Dubai: Sanctions on Iranian banks and financial institutions are likely to remain for much longer even if the country reaches a comprehensive deal on nuclear talks in Geneva, said Juan Zarate, senior adviser at the Centre for Strategic and International Studies and a former deputy assistant to the president and deputy national security adviser for combating terrorism.

Delivering his keynote address on the crucial role of financial integrity in maintaining national security on Sunday as part of the 40th anniversary of National Bank of Sharjah, he said it would be unrealistic to expect a sudden withdrawal of all sanctions on Iranian financial institutions even if there is credible progress in nuclear talks.

Zarate’s comments follow commitments from both US and European Union to suspend proposed new sanctions against Iran. The European Union (EU) on Monday said it would consider suspending sanctions against Iran if the country implements its commitments pertaining to the nuclear issue. US administration’s campaign for Congress to hold off on new sanctions over Iran’s nuclear programme won a key endorsement on Thursday when the chairman of the US Senate Banking Committee rejected tightening measures against Iran.

“Despite such gestures, the existing sanctions will continue. I believe it will be a very long process before all the sanctions against Iranian banking institutions are withdrawn,” said Zarate.

While many sanctions are linked to the nuclear and missile programmes, Zarate said a number of these are also linked to Iranian institutions’ alleged link to militias, illegal channeling of funds to foreign organisations and poor financial integrity of these institutions.

The recent thaw in relations between the West and Iran following Iran’s agreement with the so-called P5+1 (Britain, China, France, Germany, Russia and the United States) on an interim deal on its nuclear programme, has raised the hope among Iranian and international banks and oil companies that the economic sanctions are on its way out.

The aim of the interim agreement that was reached last month in Geneva is to freeze much of Iran’s nuclear programme for six months so that international negotiators can pursue a more comprehensive accord. The interim agreement can also be extended for an additional six months by mutual consent if negotiators need more time to pursue a follow-on agreement. There has been concern that the talks may be dragged out and that sanctions may erode as negotiators seek such an agreement.

“There are several layers of sanctions linked to illicit cross border fund flows involving both Iranian and international banks. It has been a well established fact that there is a close link between financial integrity and national security. Thus, it would be overoptimistic to expect governments withdraw all sanctions before these institutions prove their credibility,” said Zarate.

A number of global banks such as RBS, Standard Chartered and HSBC were imposed hefty fines for violating sanctions against Iran. While RBS paid $100 million in fines, Standard Chartered paid a total of $674 million and HSBC paid a record $1.9 billion to US regulators for violating sanctions against Iran and dealing with entities under US and international sanctions.

Architect of money wars

Juan Zarate is a senior adviser at the Centre for Strategic and International Studies (CSIS), the senior national security analyst for CBS News, a visiting lecturer at the Harvard Law School, and a national security and financial integrity consultant. Zarate served as deputy assistant to the president and deputy national security adviser for combating terrorism from 2005 to 2009 and was responsible for developing and implementing the US government’s counterterrorism strategy and policies related to transnational security threats. Zarate is the author of the recently published ‘Treasury’s War: The Unleashing of a New Era of Financial Warfare. ‘