At the behest of the New York District Court, the Bank of Tokyo-Mitsubishi UFJ has temporarily halted transactions with Tehran and its central bank.
The megabank has also frozen the assets it holds of those entities in the United States.
It took the action in response to an order by the court, dated May 2, covering accounts in the bank held by the Iranian government and central bank.
As the bank handles almost all of the trade settlements involving Japan and Iran, a prolonged freeze could hamper petroleum imports from Iran.
Although Iran has been asked by the United States to pay $2.6 billion (200 billion yen) in compensation for its involvement in terrorist acts in Lebanon in 1983, Iran has not paid up, leading to the court order.
If Iran continues to refuse to pay and the freeze order is prolonged, Japan could find itself in a bind over petroleum imports from Iran.
Bank executives are conferring with the Japanese government over what to do. The bank could end up filing an objection to some parts of the court order.
Late last year, the United States enacted a law that prohibits financial institutions that have transactions with the Iranian central bank from doing business in the United States.
In the case of Japanese financial institutions, exceptions were allowed if petroleum imports from Iran were scaled back.
The latest order by the New York District Court apparently overrides that arrangement between Washington and Tokyo.
At a May 17 news conference, Chief Cabinet Secretary Osamu Fujimura refrained from directly commenting on any matters related to a specific financial institution, but said, "The government will work as one for an appropriate response to prevent any disturbance in the stable supply of petroleum and transactions."
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