Sanctions Update: U.S. Turns Up Pressure on Iran, Syria

Earlier this month, President Obama signed into law the Iran Threat Reduction and Syria Human Rights Act of 2012. From law firm Skadden Arps:

“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.”

For your reference, five key elements of the new measures:

1. Publicly traded companies that engage in prohibited business activities are required to disclose that activity in SEC filings:

“An issuer disclosing any of the above information must include a detailed description of each activity, including the nature and extent of the activity, the gross revenues and net profits attributable to the activity and whether the issuer or its affiliate intends to continue the activity. Issuers reporting such information will also be required to separately file with the Securities and Exchange Commission a notice that the disclosure was made.” (Katten Muchin Rosenman)

2. Foreign affiliates of U.S. businesses are now subject to the same rules as their parents:

“Within 60 days of the legislation’s enactment, the President must subject foreign affiliates owned or controlled by a U.S. company to the same prohibitions as their U.S. parent and subject their U.S. parent to civil penalties for its foreign affiliate’s impermissible transactions with Iran. The legislation would allow a U.S. company to avoid penalties if it divests or terminates its business with the foreign affiliate within 180 days of enactment.” (Bryan Cave)

3. New immigration restrictions are placed on Iranian nationals:

“The Act also establishes restrictions on the issuance of U.S. immigration visas to certain Iranian nationals, including government officials deemed to be involved in weapons proliferation activities, supporting terrorism, or human rights abuses. Family members of designated officials are also subject to visa limitations. The Act also requires the Secretary of State to deny visa applications to Iranians seeking visas to attend U.S. institutions of higher learning when the Secretary of State determines the Iranian applicant seeks to prepare ‘for a career in the energy sector of Iran or in nuclear science or nuclear engineering or a related field in Iran.’” (Sheppard Mullin)

4. Financial and insurance services to Iran’s national oil or shipping companies are targeted:

“The Act requires the President to impose five or more ISA sanctions against persons that knowingly provide underwriting services, insurance or reinsurance to the National Iranian Oil Company (NIOC) or the National Iranian Tanker Company (NITC), or a successor entity to either company. The Act provides an exemption for persons providing such services for activities relating to the provision of agricultural commodities, food, medicine or medical devices to Iran, or the provision of humanitarian assistance to the people of Iran.” (Skadden Arps)

5. Activity involving Iran’s petroleum and petrochemical industry is broadly forbidden:

“… the ITRA expands the ISA definition of provision of goods, services, technology or other support that facilitates maintenance or expansion of Iran’s domestic production of refined petroleum products, which generally requires ISA Sanctions. The new statute adds to sanctionable assistance with respect to construction, modernization or repair of petroleum refineries, assistance with respect to “directly associated infrastructure including construction of port facilities, railways and roads, the primary purpose of which is to support the delivery of refined petroleum products.”” (Orrick)

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