On Wednesday the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) imposed sanctions on Informatics Services Corporation (ISC). The company is a subsidiary of the Central Bank of Iran and developed its central bank digital currency (CBDC) and other payment systems.
In addition to the ISC, two firms in Dubai and one in Turkey are also sanctioned for procuring technology on behalf of ISC. The UAE based entities are Advance Banking Solution Trading and Freedom Star General Trading. OFAC says ISC procured information security items subject to national security and anti-terrorism controls.
“The Central Bank of Iran has played a critical role in providing financial support to the IRGC-QF (Revolutionary Guard-Qods Force) and Hizballah, two key actors intent on further destabilizing the Middle East,” said Brian E. Nelson, Under Secretary of the Treasury for Terrorism and Financial Intelligence.
CBDC is one of the tools that Iran plans to use to circumvent U.S. sanctions. The country joined the BRICS intergovernmental organization this year. One of its first moves was to encourage cooperation around payment systems, digital currencies and common currencies.
At the same meeting, Russia emphasized the conclusion from the previous BRICS meeting to promote the use of local currencies rather than the U.S. dollar.
Last January, there were Russian reports that Iran and Russia might use a gold-backed currency to trade with each other. At the time, we noted that Russia’s regulation on Digital Financial Assets (tokenized real world assets) prohibited using DFAs for payments. However, in April Russia published a draft law to allow DFAs to be used for cross border payments.
Meanwhile, Iran started piloting its CBDC in 2022. It reportedly uses Hyperledger Fabric.
