US Sanctions Updates 2012

U.S. PASSES NEW SANCTIONS ENDANGERING FOREIGN BANKS’ ACCESS TO THE U.S. FINANCIAL SYSTEM - SECTION 1245 NATIONAL DEFENCE AUTHORISATION ACT 2012 - 31 DECEMBER 2011

On 31 December 2011, President Obama signed into law new sanctions against Iran set out in section 1245 of the National Defence Authorisation Act for Fiscal Year 2012 (“NDAA 2012”).

Of relevance to the shipping industry is the requirement, under Section 1245 of NDAA 2012, for the President to sanction foreign (non-U.S.) financial institutions which facilitate significant financial transactions with the Central Bank of Iran or any other designated Iranian bank, particularly with respect to oil transactions. Previous, and relatively recent, U.S. measures, including Executive Order 13590 of 21 November 2011, targeted persons engaging in activities that directly and significantly contribute to Iran’s ability to (i) develop petroleum resources located in Iran, and (ii) maintain or expand its domestic production of petrochemical products. A key development brought about by Section 1245 of NDAA 2012 is that sanctions can apply to parties facilitating the export of oil FROM Iran. The aim of this legislation appears to be to curtail Iran’s earnings from oil revenues.

In a strengthening of existing measures, the new sanctions under the Act require the President to block the property of, and prohibit all transactions in property of Iranian financial institutions, if such property and interests in property are within the US or the possession or control of a US person. (Not all Iranian banks had hitherto been targeted for asset freeze).

With effect from 60 days after enactment, the President is required to prohibit a foreign financial institution from opening or maintaining correspondent accounts with U.S. financial institutions if the foreign bank knowingly conducts or facilitates significant financial transactions with the Central Bank of Iran or other designated Iranian bank. The only exemptions are for transactions involving food, medicine or medical devices to Iran.

There is no definition of what constitutes a “significant” financial transaction. However, NDAA 2012 confers latitude upon the U.S. administration to waive imposition of sanctions:

Foreign government-owned or -controlled banks (including central banks) would only be subject to sanction if they engage in a financial transaction involving the sale or purchase of petroleum or petroleum products to or from Iran that is conducted or facilitated 180 days after 31^st December 2011;
With respect to transactions involving the purchase of petroleum or petroleum products from Iran, sanctions would only be applied against a foreign financial institution if the President determines that there is sufficient supply of petroleum or petroleum products from countries other than Iran to permit a reduction in volumes purchased from Iran by or through foreign financial institutions - a determination the President must make on a periodic basis.
Similarly sanctions would not be imposed if the country having primary jurisdiction over the foreign financial institution has significantly reduced its volume of crude oil purchases from Iran.
The President can waive imposition of sanctions for 120-day periods based on a determination that waiver is vital to national security, subject to reporting requirements to Congress.

In addition to the imposition of the sanctions described above, civil penalties of up to US$250,000, and criminal penalties of US$1 million, and/or imprisonment of up to 20 years, could also be imposed.

We are grateful to Mr Jonathan Epstein of law firm Holland & Knight for permission for their briefing on this subject to be made available via this website, which can be viewed and downloaded from the link below, together with a copy of Section 1245.

U.S. TREASURY FAQ ON SECTION 1245 NATIONAL DEFENCE AUTHORISATION ACT 2012 - 14 FEBRUARY 2012

On 14^th February 2012 the U.S. Treasury Department published a set of Frequently Asked Questions (FAQ) regarding the scope and effect of Section 1245 of NDAA 2012. This briefing includes, amongst other things, a set of useful definitions, including what constitutes government ownership and control, “petroleum products,” “foreign financial institutions” and “Iranian financial institutions”. A copy of the FAQ may be downloaded from the link below.

EXECUTIVE ORDER 13599 5 FEBRUARY 2012 - BLOCKING PROPERTY OF THE GOVERNMENT OF IRAN AND IRANIAN FINANCIAL INSTITUTIONS

Effective from 6 February 2012, President Obama has issued an Executive Order (“the Order”) requiring US persons to block (i.e., freeze) all property and interests in property of the Government of Iran, and of all Iranian financial institutions, including the Central Bank of Iran. This means that all individuals and entities that meet the definition of “Government of Iran” (“GOI”), as well as all Iranian financial institutions are now blocked.

