U-turn (banking)

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 banks (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.

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References

1. Weisman, Steven R. (October 16, 2006). "U.S. puts the squeeze on financing in Iran and North Korea - Americas - International Herald Tribune". The New York Times.