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Taiwan's Mega-Bank to cease transactions with Iran as new US sanctions go into effect

Reuters reports that Mega International Commercial Bank will terminate a payment clearing mechanism it has with Iran after November

Taiwan's Mega-Bank to cease transactions with Iran as new US sanctions go into effect

(CNA photo)

TAIPEI (Taiwan News) – In the wake of the U.S. backing out of the Iran nuclear deal, and calling for re-imposed sanctions, a major Taiwanese bank is taking the initiative to sever financial ties with the Central Asian Islamic Republic.

According to reports, Taiwan’s Mega International Commercial Bank, or Mega Bank (兆豐銀), will terminate a “payment clearing mechanism” established between Taiwan and Iran after November of this year.

Out of concern for repercussions following the re-imposition of sanctions on Iran by the Trump administration, a representative of the bank was quoted in the Reuters report as saying the bank’s “business with Iran is too sensitive, and we should no longer get involved in it.”

A February report from Bloomberg notes that after the U.S. began heavily penalizing European banks that were assisting in Iran’s banking and energy sectors, that Iran began utilizing financial partnerships in Asia as their primary avenue to access U.S. dollars.

Banks in South Korea and Taiwan in particular “may have played a part, knowingly or otherwise, in helping Iran evade trade sanctions before the nuclear deal and turn some of its oil proceeds into U.S. dollars” with Mega Bank being mentioned in the report.

New U.S. sanctions targeting Iran went into effect at the beginning of August. Companies found to be doing business with Iran will suffer penalties and may be completely barred from operating in the U.S. according to the Trump administration.

Mega-Bank has already run afoul of U.S. authorities several times in recent history. In Jan. 2018, the U.S. Federal Reserve Board found the bank to be in violation of anti-money laundering violations related to risk management and compliance controls, slapping a fine of US$29 million on the bank.

In 2016, the bank was also penalized US$180 million by the state of New York for violations of overly-lax regulatory procedures and heightened risk exposure involving transactions in Panama, in what was the first time a Taiwanese financial institution was ever penalized by U.S. authorities.

Given Mega-Bank's record with the U.S. and the newly imposed sanctions on Iran, it seems reasonable that they would take the initiative to cease transactions involving Iran which may have potentially negative consequences for the financial institution.

Updated : 2022-05-28 09:41 GMT+08:00