The German authorities will introduce financial rules this month that could delay or even block an attempt by the liquidity-plagued Iranian regime to seek cash parked in Germany that is irritating in relations between Washington and Berlin, The Wall Street Journal reported.
US officials said that new anti-money laundering regulations drafted by the German Central Bank could make it difficult for Iran to receive 300 million euros in cash, which is currently held by an Iranian-controlled bank in Hamburg. The central bank confirmed the new rules without explaining the reasons for the change.
The change follows US intensive lobbying for the German government and the central bank to prevent the Islamic Republic from claiming assets that deem US diplomats desperate to boost Iran's foreign exchange reserves and support its nuclear currency agreement with Iran ,
With effect from 25 August, the amended rules create new powers to block transactions if their implementation could threaten "to end important relations with central banks and financial institutions of third countries" following a copy of the rules presented by the Bundesbank on Friday.
The rules empower the Bundesbank to demand more information about suspicious payments because they are very large or can be linked to money laundering or terrorist financing.
They will also allow the Bundesbank to block such payments if they are not adequately secured or if it considers that the execution of the payment would jeopardize its other activities, including its relations with other central banks.
Teheran has applied to European-Iranian Handelsbank AG, a Hamburg-based financial institution owned by Iranian banks, including the Tehran Bank for Industry and Mining, for authorization to disburse cash. The Financial Supervisory Authority BaFin is currently examining the request.
A spokeswoman for the European-Iranian Handelsbank AG declined to comment on the customer secrets in Germany.
The Iranian Embassy in Berlin could not be reached for comment.
A spokesman for the German Ministry of Finance declined to comment on BaFin's ongoing investigation. BaFin, which is responsible for ensuring that supervised banks comply with anti-money laundering regulations, declined to comment.
A US official said that the reason why Tehran was physically trying to send cash to Iran was because it knew that the US could stop any attempt to transfer money electronically.
However, European officials denied this account, suggesting that Iran could still make a transfer, but would have to convert the amount into Iranian rials, meaning that such a deal would not support its foreign exchange reserves.
Money transfers to and from Iran can still be made by the Belgian-based Swift, a bank-owned consortium that processes millions of daily money orders until the new US sanctions come into effect in November. A Swift spokeswoman said that the company "demands clarification from both the EU and the US authorities," which happens afterwards.
The US official and another US official involved said that the German authorities were initially reluctant to intervene, adding that the US had agreed to downgrade classified material, indicating that the money was likely to be used to fund terrorism.
"We talk about at least two aircraft loads of cash." We have addressed this at all levels of government, and no doubt our friends in Germany share our concerns, "said the first US official.
Richard A. Grenell, the US Ambassador to Germany met with Johannes Geismann, Chancellor Angela Merkel Intelligence Coordinator, to lobby for cessation of payment to Iran, according to the persons familiar with the meeting. A spokesman for the Federal Government declined to comment.
Following a pushback from Berlin, the US changed course and demanded that the transaction be stopped due to money laundering concerns, US officials said.
"We were pleased to see that Bundesbank experts are rapidly changing their rules to stop suspicious cash payments of this nature," Grenell said Friday. Mr. Grenell had previously warned against paying in the German media.
A US official involved in the talks said the changes to the rules would provide legal protection to the Bundesbank to stop the payment.
"They absolutely wanted to have an airtight legal situation, they tightened their legal processes to protect themselves," the official said.
Some other banks hold Iranian assets in Germany, but the new rules would allow the Bundesbank to stop financial transactions to Tehran. US diplomats involved in the talks said that the Bundesbank was concerned about the provision of humanitarian aid and the retention of Iranian diplomatic missions, a matter that is now being discussed.