WASHINGTON — Behind the tough words this week from Secretary of State Hillary Clinton and Treasury Secretary Timothy Geithner, the U.S. government is quietly arguing that its new economic sanctions against Iran will not have much impact on American banks that are on the front lines of the fight. 

The sanctions will add another layer of requirements for U.S. banks, beyond those imposed in rules issued last month, in the effort to stop foreign banks from helping Iranian institutions access the international financial system. 

But in a document released Monday, the U.S. government stated that it does not expect the new requirements to add a significant additional burden to U.S. financial institutions. 

Banks in the United States have long been barred from doing business directly with Iranian banks. U.S. institutions also already have certain responsibilities for helping to determine whether certain other foreign banks, which maintain correspondent banking relationships with U.S. institutions, are using those accounts to assist Iran. 

But the government now wants U.S. banks, in addition to their existing responsibilities, to take what officials call "reasonable steps" to identify any use of foreign correspondent accounts by Iranian banks. U.S. banks' responsibilities will primarily be focused on searching transactional records they normally maintain. 

In addition, when a U.S. bank knows or suspects that one of its foreign correspondent banks is doing business with an Iranian bank, it will be required to send a notice to the foreign correspondent bank stating that the Iranian bank is not allowed to have access to the account with the U.S. bank. 

According to the proposal issued Monday, there is only a minimum burden associated with sending a one-time notice to certain foreign banks, and U.S. banks should be able to easily adapt software they are already using to comply with the monitoring requirement. 

"Thus, the special due diligence that would be required by this rulemaking is not expected to impose a significant additional burden upon U.S. financial institutions," the document states. 

Robert Rowe, vice president and senior counsel at the American Bankers Association, did not dispute that conclusion, while reserving judgment about how U.S. banks will be affected by the new sanctions against Iran. 

"They've been high on the list of sanctioned entities. So it's a little early to try to figure out the practical implications for the banks," Rowe said. 

U.S. officials suggested that the value of the new sanctions, at least in the financial sector, lies more in the strong message they send to foreign banks than in the actions American financial institutions will take to implement them. 

"If you are a financial institution anywhere in the world and you engage in any transaction involving Iran's central bank or any other Iranian bank operating inside or outside Iran, then you are at risk of supporting Iran's illicit activities . its pursuit of nuclear weapons, its support for terrorism, and its efforts to deceive responsible financial institutions and to evade sanctions," Geithner said. "Any and every financial transaction with Iran poses grave risk of supporting those activities, so financial institutions around the world should think hard about the risks of doing business with Iran." 

During a conference call with reporters, a senior Obama administration official said, "I think the impact is going to be much, much greater with respect to how the international financial community reacts to this act."

"And we've seen in the past that when we do use this action," he continued, referring to a rarely used legal designation that the United States applied to Iran on Monday, "foreign financial institutions take it very seriously. And I think it's going to create a serious chilling effect on the willingness of any foreign financial institution anywhere in the world to do business - to continue to do business with Iran."

The U.S. actions on Monday, which include steps to target Iran's petro-chemical industry, were accompanied by similar steps by the United Kingdom and Canada. They follow a report by the International Atomic Energy Agency concluding that Iran appears to have worked on nuclear weapons, as well as U.S. allegations that Iranian officials plotted to assassinate a Saudi ambassador in Washington, D.C. The new U.S. sanctions also come amid calls by members of Congress to further squeeze Iran.

U.S. officials said Monday that sanctions are successfully hobbling the Iranian economy, an argument supported by recent comments from Iranian President Mahmoud Ahmadinejad.

The new measures add to a rapidly shifting landscape for U.S. banks as they seek to comply with economic sanctions against Iran. Banks have had to step up their compliance efforts in response to the Comprehensive Iran Sanctions, Accountability and Divestment Act of 2010, which put a greater burden on U.S. institutions regarding the business of their foreign counterparts.

"Know-your-customer has been a basic tenet of a good anti-money laundering program for a very, very long time," said John Atkinson, director of regulatory risk consulting at Protiviti Inc. "But there's never been an explicit requirement to know your customers' customers."

International sanctions are an area where bankers usually refrain from complaining about the burdens of regulation, given the high stakes for U.S. national security. Last week at a conference in Washington for bank employees who specialize in anti-money laundering efforts, speakers were careful to emphasize that U.S. banks are allies with law-enforcement officials.

But there was also a message that banks are feeling overwhelmed by their expanding role in the fight against money laundering, even if that point was sometimes conveyed by metaphor.

"Go through an airport, and go through a TSA line, and you wonder, are these people looking for substance, or are they just looking to check a box?" Frank Keating, president of the American Bankers Association, said in a speech. "The longer the checklist, I think, the less helpful for law enforcement."

Richard Riese, senior vice president at the American Bankers Association's Center for Regulatory Compliance, used his own analogy to answer a question about Iran sanctions.

"In the environmental area, you take on certain costs, you get 90-95% pollution abatement. But everybody knows the next 5% will cost a huge amount," Riese said. "You can get to certain levels of protection that are functional and provide value, but if you keep pushing to the zero-tolerance level, the costs and the impact go through the roof."

U.S. banks that do business with foreign banks are being warned to be wary of transactions involving Venezuela, Bolivia, and Ecuador, nations that the U.S. government has identified as having connections with Iran. Banks are also on the lookout for transactions involving the Islamic Republic of Iran Shipping Lines, which has been changing the names of its ships and establishing shell companies in an effort to evade sanctions.

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