Trump Plans to Roll Back Decades of Iran Sanctions; Banking Compliance Risks Keep Markets on the Sidelines
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The Trump administration is pushing to lift all U.S. sanctions on Iran as part of a broader framework to end hostilities and open the Strait of Hormuz, but bank compliance concerns and a fight over where the money goes keep this memorandum far from reality.
What did the deal actually sign away?
On June 17, Trump and Iranian President Pezeshkian signed a 14-point memorandum of understanding, pledging to remove all U.S. sanctions on Iran on an "agreed timeline."
Treasury then issued "General License X," permitting "dollar-denominated funds" for Iranian oil sales. This means → Washington is formally loosening the core policy that locked Tehran out of the dollar system.
Treasury Secretary Scott Bessent said Iran will invoice oil in U.S. dollars. In plain terms = the U.S. is using "we'll let you back into the dollar" as its main bargaining chip for nuclear and military concessions.
The deal is signed — why won't banks move?
Sanctions lawyer Michael Huneke noted: financial institutions are typically more cautious than their clients when sanctions ease — and this time will be no different.
Adam Smith, former senior adviser at OFAC — the Treasury office that enforces sanctions — said banks need to be "one hundred percent certain" they are in compliance. Finding one willing to process these deals may prove very difficult.
This reflects a fundamental contradiction: politics says "open up," but legal risk has not been cleared. BNP Paribas paid nearly $1 billion in 2014 for violating Iran and Sudan sanctions — a precedent the entire industry still remembers.
What signal are oil companies waiting for?
The oil industry plans to ask Treasury for a "comfort letter" — an official written confirmation that a specific transaction will not trigger enforcement — similar to guidance issued for Venezuela operations after the U.S. captured former President Maduro in January.
This means → companies do not trust verbal assurances; they want documented legal cover before compliance departments will sign off.
In plain terms = the 60-day waiver opens a window, but without formal guidance, no compliance officer will approve a deal.
Once the oil is sold, where does the money go?
Hawks inside the administration are pushing to route Iranian oil revenue into U.S.-controlled escrow accounts, preventing funds from reaching Hezbollah or Hamas.
Trump himself has hinted the money might be restricted to buying U.S. agricultural products — but none of these terms appear in the memorandum, and Iran has publicly mocked and rejected them.
Sources say the "frozen funds for U.S. farm goods" idea was first raised about a month ago in an Oval Office meeting involving Trump, Vice President Vance, and Iran advisers — designed as a political firewall against Republican attacks echoing the Obama-era "pallets of cash" controversy.
What is the biggest structural barrier?
Decades of sanctions imposed by successive administrations and Congress have created a layered system deliberately designed to resist wholesale removal.
The 2015 Iran Nuclear Agreement Review Act explicitly requires congressional review and approval of any nuclear deal. This means → even if the White House wants full relief, Congress holds a veto.
On June 27, Trump accused Iran of violating a fragile ceasefire and U.S. Central Command launched fresh strikes on Iranian targets. This reflects how fragile the framework is — any single military incident could reset the entire deal to zero.
Content is for reference only, not financial advice.