Iran's central bank governor, in a rare visit to Washington, demanded the Obama administration take more steps to facilitate his country's banking transactions world-wide and warned the landmark nuclear agreement reached last year could be at risk if the U.S. doesn't act.

Iranian banks have been unable to process international money transfers and finance trade freely in the months since the deal went into effect in January. Iran also has faced obstacles in repatriating tens of billions of dollars of its oil revenues that were frozen in overseas accounts under U.S. sanctions. Some Western banks have acknowledged avoiding dealings with Iran due to fears of crossing the U.S. Treasury.

The troubles have jeopardized the big economic dividend the government hoped to secure from the nuclear deal Iran and six world powers struck last July, and underscored the West's lingering suspicion toward Tehran.

Iran agreed to scale back its nuclear program in exchange for relief from international sanctions that hurt its economy.

"They need to do whatever is needed to honor their commitments," Iran's central bank governor Valiollah Seif said during a 90-minute presentation that came on the sidelines of the International Monetary Fund and World Bank spring meetings in Washington on Friday. "Otherwise, the [Iran nuclear deal] breaks up under its own terms," he said.

Mr. Seif's comments came a day after a face-to-face meeting with U.S. Treasury Secretary Jacob Lew that was largely focused on Iranian demands for more sanctions relief in the wake of the landmark nuclear accord, according to Iranian and U.S. officials.

The U.S. and other world powers agreed to lift most sanctions on Iran as part of the deal. But the Treasury still bars Iran from using the U.S. financial system or the American dollar.

In recent weeks, the Obama administration has been having internal deliberations about facilitating Iran trade according to U.S. officials. This has included finding ways to allow Iran to conduct dollarized trade without directly accessing the U.S. financial system. Tehran's ability to repatriate its oil revenues is seen as limited without any ability to access dollars.

Iran's chief banker specifically said Iranian businesses should be allowed to conduct U.S. dollar transactions and be allowed into the American financial system. "We want both sides of this agreement, especially the U.S., to take the required measures to remove the obstacles," Mr. Seif said.

The White House, asked Friday about the Iranian official's comments, said the U.S. is abiding by the nuclear agreement, known as the Joint Comprehensive Plan of Action.

"The United States is fulfilling our commitments to the JCPOA, consistent with the letter and spirit of that agreement," said Josh Earnest, the White House spokesman.

He said Iran has lived up to commitments to reduce its nuclear stockpile, take centrifuges out of operation and to take other steps. "And as a result, the United States, along with the rest of the international community is committed to living up to our end of the bargain," he said.

The Iranian's appearance stoked an already heated debate in Washington about the future of U.S.-Iranian relations and the amount of sanctions relief that should be afforded Tehran.

Some Republicans criticized the White House for allowing Mr. Seif to visit Washington, noting that he had run Iranian banks that previously were sanctioned for facilitating Iran's nuclear program and allegedly supporting international terrorist groups.

Iran's continued problems accessing the financial system—which severely limits the ability of Iranian banks to move money freely around the world—are one example of how sanctions-era distrust has eroded Iranian hopes for a quick economic boost from a deal that signaled the country's rapprochement with the West.

A high-ranking Iranian banker who asked not to be named said large international banks had even begun warning other lenders that they would face additional scrutiny if they did any deals there.

"They are threatening them, saying that it's going to take a bit longer to do things, to clear the accounts or to record the transactions, and because of that banks are getting nervous," the banker said.

The wariness toward Iran threatens to stymie the nation's trade worth tens of billions of dollars annually. Banks play an important role in larger import and export deals by ensuring payments are made for goods once their delivery is verified.

Iran exported $48.9 billion worth of goods and services in 2013, according to United Nations figures, mostly crude oil it sent to Asia. It imported about the same amount.

Western officials downplay the idea that the U.S. is trying to discourage dealings with Iran. Chris Backemeyer, a top sanctions policy official at the State Department, said a post-sanctions boost in trade was to be expected, and that the U.S. didn't have anything against it.

Still, significant U.S. sanctions are still in place over the country's human rights record.

Adam Szubin, the Treasury's acting undersecretary, said Wednesday that it was up to Iran to create a welcoming business environment and that the nuclear deal was "an international arrangement, not a cashier's check."

Javad Zarif, Iran's foreign minister, called in February for the U.S. to declare explicitly that banks could do business with Iran without fear. Not doing so would amount to a problem in the implementation of the deal, he said.

In the absence of such a statement, many banks are staying on the sidelines even as Iran's financial institutions get reconnected to the Belgium-based SWIFT interbank messaging service.

So far, the EU has helped 33 Iranian banks get back on SWIFT, a secure messaging network that is essential for processing money transfers.

But the big banks haven't shaken the stigma of large fines doled out during the sanctions era. BNP Paribas, UBS and HSBC were among several banks that in the past have paid more than $1 billion to settle U.S. claims that they violated sanctions against Iran and other countries.

Mostafa Rouy, a board member and head of international affairs at the Tehran-based Bank Pasargad, said he attempted to make two international bank transfers after the implementation of the nuclear deal in January. He tried to move funds between the bank's own accounts with correspondent institutions not subject to U.S. restrictions, but was denied both times.

He was told the sending bank had a separate euro clearing account and didn't want to jeopardize its relationships by having Iranian connections, he said.

"They said, 'sorry, we are still considering our internal policies in order to make sure everything is in order,' " he said.

European officials say Iranian complaints about access to the global banking system are overblown.

None of the banking cases Iranian officials have brought to the attention of European counterparts showed any breach of the nuclear deal by the U.S., one official said. Iranian moves to combat money-laundering and terrorism financing hadn't been sufficient to allay European authorities' concerns about a wholesale reconnection of its banks to the global financial system, the official added.

Laurence Norman in Brussels contributed to this article.

Write to Jay Solomon at jay.solomon@wsj.com, Asa Fitch at asa.fitch@wsj.com and Benoit Faucon at benoit.faucon@wsj.com

 

(END) Dow Jones Newswires

April 15, 2016 15:05 ET (19:05 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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