US Asks Gov`t to Impose Sanctions on Iranian Bank

The U.S. is known to have presented to South Korea “records” implicating the Seoul branch of Iran’s Bank Mellat in financial transactions related to Tehran’s nuclear proliferation and terrorist activities.

In a related move, Robert Einhorn, U.S. coordinator for sanctions on North Korea and Iran, briefed the Foreign Affairs and Trade Ministry and the Strategy and Finance Ministry in Seoul about the branch’s “problematic financial transactions,” urging the imposition of sanctions including the branch’s closure.

A number of senior South Korean officials said Thursday that the U.S. delivered through diplomatic channels “some months ago” records of Mellat’s problematic activities involving nuclear proliferation and terrorism. They said the notification came “before (South Korean) financial authorities launched a regular inspection of banks in June.”

The Financial Supervisory Service inspected Mellat’s Seoul branch in June. Depending on the results of its inspection, the financial watchdog could order the branch to suspend operations or close.

The regular examination is going beyond normal inspection and focusing on verifying the U.S.-provided records, it said.

A senior Foreign Ministry official also said the inspection of the Seoul branch is aimed at confirming if it was involved in Iran’s nuclear program.

Mellat is one of Iran’s three state-run banks. Its Seoul branch, which was established in 2001, is Mellat’s sole overseas branch and has grown into the bank’s financial hub in Asia.

Another financial supervisory official said Washington asked Seoul to impose sanctions on the branch because of records of its problematic activities. The official also mentioned possible violations by the branch of South Korean laws banning money laundering and funding terrorism, hinting at the inspection finding several such violations.

Seoul also formed a task force of officials from the Strategy and Finance Ministry, the Knowledge Economy Ministry and the Financial Services Commission to minimize the impact on South Korea’s trade with Iran if Seoul imposes sanctions on Mellat.