The state-owned bank took this decision after it discovered few cases where Iranian entities attempted to break the bank’s firewall by using shell entities to purchase US dollars to finance their business. Such actions, the circular said, violates the OFAC (Office of Foreign Assets Control) regulations of the US Treasury department. For any bank, such violations can expose their US operations to ‘punitive’ action from the banking regulator.
“As violations of regulatory compliance are viewed very seriously by the overseas regulators, including the OFAC authority, we reiterate that branches are not to process transactions in US dollar involving Iranian entities,” the SBI circular said.