Mubasher: Bank of Kunlun, the key channel for transactions with Iran in China, is set to cease handling payments from Tehran, as US sanctions against the country loom, news reports said.

Kunlun, the main official conduit for fund flows between China and Iran verbally informed clients that it would halt accepting yuan-denominated (CNY) payments from Tehran to Beijing as from 1 November, Thomson Reuters reported on Tuesday citing four sources familiar with the matter.

“A Kunlun account manager told us payments from Iran made after that date will be rejected and returned,” one of the sources said.

The bank, which is owned by the financial division of Chinese state-run energy firm CNPC, quietly suspended euro-denominated payments from Tehran in late August, the sources noted.

It remains unclear for how long the cessation would last and how businesses in China that sell goods or services to Iran would receive payment.

“Whether and when to resume the services depends on the international situation after the sanctions start,” one source said.

China is the largest importer of Iranian crude oil and nearly all of related payments pass through Kunlun. Beijing has been buying around $1.5 billion worth of oil on a monthly basis as recently as last September.

However, state refineries have been reducing purchases from Iran since October in compliance with the looming US sanctions, oil industry sources informed Reuters.