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IRAN

Iran uses German bank to skirt sanctions

Tehran has used a small Iranian-owned bank in Germany to circumvent sanctions slapped on firms blacklisted for involvement in the Islamic republic's missile programmes, a newspaper report said Monday.

Published: 19 July 2010 08:05 CEST
Updated: 19 July 2010 13:54 CEST
Iran uses German bank to skirt sanctions
Photo: DPA

Citing unnamed Western officials, the Wall Street Journal said the European-Iranian Trade Bank AG (EIH) had done more than a billion dollars of business for firms subject to US, UN and EU sanctions.

The German finance ministry said Monday it was not aware of any such infringements but that the country’s financial regulator, Bafin, and the Bundesbank central bank were looking into the claims made by the newspaper.

“At present we are not in possession of any information … about these reported infringements. But the Bafin and the Bundesbank are currently investigating all allegations against this bank,” spokesman Michael Offer said.

Contacted by AFP, the bank, known in Germany as the Europaeisch-Iranische Handelsbank AG, declined to comment.

The UN Security Council slapped a fourth set of sanctions against Iran in June for refusing to halt its uranium enrichment work, the most sensitive part of Tehran’s atomic drive.

They authorise states to conduct high-seas inspections of vessels suspected of ferrying banned items to Iran and add 40 entities to a list of people and groups subject to travel restrictions and financial sanctions.

Meanwhile, the US administration added Iranian individuals and firms to a blacklist as part of US and European efforts to tighten the screws on Iran.

The new US sanctions target insurance companies, oil firms and shipping lines linked to Iran’s nuclear or missile programmes as well as the Islamic Revolutionary Guards Corps (IRGC) and Iran’s Defence Minister Ahmad Vahidi.

The Journal said that EIH’s business partners include units of Iran’s Defense Industries Organization, the Aerospace Industries Organization and the Iranian Revolutionary Guard Corps.

In 2009, EIH appears to have been involved in a broad sanctions-evasion scheme, conducting transactions on behalf of Iran’s Bank Sepah that has been sanctioned for facilitating Iran’s weapons trade and proliferation activities, the paper said.

EIH was founded by a group of Iranian merchants in Hamburg in 1971, according to The Journal. It operates openly under the supervision of German bank regulators, but the US Department of Treasury blacklisted it for alleged illicit business with Iran, the report noted.

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BANKING

Card over cash? Why Germany is seeing a new payment preference

Cash has long been king in Germany, with many smaller retailers refusing to join the rest of the world in adopting contactless payment systems. But card-based payments are on the rise, as recent stats about Girocard use reveal.

Published: 13 February 2024 12:31 CET
Card over cash? Why Germany is seeing a new payment preference

Germany has long been a very cash-based country, occasionally to the dismay of frustrated tourists at the Döner shop.

A few German phrases express the people’s love of physical money. There’s ‘only cash is true’ – Nur Bares ist Wahres. Or Bargeld lacht, literally meaning cash laughs, but used to imply that cash is what’s wanted, similar to ‘cash is king’ in English.

But the classic German preference for cash appears to be evolving, as the use of girocards is growing, even for small transactions.

How are girocards being used?

Girocard, an ATM and debit card service offered by German Banks, was designed to allow customers to use virtually all German ATMs and, increasingly, to make purchases at businesses.

READ ALSO: Ask an expert – Why is cash still so popular in Germany, and is it changing?

Last year, consumers in Germany used their Girocard more often than ever before for cashless payments. A total of €7.48 billion payment transactions with the plastic card were counted – 11.5 percent more than in the previous record year 2022, according to figures published by the Frankfurt-based institution Euro Card Systems.

Whether at the bakery, petrol station or supermarket, customers are increasingly pulling out their cards at the checkout, even for smaller amounts. As a result, the average amount paid with the Girocard fell from €42.34 to €40.69 within a year. 

The rise of card payments in Germany

Contactless payment, which is possible with girocards and credit cards that have an NFC chip, got a boost during the Covid pandemic, as retailers promoted it for hygiene reasons. 

But the use of card payments has continued to grow in Germany since then, boosted partly by the increasing use of girocards.

Promoting the use of girocards, some German banks have expanded their cards’ functions: Sparkassen, Volksbanken, or Raiffeisenbanken offer girocards for the digital wallet, for example.

Banks want to continue upgrading the payment card with further applications. For example, a project is being tested which would add an age verification function to girocards that would be useful when a customer is buying cigarettes.

On the retail side, it’s clear why the Girocard is preferred to other debit options.

“We see that debit cards from international providers cost up to four times more,” Ulrich Binnebößel, Head of the Payment Systems & Logistics Department at the German Retail Association (HDE) told DPA.

What’s the difference between the Girocard and other debit?

The Girocard is a strictly German phenomenon. It can be seen as the latest iteration of the EC card, which was created to consolidate payment systems following the unification of former East and West Germany.

In 1991 different debit card systems, including Eurocheque guarantee cards from former West Germany and Geldkarte ATMs from former East Germany, were unified into Eurocheque cards.

Then in 2001, the Eurocheque system was disbanded, but German banks continued to use the EC logo for “electronic cash’” cards, or EC cards. In 2007, the German Banking Industry Committee introduced Girocard as a common name for electronic cash and the German ATM network.

Girocards are only issued and accepted in Germany, so if you want to get one of your own, you’ll have to join a German bank, and shell out those notorious German banking fees.

READ ALSO: Why it’s almost impossible to find a free bank account in Germany

Alternatively, you can get by with internationally accepted debit cards provided by a bank in your home country, or otherwise by joining an app-based European banking service like N26. 

But be warned, without the Girocard in hand, at some smaller retailers you may be told, “Leider nur Bargeld oder EC-Karte.”

With reporting by DPA

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