Legislation Broadens U.S. Sanctions Against Iran

On August 10, 2012, President Obama signed into law the Iran Threat Reduction and Syria Human Rights Act of 2012 (the Act) (P.L. 112-158). The Act broadens the sanctions provided under the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (CISADA) and the Iran Sanctions Act of 1996 (ISA). Most significantly, the Act imposes liability on U.S. firms for their foreign subsidiaries' involvement in sanctioned activities as well as provides for U.S. sanctions on non-U.S. firms and their corporate officers. 

The Iranian sanctions under the Act will become similar to those currently in place with respect to Cuba in that the foreign affiliates of U.S. companies will be included under the U.S. jurisdiction. Thus, under the Act, foreign entities owned or controlled by a U.S. person must comply with U.S. sanctions against Iran. Sec. 218 of the Act provides that violation of the Iranian sanctions by a foreign affiliate requires the imposition of civil penalties under the International Emergency Economic Powers Act (IEEPA) of up to twice the amount of the relevant transaction, on U.S. parent companies for the activities of their foreign subsidiaries that would violate the Act. 

Other significant sections include: 

    *    Sec. 201, which expands sanctions with respect to transactions in Iran's energy sector. 
    *    Sec. 202 imposes sanctions for transportation of crude oil from Iran and evasions of sanctions by shipping companies. 
    *    Sec. 203 expands sanctions with respect to development of weapons of mass destruction (WMD). 
    *    Sec. 204 expands sanctions available under the ISA, including prohibiting any U.S. person from investing in or purchasing significant amounts of equity or debt instruments of a sanctioned person.  
    *    Sec. 219 requires companies whose stock is traded on U.S. stock exchanges to disclose whether they or their affiliates have knowingly engaged in sanctionable activities. 

Act summary by section: http://banking.senate.gov/public/_files/IranSanctionSectionbySectionRevised.pdf