at the U.S. Treasury Department (2004-11).

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About UANI

UANI is an independent, not-for-profit, non-partisan, advocacy group founded in 2008 by Ambassador Mark D. Wallace, Ambassador Richard Holbrooke, former CIA Director Jim Woolsey, and Middle East Expert Ambassador Dennis Ross, that seeks to heighten awareness of the danger the Iranian regime poses to the world.