U-turn (banking)
Encyclopedia
A U-turn transaction, generally speaking, is a banned financial transaction
done by a bank in country A (example: USA) for the benefit of a bank in country B (example: Iran) through offshore bank
s (example: Switzerland). This loophole
is used by Iranian banks to avoid U.S. sanctions
for their US dollar based transactions. The phrase "U-turn" applies because the funds are transferred to a U.S. bank and instantly turned back as dollars to a European bank.
Financial transaction
A financial transaction is an event or condition under the contract between a buyer and a seller to exchange an asset for payment. It involves a change in the status of the finances of two or more businesses or individuals.-History:...
done by a bank in country A (example: USA) for the benefit of a bank in country B (example: Iran) through offshore bank
Offshore bank
An offshore bank is a bank located outside the country of residence of the depositor, typically in a low tax jurisdiction that provides financial and legal advantages. These advantages typically include:...
s (example: Switzerland). This loophole
Loophole
A loophole is a weakness that allows a system to be circumvented.Loophole may also refer to:*Arrowslit, a slit in a castle wall*Loophole , a short science fiction story by Arthur C...
is used by Iranian banks to avoid U.S. sanctions
Sanctions against Iran
This article outlines economic, trade, scientific and military sanctions against Iran, which have been imposed by the U.S. government, or under U.S. pressure by the international community through the United Nations Security Council...
for their US dollar based transactions. The phrase "U-turn" applies because the funds are transferred to a U.S. bank and instantly turned back as dollars to a European bank.