Abu Dhabi, UAEMonday 6 July 2020

Afghanistan closes Iran-backed bank, citing regulatory violations

Arian Bank was one of more than 50 Iranian banks hit with US sanctions in November

Arian Bank In Afghanistan
Arian Bank In Afghanistan

Afghanistan has closed an Iran-backed bank in the country, saying it had repeatedly flouted financial regulations.

Arian Bank had its licence revoked six months after the lender was also hit with punitive US financial sanctions for its links to Iran's Islamic Revolutionary Guards Corps (IRGC).

Afghan officials said the decision against the bank was not linked to the sanctions, which were reimposed by Donald Trump in November 2018 to end Iran's “destabilising activities” in the Middle East.

Aimal Ashoor, spokesperson for the governing Central Bank of Afghanistan, would not give details of the banks alleged wrongdoing, but said Arian “was not respecting the laws and regulations of the central bank” and “not adhering to our previous decisions given out with regards to their operations”.

He also said: “Arian bank has made zero contribution to the economic development of the country. For instance, they refused to provide loans to businesses in order to further investment in Afghanistan.”

The bank on Sunday said it was Afghan rather than Iranian, though admitted it had been set up in 2004 with investments from Iran's Bank Melli and Bank Sederat. The central bank said Arian had Iranian supporters, but according to its US Treasury sanctions listing, the bank is owned or controlled by Iran's Bank Melli.

Davood Mahadian, CEO of Arian Bank, complained the Afghan allegations were full of “generalities” and said the lender had obeyed the rules since its founding.

The decision to revoke the licence was made in a mid-March central bank board meeting, Mr Ashoor said. Pakistan's Habib Bank also had its licence revoked at the same meeting.

“We are very serious about our regulations, and if other banks don’t adhere to them, they will meet similar fate," said Mr Ashoor. “There was no political aspects to our decision regarding Arian bank.”

The decision was irreversible, he said.

Arian Bank was one of more than 50 Iranian banks and their subsidiaries hit with sanctions in November 2018 when the US government re-imposed penalties lifted as part of the 2015 Iranian nuclear deal.

The US Treasury alleges Iran is using its banking system, and particularly Bank Melli, to funnel billions of dollars to the IRGC's overseas operations arm, the Quds Force.

The 2018 sanctions listings alleged the Quds Force was using Bank Melli to disperse funds to Iraqi Shia militant groups. “Since the mid-2000s, Bank Melli increasingly provided services to Iranian military-related entities as they became further involved in all aspects of the Iranian economy. Bank Melli has enabled the IRGC and its affiliates to move funds inside and outside of Iran.”

Arian Bank was added to the sanctions list “for being owned or controlled by Bank Melli,” the US Treasury said at the time.

Large numbers of private banks emerged in Afghanistan after the fall of the Taliban in 2001, hoping to cash in on what for much of last decade was a booming economy driven by aid and military spending.

Updated: May 21, 2019 09:48 AM



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