Financial services firms and other businesses stepped up both domestically and abroad in the wake of the COVID-19 crisis, but they’ve been reluctant to provide humanitarian aid to Iran for fear of violating US sanctions. To address this concern, the US government worked with Switzerland to create and implement the Swiss Humanitarian Trade Agreement (SHTA), allowing financial institutions to participate in relief efforts by meeting stringent criteria. Switzerland has represented US interests in Iran, as the adversaries do not have direct ties.
The SHTA could provide a lifeline to Iran’s people during this crisis. By adopting SHTA, your firm can enhance its leadership credentials while strengthening its global capabilities. To qualify for the exemptions and comply with the SHTA, you’ll need to implement more stringent due-diligence and reporting programs. Doing this could enhance your relationships with regulators — and the benefits from this may outweigh the accompanying increased scrutiny from oversight bodies.
Banking and capital markets may benefit most from adopting SHTA. While most global financial institutions have almost completely ceased doing business in Iran, Treasury’s assurances may prompt some to reconsider. Other sectors that could benefit include transportation and logistics, pharmaceuticals and medical devices, and agriculture.
SHTA allows firms to conduct some transactions with Iran, but significant sanctions risk remains. Even an unintentional breach could result in harsh penalties and negative publicity. To mitigate this, you’ll want to evaluate your firm’s risk appetite and enhance its due-diligence and reporting programs.
SHTA presents attractive opportunities both reputationally for doing the right thing and strategically by setting a precedent for navigating complex sanctions issues. PwC’s Financial crimes observer offers more insight into industries affected by SHTA and advice on what financial institutions should do next.
Global Financial Crimes Leader, PwC US
Financial Crimes Unit Leader, PwC US
Financial Crimes Unit, AML Leader, PwC US