HMT to presume denial of licences for designated Iranian banks

HM Treasury has published licensing guidance applying a presumption of denial to licence applications from designated Iranian banksGOVGOV. The guidance covers which banks fall in scope of the policy, HM Treasury's licensing approach and the presumption of denial, the activities that may be considered for licensing in exceptional circumstances, the conditions and limitations on any licences granted, and the case-by-case assessment of applications.

Designated persons under the Iran (Sanctions) Regulations 2023 are subject to an asset freeze: a person must not deal with funds or economic resources owned, held or controlled by a designated person, and must not make funds or economic resources available to or for the benefit of a designated person, where the person knows or has reasonable cause to suspect the connection. Contravention is an offence. Those prohibitions in regulations 15 to 19 are subject to Part 8 (Exceptions and licences)Legislation: they do not apply to anything done under the authority of a licence issued by the TreasuryLegislation, which may authorise acts by a particular person where the Treasury considers it appropriate for a purpose set out in Schedule 5, and every licence must specify the acts it authorises.

The new guidance sets HM Treasury's licensing posture for one class of applicant within that framework. Under the guidance's presumption-of-denial approach, the route left open is licensing of identified activities in exceptional circumstances, assessed case by caseGOV. The guidance addresses the conditions and limitations on any licences granted; under regulation 63 a Treasury licence must specify the acts it authorises and may contain conditionsLegislation.

For UK persons, financial institutions, compliance officers and lawyers dealing with designated Iranian banks, the consequence is to treat licensing as a narrow routeGOV: confirm whether the bank counterparty is in scope of the policy, frame any application around the exceptional-circumstances activities the guidance identifies, and structure transactions and timelines around the conditions and limitations that attach to any licence granted.

Legal basis: HMT Licensing Guidance on presumption of denial of licence applications for designated Iranian banks (banks in scope; licensing approach and presumption of denial; exceptional-circumstances activities; conditions and limitations; case-by-case assessment); The Iran (Sanctions) Regulations 2023, regulations 15 to 19 (asset-freeze prohibitions) and regulations 60 and 63 (Treasury licences; licences specify authorised acts).