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Misleading Claims about U.S. Barriers to Iran-Europe Financial Ties
(Washington Institute for Near East Policy) Patrick Clawson - Iran blames the U.S. for the various problems that continue to hinder its businesses, especially in terms of accessing the international banking system. Indeed, Washington has erected significant barriers to Western banks seeking to work with Iranian banks. Yet the reasons for this practice have nothing to do with the nuclear issue. The 2010 U.S. Foreign Account Tax Compliance Act (FATCA) places tough requirements on foreign financial institutions (FFIs) to report accounts of U.S. taxpayers. FFIs that do not report face a 30% withholding tax on certain U.S.-source payments made to them. In practice, almost every financial institution in the world insists that its correspondents be FATCA-compliant because that is the only way to avoid the heavy withholding tax. The barriers to Iranian banks gaining full access to the international financial system stem from the simple fact that Iranian firms are not following the same rules applied to all other foreign banks. If Iran wants to enjoy the fruits of the nuclear deal, it must join the rest of the world in implementing the tough standards adopted over the past decade regarding tax avoidance, financial reporting, money laundering, and other issues. The writer is director of research at the Washington Institute.