What is INSTEX, the Instrument iN Support of Trade Exchanges, and who are its shareholders?
INSTEX SAS (société par actions simplifiée) was founded in 2019 as a Paris-based company governed by French law. As of September 2020, it has nine sovereign owners:
- Republic of France
- Federal Republic of Germany
- United Kingdom of Great Britain and Northern Ireland
- Kingdom of Belgium
- Kingdom of Denmark
- Kingdom of the Netherlands
- Kingdom of Norway
- Republic of Finland
- Kingdom of Sweden
INSTEX is expecting more sovereign states to join in the future.
What is the purpose of INSTEX?
The goal of INSTEX is to facilitate legitimate trade with Iran in light of challenges faced by European market participants who wish to continue trading in and with Iran in an unobstructed manner. At present, INSTEX focuses on humanitarian trade between Europe and Iran, broadly encompassing food, agricultural equipment, medicine, and medical supplies as well as items required to produce, create, package, transport, preserve, and ensure humanitarian goods arrive with their end-users in a satisfactory manner.
How does INSTEX operate?
INSTEX functions as a clearing house that facilitates the exchange of payment transactions between Europe and Iran. In coordination with our Iranian counterpart, the Special Trade and Finance Instrument (STFI), INSTEX settles mutual claims and liabilities by means of clearing debts (forfaiting) within a ‘closed loop’ financial system that minimises cross-border payments between Europe and Iran. Direct payments between Iran and Europe occur to the extent that periodic imbalances arise during our imports-exports. INSTEX and STFI are exploring solutions to allow for the further expansion of trade activity.
INSTEX Compliance Standards
In line with financial crime compliance best practice, INSTEX and STFI conduct Know Your Customer (KYC), sanctions, and anti-money laundering (AML) screening of clients and third parties involved, while staying outside of the trade relationship between exporter and importer. The key elements of INSTEX’s sanctions compliance programme are:
- INSTEX sanctions compliance measures are detailed in our Sanctions and sensitive countries and parties policy
- INSTEX abides by the three sets of sanctions laws, rules, and regulations: the European Union (EU), United Kingdom (UK), and United Nations (UN)
- INSTEX screens all client, client counterparty, and third-party provider names against the lists of these three sanctions regimes – EU, UK, UN, including Ultimate Beneficial Owners (UBOs)
INSTEX restricts transactions with sensitive parties and sanctioned parties based upon the materiality of the nexus. These restrictions are checked during client on-boarding, client life- cycle renewal and on a transactional basis. As an EU-based entity, INSTEX does not implement or adhere to third party sanctions regimes, does not apply third party lists to our business, nor does it disclose data relating to our trading activity outside the jurisdictions of Europe and Iran.