The term “Iranian financial institution” means “a financial institution organised under the laws of Iran or any jurisdiction within Iran (including foreign branches), any financial institution in Iran, any financial institution, wherever located, owned or controlled by the Government of Iran, and any financial institution, wherever located, owned or controlled by any of the foregoing.”

Previously, under the Iranian Transactions Regulations, 31 C.F.R. part 560 (the “ITR”), US financial institutions and other US persons were prohibited from engaging in transactions with the GOI. Under those prior rules, US financial institutions receiving instructions to execute transactions involving these entities were not required to block the transactions, but were instead required to reject those instructions, unless the transactions were exempt, authorized, or not prohibited by OFAC. The new Order goes further by requiring US financial institutions to actually freeze assets related to GOI or an Iranian financial institution.

Pursuant to OFAC guidance, even when an entity does not itself appear on the SDN List or otherwise meet the definition of the GOI or an Iranian financial institution, the property and interests in property of that entity are blocked if the entity is owned, directly or indirectly, 50% or more by a person whose property and interests in property are blocked pursuant to an Executive Order or regulations administered by OFAC. A US Treasury FAQ relating to the new Order states that “…OFAC expects financial institutions to conduct due diligence on their own direct customers (including, for example, their ownership structure) to confirm that those customers are not persons whose property and interests in property are blocked.”

The FAQ also illustrates how the new Order would apply to a transaction involving a commercial wire transaction being processed through the U.S. financial system by order of a third-country, non-U.S. company for credit to a third-country financial institution in favour of a correspondent account it maintains for an Iranian financial institution, where the transaction is not exempt or authorized by a general or specific licence, and the Iranian bank is not blocked pursuant to the Global Terrorism Sanctions Regulations 31 C.F.R. part 594 (“GTSR”) or the Weapons of Mass Destruction Proliferators Sanctions Regulations, 31 C.F.R. part 544 ( “WMDPSR”).

“Previously, under the ITR, any U.S. financial institution handling the transaction would have needed to reject the payment because allowing it to be processed would constitute a prohibited exportation of services to Iran. With the new E.O. in place, the U.S. financial institution would be required to block (“freeze”) that transaction”.

Copies of the Order, as well as the accompanying FAQ, can be downloaded from the links below.

U.S. TREASURY AMENDS IRANIAN FINANCIAL SANCTIONS REGULATIONS TO IMPLEMENT SECTION 1245 OF THE NATIONAL DEFENCE AUTHORISATION ACT 2012 - 27 FEBRUARY 2012

On 27 February 2012 the U.S. Treasury announced regulations to implement sub-section 1245(d) of the National Defence Authorisation Act for Fiscal Year 2012 ("Section 1245 of NDAA 2012").

The new regulations contain various time-based triggers for the imposition of sanctions.

In relation to privately-owned foreign financial institutions knowingly conducting or facilitating significant financial transactions with the Central Bank of Iran (CBI) involving the purchase of petroleum or petroleum products from Iran on or after 28 June 2012, sanctions will be imposed if the U.S. President determines that there is a sufficient supply of petroleum or petroleum products from countries other than Iran to permit a significant reduction in the volume of petroleum and petroleum products purchased from Iran by or through foreign financial institutions. In relation to transactions not involving petroleum or petroleum products, sanctions will be imposed with effect from 29 February 2012, unless they involve the sale of food, medicine or medical devices to Iran.

Equivalent provisions apply in relation to Government-owned or -controlled foreign financial institutions, including central banks, knowingly conducting or facilitating significant financial transactions with the CBI involving the sale or purchase of petroleum or petroleum products to or from Iran on or after 28 June 2012.

The new regulations have been enacted by means of amending and reissuing the Iranian Financial Sanctions Regulations (IFSR), which were initially published on 16 August 2010 to implement CISADA. The revised IFSR therefore combine the provisions of both CISADA and Section 1245 of NDAA 2012. The names of foreign financial institutions sanctioned under CISADA and NDAA will be published in the new List of Foreign Financial Institutions Subject to Part 561 (the ‘‘Part 561 List’’), which will be maintained on the OFAC website www.treasury.gov/ofac.

Copies of the new IFSR and a U.S. Treasury Fact Sheet commenting on these developments can be downloaded from the links set out below.

