New Sanctions Against Iran: President Obama Signs the Iran Threat Reduction and Syria Human Rights Act of 2012

On August 10, 2012, President Obama signed into law the Iran Threat Reduction and Syria Human Rights Act of 2012, H.R. 1905 (the Act). The Act is the U.S. government’s latest response to Iran’s illegal nuclear program and the situation in Syria, and it reflects an intensified effort to counter perceived efforts by non-U.S. companies to help Iran in particular evade existing U.S. economic sanctions. The Act focuses primarily on Iran, with few new requirements pertaining to Syria. The Act further expands the scope of the Iran Sanctions Act (ISA), as amended by the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (CISADA), by expanding the sanctions imposed by the ISA and by imposing new sanctions, including sanctions targeting persons that (1) issue or purchase Iranian sovereign debt; (2) enter into joint ventures with the Government of Iran to develop petroleum resources outside of Iran; (3) construct infrastructure that can be used to transport Iran’s energy products; (4) support Iran’s production of petrochemical products; and (5) own, operate or insure vessels used to transport crude oil out of Iran. In addition, the Act (1) expands the scope of sanctions set forth in CISADA, (2) amends the scope of sanctions against financial institutions set forth in Section 1245 of the National Defense Authorization Act for Fiscal Year 2012 (NDAA); (3) expands the liability of U.S. companies for violations of sanctions by its non-U.S. subsidiaries; and (4) imposes new Securities and Exchange Commission (SEC) disclosure requirements.

The Act caps off a season of expanding U.S. economic sanctions against non U.S. companies that continue to do business with Iran. President Obama also signed two new Executive Orders, in May and July, authorizing sanctions (1) against non-U.S. persons that have violated U.S. economic sanctions against Iran or Syria or that have facilitated deceptive transactions for persons who are the targets of those sanctions (e.g., an Iranian bank or Syrian government agency), and (2) against persons — presumably mainly non U.S. persons — that do certain business with the National Iranian Oil Company or Naftiran Intertrade Company, or certain petroleum or petrochemical business involving Iran. In addition, the U.S. Department of the Treasury made its first use of the financial sanctions authorized by CISADA, almost two years after that statute was enacted, when it imposed sanctions against the Bank of Kunlun in China and the Elaf Islamic Bank in Iraq for knowingly facilitating significant transactions and providing significant financial services to designated Iranian banks. The U.S. government’s clear signal to non-U.S. companies is that they face a growing risk of being subjected to U.S. economic sanctions in their own right if they continue to conduct certain business with Iran. In addition, the rapid proliferation of new U.S. economic sanctions involving Iran have the effect, and possibly the purpose, of making it difficult for non-U.S. companies to determine exactly what Iran related business of theirs risks inviting the unwelcome attention of the U.S. government.

Please see full memorandum below for more information.

LOADING PDF: If there are any problems, click here to download the file.

Published In: General Business Updates, Elections & Politics Updates, Finance & Banking Updates, International Trade Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Skadden, Arps, Slate, Meagher & Flom LLP | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »