Persia International's assets frozen in Dubai clampdown

The Dubai Financial Services Authority has frozen the assets of Persia International Bank's Dubai branch to comply with tougher EU sanctions on Iran.

The Dubai Financial Services Authority (DFSA) has frozen the assets of Persia International Bank's Dubai branch to comply with tougher EU sanctions on Iran. The freeze follows the addition of Persia International to the EU's list of sanctions targets on July 26 as Iran comes under greater pressure to cease a uranium enrichment programme it has pursued sporadically since the 1950s. Iran insists the nuclear programme is for peaceful purposes only.

"As part of this [EU] regulation, the assets of a number of persons, entities and bodies were frozen, including Persia International Bank," the DFSA, which regulates companies based in the Dubai International Financial Centre (DIFC), said in an alert on its website yesterday. "The asset freeze applies to [the bank's] Dubai branch, a DFSA-authorised firm." Persia International, which in 2005 was one of the first companies to set up in the DIFC, was put on the sanctions list because of its ties with Iran's Bank Mellat, which owns a 60 per cent stake.

The EU sanctions listing says Bank Mellat is a "state-owned Iranian bank" that "engages in a pattern of conduct which supports and facilitates Iran's nuclear and ballistic missile programmes". Officials at Persia International, which is based in London but has offices in Dubai and Tehran, declined to comment on the freeze. But a source at the bank in Dubai said the freeze "means we stop". "New business will not come to us and the old business can be finalised subject to the authorities' permission," the source said. The bank's business consisted mainly of financing trade, managing customer accounts, transferring cash and providing other basic financial services, the source said.

The UN Security Council in June passed a fresh round of sanctions against Iran outlining tougher restrictions on business dealings and arms trading with the government of Mahmoud Ahmadinejad, the president. The resolution also repeated a demand that Iran allow representatives of the International Atomic Energy Agency to inspect its nuclear sites. Traders in Dubai say the tightening of sanctions has already markedly curtailed the flow of goods between the UAE and Iran, jeopardising a trade estimated to be worth between US$10 billion (Dh36.73bn) and $15bn a year. The US-led sanctions have focused on limiting the activities of Iranian banks and insurers that have facilitated that trade for decades.Large shipments between the UAE and Iran typically cannot be organised and moved without financing and insurance, which ensures sellers get paid and buyers get their goods on time and intact.

As restrictions on financial dealings with Iran are tightened, authorities in the UAE have been monitoring shipments to the Gulf country more closely for evidence of sanctions violations and dealings with entities controlled by Iran's powerful Revolutionary Guard Corps. The UAE Central Bank in June froze 41 bank accounts of companies suspected of doing business with individuals and companies targeted by sanctions, and shipments of petroleum to Iran have come under increased scrutiny at UAE ports, Reuters reported this week.

Morteza Masoumzadeh, the head of the Iranian Business Council in Dubai, said Persia International Bank was a small player in the UAE's trade finance market. While traders continued to suffer because of the sanctions, the freeze on the bank would not significantly curtail already declining shipments to Iran, he said. "They are a very small bank," he said. "They are not a big operator, and they are not comparable with Bank Melli or Bank Saderat."

The DFSA's freeze came at the behest of the UKtreasury, which is overseeing a list of UK companies and individuals subject to sanctions, according to the DFSA's statement. "This is an EU decision, which automatically triggers effect in UK law and provides penalties," a spokesman for the UK treasury said. The DFSA declined to comment. [e-mail]