Iran’s Central Bank Vows Legal Action if South Korea Doesn't Unlock Funds Frozen Due to US Sanctions

While some of the funds were used to pay for humanitarian goods for the Islamic Republic, as these are not subject to sanctions, the future of Iran’s billions of dollars in South Korean banks remains uncertain.

Head of the Iranian Central Bank Abdolnaser Hemmati has condemned the continued freeze on the country's oil funds in South Korean banks and has threatened with legal action if the issue remains unresolved in the near future.

"It is appalling to see that (South) Korean banks have conveniently neglected their obligations, common international financial agreements, and decided to play politics and follow illegal and unilateral US sanctions", Hemmati said.

Iran's Foreign Ministry previously revealed that South Korean banks currently hold around $7 billion owed to Iran for oil shipments in funds that have been frozen due to American economic sanctions. $500,000 from these funds were recently used to pay for humanitarian cargo for the Islamic Republic, while $2 million more will be used to pay for COVID-19 test kits, since Washington generally allows the sale of humanitarian goods without complications in the form of sanctions.

"We have been consulting with the US, Iran and the banks holding the frozen funds, seeking to make progress on this issue. So far, we’ve been able to utilise some of the funds to expand humanitarian trade with Iran, and will continue to seek ways to increase such exchanges", a representative of the South Korean Foreign Ministry, Koh Kyung-sok, said.

Additionally, the two countries are working on a special trade vehicle similar to the INSTEX mechanism, developed by the EU, in order to allow carrying out some transactions without the threat of economic sanctions, Hemmati revealed.

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Iran has seen its funds frozen in some countries that have chosen to comply with the unilateral sanctions that Washington imposed on Tehran in 2018 following its withdrawal from the Joint Comprehensive Plan of Action (JCPOA). The US said it would only lift sanctions when it is confident that Iran is not developing nuclear weapons and when its government changes its regional policies. Tehran vehemently denies Washington's allegations that it is pursuing a military nuclear programme and has argued that it will only be ready to negotiate a new deal with the US after the sanctions are lifted.

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