LONDON – The use of EU powers to ban banks in the block of US sanctions against Iran would be "limited" given global financial reach, EU finance director said Thursday.
U.S. President Donald Trump decided on May 8 to resume sanctions on Iran, including sanctions against the Iranian oil sector and transactions with its central bank.
European Commission Vice-President Valdis Dombrovskis said the EU executive assessed the economic impact and potential impact of US sanctions on Iran, including its impact on EU companies and the financial sector.
The EU wants to save the Iranian nuclear program, which offers the Islamic Republic the liberation of economic sanctions in return for curtailing its nuclear program and is an important element of international security for Europe.
The EU's Blocking Statute prohibits any EU company from complying with US sanctions and does not recognize court sentences enforcing American penalties.
But it has never been used and is seen by European governments as a political weapon rather than an ordinance because its rules are vague, difficult to enforce, and serve primarily as a warning to the United States.
"In fact, given the international character of the banking system, and in particular the exposure of large systemic banks to the US financial system and US dollar transactions, the EU Blocking Regulation could have limited effect there," Dombrovskis told the European Parliament.
"There are some difficult issues we need to address and we are working to address these issues accurately," Dombrovskis said.
He also told Parliament that it was important to have a "credible and coordinated" anti-money laundering system at EU level without waiting for the US, Dombrovskis added.
Earlier this year, the United States accused Latvia's third-largest bank, ABLV, money laundering and the lifting of sanctions against North Korea, which resulted in its closure, triggering the worst financial crisis in the Baltics in a decade.
It raises questions about Europe's ability to monitor money laundering in its own area of responsibility.