…why has a digital currency such as e-gold, cut all operations with Iran? If they are not a bank, a Money Transfer Service or even considered at this time to be a ‘currency’ of legal type?
According to e-goldstrong.com Gold & Silver Reserve (G&SR), Inc suspended all Iranian held accounts back on 24 November 2006 without any notification. This was a surprise move to some e-gold followers and definitely a big surprise to the Iranian e-gold account holders !! There was no notice or news posted on the e-gold web disclosing ‘why’ they closed the accounts.
One Iranian e-gold holder of a closed account published this email stating he had received it from the e-gold service department (we have no confirmation from e-gold on this or any notice).
This is their answer : Your account has been frozen in compliance with the laws which govern e-gold, Ltd. and its managers. e-gold, Ltd. has taken this step in strict compliance with the law. No further information is available at this time. When additional information is available it will be provided upon account login.
On December 3rd, in the Business Section of the The Independent, a UK publication, Andrew Murray-Watson wrote an insightful article. It describes, how, ‘right-now-this-week’, the US is telling all UK banks with US subsidiaries to shut down Iran operations. It is believed that several of the larger UK banks such as RBS, HSBC and others which maintain operations across the pond have already shut down operations on behalf of customers in Iran.
A spokeswoman for the US Treasury Department confirmed that meetings had taken place with senior UK bankers. However, she stressed that the talks had been set up so that US government officials could “equip banks with information” about the dangers of allowing Iran to remain part of the international financial community. The US has imposed unilateral sanctions on Iran – because of its alleged support for international terrorism – and individuals found to have breached the economic restrictions face a fine of up to $250,000 (£126,000) and 20 years in jail.
[are you now getting the picture why e-gold dropped Iran]
It is also known that Barclays has already stopped taking any deposits on corporate accounts in transactions originating from Iran. UK banks with US operations are very concerned at facing legislative or legal troubles if they don’t stop acting on behalf of UK business customers in Iran.
Like the brief response quoted above which we believe came from e-gold’s service department, the UK banks aren’t telling the press they were given a specific reason to halt the Iran banking connection.
An AIM-listed finance director with significant operations in Iran said: “Barclays told us that it is unable to act as our bank as far as Iran is concerned. We have not been told why.” HSBC has said it will no longer accept dollar transactions from within Iran, while RBS declined to comment. A top exec at on of these banks said: “The consequences of not toeing the American line on Iran have not been made clear, but we were left in no doubt that we might not want to find out.”
Although these are UK banks and listed UK corporations, they all have substantial operations in the US, which leaves the door open to their assets and potentially vulnerable to any US action.
But why has a digital currency such as e-gold, cut all operations with Iran? If they are not a bank, a Money Transfer Service or even considered at this time to be a ‘currency’ of legal type?
The answer is simple but very serious and may be reflected in these two recent reports:
(1) FAFT’s New Payment Methods Report which by the way was published just three weeks (Nov. 2) before the Iranian e-gold accounts were halted.
The FAFT’s Report specific text is quoted below:
Digital Precious Metals
…….Typology. Digital precious metals offer the potential for anonymous cross-border funds transfers. The risk is greatest when the service provider operates offshore in a jurisdiction with a weak anti-money laundering and counter terrorist financing regime. Even when CDD is envisaged, where the customer relationship exists entirely online, the extent to which service providers attempt to verify customer identification determines the ML/TF risk relative to the other risk criteria and risk mitigation efforts.
- ML = Money Laundering
- TF = Terrorist Financing
(2) Study of New U.S. Unilateral Sanctions, 1997-2006 by Michael P. Malloy commissioned by the National Foreign Trade Council (NFTC). The new report reveals that from 2001 to 2006, the imposition of sanctions against individuals and non-governmental organizations increased, generally as a response to heightened concerns about the threat of terrorism. As quoted from the report.
List of Current U.S. Unilateral Sanctions For Iran
- Antiterrorism and Effective Death Penalty Act of 1996
- Arms Export Control Act
- Consolidated Appropriations Resolution, 2003
- Consolidated Appropriations Act, 2004
- Defense Authorization Act, 1996
- Department of Defense Appropriations Act, 1987
- Export-Import Bank Act
- Foreign Assistance Act
- Foreign Relations Authorization Act for 1994 and 1995
- Foreign Operations, Export Financing, and Related Programs Appropriations Act, 1996 & 1998
- Foreign Operations, Export Financing, and Related Programs Appropriations Act, 2002
- Foreign Operations, Export Financing, and Related Programs Appropriations Act, 2006
- Internal Revenue Code
- International Emergency Economic Powers Act
- International Security and Development Cooperation Act of 1985
- Iran and Libya Sanctions Act of 1996
- Iran and Syria Nonproliferation Act
- Iran-Iraq Arms Non-Proliferation Act of 1992 (excepting humanitarian assistance and supplies
- per Narcotics Control Trade Act (removed by EO in 1999)
- National Defense Authorization Act for 1990-91
- National Emergencies Act
- Omnibus Appropriations Act, 1997
- Supplemental Appropriations–FY 2003)
It would appear, that ANY type of financial connection with Iran via the US at this time is a severe ‘no no’. It also appears that even (perhaps?) in advance of being asked, e-gold Ltd, may already be complying with the US governments regs….or perhaps they got the same explanation from the Treasury Department as the UK bankers?
As listed above, if you are in the United States, at this time there are a good number of reasons and restrictions on any type of business with Iran, especially financial.
While their ‘reasons why’ may always remain unknown to us the general public, it looks like, e-gold made the smart move. Thumbs up mates.