EXECUTIVE ORDER 13608 TARGETING FOREIGN SANCTIONS EVADERS - 1 MAY 2012

Entitled “Prohibiting Certain Transactions With and Suspending Entry into the United States of Foreign Sanctions Evaders with Respect to Iran and Syria.”, this Executive Order provides the U.S. Treasury Department with power to impose measures on foreign individuals and entities that have:

violated, attempted to violate, conspired to violate, or caused a violation of U.S. sanctions against Iran or Syria; or
facilitated deceptive transactions for persons subject to U.S. sanctions concerning Iran or Syria.

A “deceptive transaction” means any transaction where the identity of any person subject to US sanctions concerning Iran or Syria is concealed from other participants to the transaction or any relevant regulatory authority.

Measures may also be imposed on foreign individuals and entities who are owned or controlled by, or are acting or purporting to act for or on behalf of, directly or indirectly, any person determined to have committed, conspired to, or attempted a violation, or facilitated a deceptive transaction as set out in the Order.

In order for a non-US person to be subjected to sanctions under the new Executive Order, a transaction that they engaged in or are currently engaging in had/has to have a U.S. nexus and be of a type that is prohibited under existing U.S. sanctions laws and regulations. The US sanctions against Iran and Syria generally apply to US persons (general in personam jurisdiction), and to non-US persons, but only with respect to or to the extent of their transactions that : (i) have a US nexus or connection or effect (specific jurisdiction), and (ii) would be prohibited if engaged in by a US person. The new Executive Order does not expand the universe of prohibited transactions and activities. Transactions by non-U.S. persons and without any U.S. nexus or connection remain outside U.S. jurisdiction.

The Order overcomes some of the difficulties OFAC has encountered in enforcing sanctions measures, such as traditional monetary fines, against non-U.S. persons who are located outside of the United States. Such measures often face opposition from authorities in other countries. Under this new Order, OFAC can punish breaches of sanctions prohibitions by imposing sanctions against offenders directly, i.e. by blacklisting/targeting them, prohibiting US persons from dealing with such violators and cutting them off from trade with and entry into the United States. Measures which might be imposed on an offender include a prohibition on all transactions or dealings, whether direct or indirect, involving such person, including any exporting, re-exporting, importing, selling, purchasing, transporting, swapping, brokering, approving, financing, facilitating, or guaranteeing, in or related to (i) any goods, services, or technology in or intended for the United States, or (ii) any goods, services, or technology provided by or to United States persons, wherever located. Appearing on a U.S. blacklist or list of sanctions targets can have negative implications for the activities of such persons outside or beyond the United States, as most international banks, no matter where located, as a practical or risk management matter refuse or decline to handle transactions for such persons.

The Order also empowers the US Treasury to publicly identify foreign individuals and entities that have engaged in evasive or deceptive activities and generally to bar access to the US financial and commercial systems. Publication of foreign offender details is aimed at helping U.S persons to avoid unwittingly engaging in transactions with an offender.

The measures also include the power to prohibit the entry into the U.S. of foreign persons found to have attempted, or conspired to violate, or actually violated US sanctions against Iran or Syria, or to have facilitated a deceptive transaction.

Measures under the new Order have potentially serious financial and reputational consequences for offenders, effectively cutting them off from the US marketplace. To avoid punishment under the new Executive Order, members should ensure they do not violate U.S. Iran and Syria sanctions laws whenever they engage in a transaction with or involving Iran or Syria.

Copies of the Executive Order and a US Treasury Department Fact Sheet can be downloaded from the links set out below.

The Foreign Sanctions Evaders E.O. comes one week after publication of a U.S. Executive Order Blocking the Property and Suspending the Entry into the United States of Certain Persons with Respect to Grave Human Rights Abuses by the Government of Iran and Syria via Information Technology (the GHRAVITY E.O.), which targeted the provision and use of information and communications technology to facilitate computer or network disruption, monitoring or tracking that could assist in or enable serious human rights abuses by or on behalf of the Government of Iran or the Government of Syria.

UNITED STATES INCREASES SANCTIONS AGAINST GOVERNMENT OF IRAN - 12 JULY 2012

The U.S. Treasury has taken steps on two fronts to increase sanctions against Iran.

First, it has designated a number of entities and individuals that are alleged to be connected with the nuclear and missile procurement and proliferation activities of Iran’s Ministry of Defense for Armed Forces Logistics (MODAFL); Aerospace Industries Organization (AIO); Iran’s national maritime carrier, Islamic Republic of Iran Shipping Lines (IRISL); and Iran’s Islamic Revolutionary Guard Corps (IRGC) – all of which have been previously designated under Executive Order (E.O.) 13382, "Blocking Property of Weapons of Mass Destruction Proliferators and Their Supporters." It has also updated the identifying information for 57 vessels affiliated with IRISL that have been renamed or reflagged since initial designation, and also added a further 7 vessels which had not been identified previously. In total, the U.S. now lists 155 ships as blocked property in which IRISL or designated IRISL affiliates have an interest.

