Italian case reaffirms sanctioned Iranian financial institution’s right to EU-based banking services
On 22 December 2022, the civil court in Milan (Tribunale di Milano, Settima Sezione Civile) ordered a local bank to continue its banking services with Europaisch-Iranische Handelsbank Ag (EIH), a company controlled by partners in Iran.
The court found that terminating these services would constitute an infringement of the Blocking Statute and issued a provisional injunction against the bank to prevent the termination of these services, according to World ECR, a sanctions law-focused periodical.Â
Public sources do not list the names of these entities. Tehran Bureau found the names of the involved parties by contacting the Italian-Iranian Chamber of Commerce (Camera di Commercio e Industria Italo-Iraniana). The text of the judgment appears to be classified.
Nexi Payments s. P. a. is a financial services provider based in Italy, with a branch in Germany.
Europaisch-Iranische Handelsbank Ag also in 2015 unsuccessfully appealed an asset freezing based on the sanctioning of its parent companies in Iran, Bank Saderat and Bank Melli.Â
EIH Overview
Described by sanctions watchdogs as a conduit for financial transactions between the EU and Iran, EIH has been at the center of several legal disputes, including EIH v. Nexi Payments Spa in Italy in 2022 and Europäisch-Iranische Handelsbank v. Council in 2015.Â
The U.S. Treasury’s Office of Foreign Assets Control (OFAC) reports that EIH has helped several Iranian banks find alternative ways to complete transactions blocked by EU sanctions. EIH has acted as the advising and intermediary bank in deals with sanctioned Iranian entities. For instance, in August 2010, EIH froze the accounts of EU-sanctioned banks Saderat Iran and Bank Mellat at its Hamburg branch but then resumed Euro-denominated transactions for these banks by using accounts held with an unsanctioned Iranian bank.
Sanctions watchdogs further allege that in August 2010, EIH was setting up a system to enable payments to reach Bank Saderat London and Future Bank Bahrain while avoiding EU sanctions. By October 2010, EIH continued facilitating payments for EU-sanctioned Iranian banks, including Bank Mellat and Bank Saderat, using Iran’s Bank of Industry and Mine as a channel. In 2009, EIH helped Post Bank in a sanctions evasion scheme by handling transactions for UN-sanctioned Bank Sepah. Bank Mellat is also a parent bank of EIH.