Investors eager to buy assets in Iran should be aware that many sanctions relating to missile technology, human rights violations and terrorism remain in place, says a Luxembourg lawyer.
On January 16, the European Union lifted
financial sanctions that prevented foreign investors buying stocks on Iran's stock market. Several fund managers such as Turquoise Capital, Charlemagne Capital and Griffon Capital are involved
in launching Iranian equity funds to channel money into the country, which has a market capitalisation of about $90 billion.
However, it remains illegal to transfer funds to any of 87 listed individuals and one entity in Iran who were identified as responsible for grave human rights violations by the European Union in 2011, says the statement by Arendt & Medernach. Iranian persons may also be sanctioned under EU terrorism and Syria sanctions regimes, while sanctions relating to nuclear proliferation, which restrict the sale of certain metals and software, remain in place.
In addition, Iran has been criticised by the Financial Action Task Force (FATF) for inadequate measures to combat money laundering and financing of terrorism. The Commission de Surveillance du Secteur Financier, the Luxembourg regulator, requires enhanced due diligence for any business relationship and transaction as well as correspondent banking relationships with Iran.
The lawyer's statement stands as a warning that despite the opportunities offered in the Iranian market – where stocks trade at an average of less than six times earnings – the country is still something of a global outcast.
The statement adds, "it must not be forgotten that, aside from the lifting of sanctions as described above, Iran remains the only jurisdiction together with the Democratic People's Republic of Korea which has been made subject [...] to a FATF call to apply counter-measures to protect the international financial system".
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