Despite U.S. secondary sanctions cutting Iranian banks off from global finance, Bank Saman maintains branches in Germany and Italy, underscoring the EU’s divergent approach.
When the US withdrew from the nuclear deal in 2018, European officials were faced with a conundrum: follow the US or chart their own perilous path? On one hand, Europe wanted to uphold its commitment to the agreement, which was designed to ensure that Iran’s nuclear program would be curbed in exchange for sanctions relief. On the other, European businesses were faced with the practical realities of US sanctions and their potential fallout across the market. Ultimately, even as the US re-imposed sanctions on Iran, the EU refused to mirror the US measures, leaving the door open for banks like Saman to continue operating.
However, that didn’t mean things were easy for Bank Saman. While Europe refrained from imposing sanctions on Iranian banks, individual European countries and businesses faced significant pressure to comply with US measures as Washington lobbied firms to exit Iran and wind down trade. The EU’s reluctance to fully sever ties with Iran therefore created a patchwork of approaches across different European nations, with some countries more willing to engage with Iranian financial institutions than others, and financial markets following Washington’s line more than Brussels.
Earlier, between 2016-2018 and before the Transatlantic cleavage, Bank Saman found itself operating in a brief window of relative stability. With many sanctions lifted, the bank, like several of its Iranian counterparts, looked to capitalize on new opportunities for growth and re-connect Iran to the world. European countries, eager to reintegrate Iran into the global economic fold and profit from new opportunities, attempted to facilitate trade and financial ties that had been severely restricted in the past.
Several Iranian banks attempted to reform themselves to meet international compliance expectations, however these reforms faced irresistible structural and systemic challenges. The rapid adoption of regulatory technology (reg-tech) and spread of financial crime compliance standards during the previous decade heightened the difficulty of Iran’s reintegration, as new compliance systems has been shaped and adopted without Iranian participation. Additionally, rising compliance costs and the risk of personal liability deterred global banks from transacting with Iran, deepening its financial isolation.
In this compliance zeitgeist, Bank Saman sought to position itself internationally as Iran’s most compliant bank. It voluntarily and proactively implemented international compliance norms, including foreign sanctions lists, despite potential Iranian legal prohibitions. This strategic move aimed to reduce the stigma surrounding Iranian banks and attract European correspondent relationships, particularly with Italian and German institutions. By engaging foreign consultants and embedding global best practices, Saman wished to signal its commitment to compliance beyond Iran’s local regulatory requirements, thereby demonstrating a unique selling point: being fully compliant with international compliance norms and standards.
Ultimately, all this effort, both time and money, was for naught as Saman was sanctioned anyway. This highlights the paradox of Iranian banking reform more broadly – despite embedding stringent compliance measures, international reintegration is constrained more by geopolitics than technical compliance, an inescapable fate determined by its government’s behavior. This re-imposition of US sanctions from 2018 onwards soon closed the window of opportunity, developing into a significant challenge for Bank Saman to remain connected to the wider global banking network after investing significantly in foreign banking licenses in Europe and expensive advisors. Iranian hopes that the lifting of sanctions would lead to a lasting integration of its banks into the international financial system dissipated as the regulatory landscape became more hostile and doors closed.
Bank Saman, like others that tried to meet the expectations of Western banks, was forced to adapt, leaning heavily on its European branches while strengthening its domestic operations in Iran. And while the bank still operates in some European markets, it was relegated to serving Iranian clients who need access to international financial services, in addition to facilitating select trade with Europe. The geopolitical tensions surrounding the bank’s activities have added a layer of complexity to its operations, leaving it to carefully navigate a web of restrictions and regulations.
The case of Bank Saman encapsulates the ongoing geopolitical tug-of-war between the US and the EU over Iran’s financial future. The EU’s decision to allow Iranian banks like Saman to continue operating, despite US sanctions and despite Iran’s support for Russia, highlights the rift between Europe and the United States on how best to deal with Iran. For now, this looks set to continue under the new Trump administration, which is poised to reignite its Maximum Pressure campaign, again targeting all Iranian financial institutions – including Bank Saman, to further isolate it internationally. So, as the political landscape evolves, the ongoing operations of banks like Saman in Europe will offer a glimpse into how international actors balance competing interests and how financial institutions navigate the shifting currents of global diplomacy.