Secondly, in relation to preventing the circumvention of U.S. sanctions against Iran, the U.S. Treasury has published information in relation to a number of entities which are considered to be a part of the Government of Iran. Executive Order 13599 blocks all property and interests in property within U.S. jurisdiction of the Government of Iran and of all Iranian financial institutions, and prohibits U.S. persons or those within U.S. jurisdiction from having dealings with them, regardless of whether or not they have been identified and added to the SDN List. To assist U.S. persons in complying with their obligation to freeze the assets of, and not to deal with, any such entities, the Treasury has expressly identified National Iranian Tanker Company ("NITC"), it's fleet of 58 vessels, and 27 affiliated entities. The Treasury has also identified a number of front companies for National Iranian Oil Company and Naftiran Intertrade Company (Petro Suisse Intertrade Company SA (Petro Suisse), an entity incorporated in Switzerland; Hong Kong Intertrade Company, a Hong Kong-based entity; Noor Energy (Malaysia) Ltd, an entity incorporated in Malaysia; and Petro Energy Intertrade Company, an entity operating out of Dubai), who are said to be centrally involved in the sale of Iranian oil, as well as 20 Iranian financial institutions, as an aid to enabling US persons to company with their obligations under Executive Order 13599.

Copies of a U.S. Treasury Fact Sheet and Press Release setting out full details of these developments can be downloaded from the links below.

OFAC GLOBAL ADVISORY CONCERNING IRISL - 19 JULY 2012

IRISL was designated by the U.S. in September 2008 pursuant to Executive Order 13382 for providing logistical services to Iran's Ministry of Defence and Armed Forces Logistics (MODAFL). Since then the U.S. has sought to track IRISL's efforts to evade sanctions through re-flagging and re-naming its vessels. By this advisory issued on 19 July 2012, OFAC advises the global maritime industry that it believes IRISL has recently been operating vessels despite their flags having been revoked. OFAC urges state port control and flag authorities to thoroughly scrutinise the certificates of registry of IRISL vessels to ensure that such documentation is not expired or fraudulent. OFAC also warns that assisting IRISL or its blocked affiliates to re-flag their vessels may constitute the provision of services to a person whose property is blocked and may be considered a basis for designation pursuant to Executive Order 13382.

A copy of the advisory can be downloaded from the link below.

EXECUTIVE ORDER 13622 31 JULY 2012 AUTHORISING ADDITIONAL SANCTIONS WITH RESPECT TO IRAN

With effect from 31 July 2012, the U.S. President conferred additional authorities upon the Secretary of the Treasury and the Secretary of State to impose additional sanctions with respect to Iran. These powers are set out in the new Executive Order 13622 (“the EO”) which ties in with previous powers vested pursuant to the Iran Sanctions Act 1996 (“ISA”) and Section 1245 of the National Defence Authorisation Act 2012 (“NDAA”).

Under Section 1 of the EO, the Secretary of the Treasury, in consultation with the Secretary of State, is authorised to impose sanctions on foreign financial institutions found to have knowingly conducted or facilitated any significant financial transaction (i) with the National Iranian Oil Company (“NIOC”) or Naftiran Intertrade Company (“NICO”), (although sales of refined petroleum products to NIOC or NICO which are below the dollar threshold for the trigger of sanctions under the ISA are excepted), or (ii) for the purchase or acquisition of petroleum, petroleum products, or petrochemical products, from Iran.

There is new authority to impose sanctions on “foreign financial institutions” found to have knowingly conducted or facilitated such transactions through any channel, with the aim of deterring the use of work-around financial transactions which attempt to circumvent the oil sanctions.

The inclusion of purchases of petrochemical products from Iran addresses U.S. concerns that Iran is utilising sales of petrochemical products to replace revenue lost as a result of previously enacted sanctions in respect of petroleum and petroleum products. Sanctions against a foreign financial institution could include a prohibition or imposition of strict conditions on maintaining a correspondent account or a payable-through account in the U.S.

