May 17, 2013 / 5:24 PM / 7 years ago

U.S. lifts sanctions on Iraq bank that had links to Iran

An Iranian flag flutters in front of the head office of the Export Development Bank of Iran (EDBI) in Tehran November 9, 2008. REUTERS/Morteza Nikoubazl

WASHINGTON (Reuters) - The United States said on Friday it had allowed an Iraqi bank to again conduct business with the U.S. financial system after the bank showed it was no longer helping Iran evade financial sanctions.

Iraq’s Elaf Islamic Bank BELF.ISX was first blacklisted by the United States last year for knowingly doing business with the Export Development Bank of Iran (EDBI), an Iranian state bank the United States accuses of being a “proliferator” of weapons of mass destruction.

Getting sanctioned by the United States forces foreign banks to make a choice: cut ties to blacklisted Iranian institutions or be cut off from the United States.

Washington has imposed a series of financial and trade sanctions against Iran to pressure it to curb its nuclear program, which the United States suspects is aimed at developing atom bombs. Iran says the program is for peaceful purposes.

The U.S. Treasury Department said the Elaf Islamic Bank had to complete several steps to regain its access to the U.S. financial system, including freezing the accounts of EDBI and reducing its business with the Iranian financial sector.

“Today we welcome Elaf Islamic Bank back into the U.S. financial system, and we urge other designated individuals and entities around the world to follow its positive example,” Treasury Undersecretary for Terrorism and Financial Intelligence David Cohen said in a statement.

“As today’s de-listing demonstrates, our sanctions are flexible and can be lifted if the conduct that led to the sanction terminates,” he said.

A 2010 act allows the United States to sanction foreign banks that do business with Iranian banks, companies or people that are banned from the U.S. financial system. This is the first time the United States has lifted sanctions under that law.

Reporting by Anna Yukhananov; Editing by Eric Beech

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