Counter-Terrorism Act (Financial Order)

Mark Hoban Excerpts

Monday 21st November 2011 Written Statements

[The Financial Secretary to the Treasury (Mr Mark Hoban)]

The Government have today laid before the House an order under the Counter-Terrorism Act 2008 containing a direction requiring UK credit and financial institutions to cease all business with banks incorporated in Iran and their branches and subsidiaries. This means that UK credit and financial institutions are prohibited from entering into transactions or business relationships with these entities and continuing existing transactions and business relationships with them, unless licensed to do so by HM Treasury.

The Treasury is satisfied, as required by the Act, that activity in Iran that facilitates the development or production of nuclear weapons poses a significant risk to the national interests of the United Kingdom. The November board report of the International Atomic Energy Agency (the UN body charged with monitoring Iran’s activities and ensuring that no nuclear material is being diverted to non-civilian applications) highlights the reasons for the Government’s serious and ongoing concerns about Iran’s nuclear activities. The IAEA report sets out the agency’s concerns about

“possible military dimensions to Iran’s nuclear programme”.



In particular, the information available to the agency indicates that Iran has carried out the activities that are relevant to the development of a nuclear explosive device. The report notes that

“while some of the activities identified have civilian as well as military applications, others are specific to nuclear weapons”.

The Government view these developments with the utmost concern.

The case for action is underlined by the recent calls from the Financial Action Task Force for countries to apply effective countermeasures to protect their financial sectors from money laundering and financing of terrorism risks emanating from Iran. The FATF (the global standard setting body for anti-money laundering and combating the financing of terrorism) renewed these calls with urgency on 28 October 2011 and noted its particular and exceptional concern about Iran’s failure to address the risk of terrorist financing and the serious threat this poses to the integrity of the international financial system.

In light of these risks to the UK’s national interests, I consider it a proportionate response to require the UK financial sector to cease all business relationships and transactions with Iranian banks and their branches and subsidiaries, including the Central Bank of Iran. Iranian banks play a crucial role in providing financial services to individuals and entities within Iran’s nuclear and ballistic missile programmes as companies carrying out proliferation activities will typically require banking services. Any Iranian bank is exposed to the risk of being used by proliferators in Iran’s nuclear and ballistic missile programmes. Experience under existing UN and EU financial sanctions against Iran demonstrates that targeting individual Iranian banks is not sufficient. Once one bank is targeted, a new one can step into its place.

As they relate to an important global financial centre, UK restrictions will have an impact on the options available to Iranian banks. This will make it more difficult for Iranian banks to utilise the international financial system in support of proliferation-sensitive activities. It will protect the UK financial sector from the risk of unwittingly being used to facilitate activities which support Iran’s nuclear and ballistic missile programmes. UK action of this nature signals to Iran and the international community that we consider this risk to be significant.

These actions are being taken in co-ordination with other partner countries, who will make their own announcements separately.