* Many sanctions on Iran likely to stay for months
* Lenders have paid heavy penalties for Iran business
* Banks still fear U.S. anti-money laundering rules
* UK not recommending insurance trade with Iran yet
By Jonathan Saul and Thomas Atkins
LONDON/FRANKFURT, July 16 (Reuters) - International banksand most insurers are likely to steer clear of dealing with Iranfor some time, fearing they could face more fines from U.S.regulators despite this week's nuclear deal between world powersand Tehran.
With almost 80 million people and annual output of some $400billion, Iran will be the biggest economy to rejoin the globaltrading and financial system since Russia emerged from the ruinsof the Soviet Union over two decades ago.
But while Iran is trying to come in from the cold, many ofthe sanctions imposed over its nuclear programme are likely tostay for months and those that are lifted can be rapidlyrestored if the deal falters.
U.S. and European banking restrictions, for example, will belifted only when the International Atomic Energy Agency hasverified that Iran is keeping to its side of the bargain.
The layers of sanctions also include U.S. anti-moneylaundering legislation, and any breaches could lead to banksbeing cut off from the U.S. dollar clearing system.
"There's a real hesitancy for the right reasons," saidWashington lawyer D.E. Wilson, former acting general counsel atthe U.S. Treasury, whose Office of Foreign Assets Control (OFAC)enforces the legislation. "The banks don't want to get intotrouble."
There are tentative signs of a financial thaw. In one of thefirst steps to normalise trade between Britain and Tehran, theUK's export credit agency told Reuters on Thursday it wasplanning to review Iran's creditworthiness.
But Germany's largest bank by assets, Deutsche Bank, said it would consider doing business in Iran onlywhen sanctions disappear.
"Deutsche Bank will continue to adhere to all U.S. and EUsanctions against Iran," it said in a statement. "The bankclosely monitors the implementation of the nuclear agreement andrelated sanctions and will reconsider its position if sanctionsare lifted in areas of relevance to the bank."
Deutsche has yet to reach a settlement with U.S. officialsover suspicions that it may have breached sanctions in dealingswith Iran. The bank has already paid about 9 billion euros ($9.8 billion) in U.S. and European settlements and fines in thepast three years, and faces more U.S. penalties in the Irancase.
Germany's second biggest lender Commerzbank declined to comment. In March, Commerzbank agreed to pay U.S.authorities $1.45 billion after it joined the ranks of Europeanbanks to acknowledge moving funds through the U.S. financialsystem for countries such as Iran and Sudan.
British banks will also be cautious given past experiences,industry sources said. They are generally pulling out ofbusiness likely to stir controversy and slimming theirinternational operations in response to recent scandals.
HSBC was fined $1.9 billion in 2012 by U.S.regulators for violations including doing business with Iran,while Standard Chartered paid $667 million in 2012 forviolating U.S. sanctions and a further $300 million after morecompliance shortcomings were uncovered.
"Global banks are unlikely to rush in until the ground rulesare clearly laid out by the U.S," an executive at a major bankbased outside the United States.
U.S. banking groups JPMorgan Chase & Co andCitigroup declined to comment.
Lenders further afield are also playing safe. "Some banksthat can operate lawfully beyond the reach of the OFAC sanctionshave chosen as a matter of bank policy not to engage in any Irandealings ... The juice isn't worth the squeeze," said LesCarnegie, who specialises in international trade and nationalsecurity matters at law firm Latham & Watkins.
Global transaction services organisation SWIFT said onTuesday current European Union sanctions remained in place whichincluded "measures prohibiting companies such as SWIFT fromproviding specialised financial messaging services toEU-sanctioned Iranian banks".
FIRST STEPS
Still, parts of Britain's financial services industry -which includes the Lloyd's of London insurance market - will bevying for business in Iran.
Government department UK Export Finance (UKEF), whichprovides banking and insurance guarantees to support Britishexporters, said on Thursday it would initiate "a review of Iranto assess creditworthiness, in light of the new agreement, andthe expected positive effect on the Iranian economy".
However, it added that Iran had to clear arrears with UKEF"to a large degree" before full cover could be restored.
Nigel Kushner, a director with the British Iranian Chamberof Commerce association, said trade prospects would depend onIran complying with a "multitude of obligations".
"The reality is that there will be no tangible change in theEU or U.S. sanctions regime for at least six to nine months atbest," said Kushner, a London-based sanctions lawyer.
Industry sources said that while some insurers were gearingup for a resumption of business, they were unlikely to make anymoves yet.
Helen Dalziel, senior market services executive at theInternational Underwriting Association, said the BritishTreasury had issued a notice to insurers saying its previousguidance remained in place. "They're not recommending trade withIran at present," she said. "Essentially, nothing's changed forour members and won't change for several months, we believe."
Insurer Allianz said it would adjust its business"if and when the steps specified in the political agreement havebeen implemented".
A similar message was given by CityUK, a trade associationworking to promote UK financial services overseas. "Our focuswill be on the need for a clear and consistent policy onsanctions and their operation," said Gary Campkin of CityUK.
Under interim accords reached between Iran and world powers,Iran was allowed to secure insurance cover to transport oilcargoes - Tehran's main revenue earner - for approved business.
The interim agreement was renewed on a six-month basis andmost ship insurers - known as P&I clubs - remained wary ofentering into contracts.
The International Group of P&I clubs, whose members provideliability cover to 95 percent of the world's tanker fleet, saidit was difficult to say when EU and U.S. legislation would berepealed or rolled back.
"In the meantime clubs should advise members with aninterest in trading to Iran to proceed with extreme caution andcontinue to seek independent advice before committing to tradecontracts," it said in a note this week. ($1 = 0.9170 euros) (Additional reporting by Carolyn Cohn, Sinead Cruise, HuwJones, Simon Jessop and Matt Scuffham in London, Karen Freifeldin New York, Brett Wolf in St Louis and Yeganeh Torbati inWashington, writing by Jonathan Saul; editing by David Stamp)