No, there haven't been any nuclear missiles launched, at least not yet. No mobilization of U.S. forces on Iran's border But on March 20, the United States launched the equivalent of an invasion of Iran, in the world of global finance.
On that date, the Financial Crimes Enforcement Network (FinCEN), issued a "financial advisory" dealing with Iran. FinCEN, a little-known bureau within the US Treasury Department warned the world's banks that if they do business with Iran, they do so at their financial peril.
But the FinCEN advisory was no less an act of war, albeit undeclared, than an outright invasion of Iranian territory. In its advisory, FinCEN states that the entire Iranian banking system—including the Iranian central bank—represents an imminent risk to the international financial system.
FinCEN bases this assessment in part on a highly creative interpretation of United Nations Security Council Resolution (UNSC) 1803 (passed on March 3, 2008). In case you missed it, CR 1803 calls on member states "to exercise vigilance over the activities of financial institutions in their territories with all banks domiciled in Iran, and their branches and subsidiaries abroad."
But the coup-de-grâce for Iran came courtesy of another obscure agency, this one housed in Paris within the spacious bowels of the Organization for Economic Cooperation and Development (OECD). This agency's name is the Financial Action Task Force (FATF). On February 28, it issued a statement reiterating its concern about continuing deficiencies in Iran's anti-money laundering and terrorist financing laws.
CR 1803 and the FATF's mild rebuke are a far cry from stating the Iranian banking system is a clear and present danger to the world economy, as FinCEN now states. But that threat assessment is now official U.S. policy.
And if a bank with substantial connections to the United States carries out the transactions, they risk retaliation under the draconian sanctions authorized in Section 311 of the USA PATRIOT Act. Section 311 allows the United States to freeze the U.S. assets of any foreign bank deemed to have correspondent banking or other substantial relationships with specific banks FinCEN identifies.
What happens next? We need look no further than the experience of North Korea, which FinCEN listed as an imminent threat to the global financial system in September 2005. I'll discuss that experience and the possible outcomes of FinCEN's declaration of financial war on Iran in tomorrow's blog.
For a detailed analysis of the U.S. and global regime of financial sanctions against Iran and North Korea, see http://japanfocus.org/products/details/2707.
Copyright © 2008 by Mark Nestmann
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