Obama Authorizes New Iran Sanctions Targeting Currency
President Obama approved new U.S. sanctions against Iran June 3 targeting the country’s currency -- the first time the rial has been the direct focus of sanctions -- as well as its automotive sector and persons already placed on the Specially Designated Nationals List. The new Executive Order authorizes sanctions on foreign financial institutions that knowingly conduct or facilitate significant transactions for the purchase or sale of the rial. Foreign financial institutions that keep significant accounts outside Iran denominated in the rial are also subject to sanctions.
Sign up for a free preview to unlock the rest of this article
Export Compliance Daily combines U.S. export control news, foreign border import regulation and policy developments into a single daily information service that reliably informs its trade professional readers about important current issues affecting their operations.
“While the rial has lost half of its value since the beginning of 2012 as a result of our comprehensive sanctions, this is the first time that trade in the rial has been targeted directly for sanctions,” said a White House statement on the sanctions (here). Recent bills in the House and Senate have also focused on new currency-based Iran sanctions. In May, the House Foreign Affairs Committee approved a bill that creates mandatory sanctions against foreign entities that “knowingly conducted or facilitated a significant financial transaction with the Central bank of Iran,” or other Iranian financial institutions designated by the Treasury Department (see 13052301). A recent Senate bill would require sanctions on foreign banks, designed to block Iran’s access to foreign exchange reserves and limit the ability of certain Iran entities to conduct foreign currencies transactions (see 13050909).
The Executive Order applies new sanctions to Iran’s automotive sector. It makes the sale, supply or transfer to Iran of significant goods or services used in connected with the country’s automotive sector -- including manufacturing and assembling of vehicles and vehicle parts -- subject to sanctions. This addition builds on the “sectoral sanctions in the Iran Freedom and Counter-Proliferation Act of 2012 that target Iran’s shipping, shipbuilding, and energy sectors,” according to the White House statement.
The Order also authorizes new sanctions against persons who provide material support to “Iranian persons and certain other persons” designated on the Treasury Department’s Specially Designated Nationals List. The Order does include an exception for specific Iranian depository institutions and activities relating to the pipeline project to supply natural gas from the Shah Deniz gas field in Azerbaijan to Europe and Turkey.
The Order also implements and builds on certain sanctions from the Iran Freedom and Counter-Proliferation Act, which became law in January 2013. The Office of Foreign Assets Control released a fact sheet on the Executive Order and the implementation of the Iran Freedom Act (here). Read Obama's message to Congress about the order, which becomes effective July 1 (here).