The existing exception rules under the NDAA apply to these measures. Thus, sanctions would not be imposed on foreign financial institutions in countries to whom an exemption has been granted by reason of the U.S. President having determined that that country has significantly reduced the volume of its crude oil purchases from Iran. Currently those countries include Belgium, China, Czech Republic, France, Germany, Greece, India, Italy, Japan, Malaysia, the Netherlands, Poland, Singapore, Spain, South Korea, South Africa, Sri Lanka, Turkey, Taiwan and the UK.

“Foreign financial institution” is defined as “any foreign entity that is engaged in the business of accepting deposits, making, granting, transferring, holding, or brokering loans or credits, or purchasing or selling foreign exchange, securities, commodity futures or options, or procuring purchasers and sellers thereof, as principal or agent. It includes but is not limited to depository institutions, banks, savings banks, money service businesses, trust companies, securities brokers and dealers, commodity futures and options brokers and dealers, forward contract and foreign exchange merchants, securities and commodities exchanges, clearing corporations, investment companies, employee benefit plans, and holding companies, affiliates, or subsidiaries of any of the foregoing.” This list of institutions and entities does not include an “insurance company,” unlike the definition of “Financial Institution” in the same Order. It appears that foreign insurers, and hence the Club, would fall outside the definition of “foreign financial institutions” for purposes of section 1 of the EO, and Section 1245 of the NDAA, which utilizes the same definition of foreign financial institution.

Section 2 of the EO provides authority for the Secretary of State to impose sanctions on any person upon determination that the person has knowingly, on or after 31 July 2012, engaged in a significant transaction for the purchase or acquisition of petroleum, petroleum products or petrochemical products from Iran.

The term “person” is defined as “an individual or entity”. The definition of entity is not limited to US persons and can include successor organisations as well as parent and subsidiary organisations having ownership or control over the “person”. The EO does, however, provide that sanctions would only be imposed on a person pursuant to section 2 if the NDAA exemption does not apply, i.e. if the person is a financial institution whose primary jurisdiction is in a country which has not qualified for an exemption from NDAA sanctions by virtue of reduced Iranian oil imports.

Possible sanctions for breach of Section 2 could include prohibitions, or strict conditions on, access to the US financial system.

Under Section 5, the EO provides authority for the Secretary of the Treasury to impose sanctions on any person determined to have materially assisted, sponsored or provided financial, material, or technological support for, or goods or services in support of:

NIOC, NICO or the Central Bank of Iran, or
The purchase or acquisition of U.S. bank notes or precious metals by the Government of Iran.

Sanctions for breach of this provision could involve a freeze of assets coming within the jurisdiction of the U.S., including any dollar payments which are processed through U.S. banks. The NDAA exemption provisions do not apply to Section 5 breaches, and so it is possible that any person or entity wherever located may be subjected to a US asset freeze if it is found to have breached the Section 5 prohibitions.

Eren Law Firm in Washington U.S.A. have published an Economic Sanctions Update dated 2 August 2012 which comments in detail on the impact of the new EO on the shipowning and insurance communities. A copy of this, along with copies of the Executive Order, an OFAC explanatory notice, and OFAC FAQs can be downloaded from the links set out below.

NEW DESIGNATIONS UNDER IRANIAN FINANCIAL SANCTIONS REGULATIONS (IFSR) – 31 JULY 2012

OFAC has announced the impositions of sanctions under the IFSR against two financial institutions for knowingly facilitating significant transactions or providing significant financial services for designated Iranian banks. The sanctioned financial institutions are:

BANK OF KUNLUN CO LTD (f.k.a. KARAMAY CITY COMMERCIAL BANK CO LTD.; f.k.a. KARAMAY URBAN CREDIT COOPERATIVES), 172 Xibin Rd, Ranghulu District, (Daqing, Heilongjiang Branch), Daqing 163453, China; 9 Dongzhimen North Street, Dongcheng District, (Head Office), Beijing 100007, China; No. 7 Century Ave, (Registered Office), Xinjiang, Karamay 834000, China; No. 68 Zhongya South Rd, Economic and Technological Development Zone, (Urumqi, Xinjiang Branch), Urumqi 830026, China; SWIFT/BIC CKLB CN BJ [561LIST].
ELAF ISLAMIC BANK, PO Box 3440, Building No. 14, Street 99, Hai Al Wehda-Mahala 902, Alweih, Baghdad, Iraq; SWIFT/BIC ELAF IQ BA; Note: The entity being designated, "Elaf Islamic Bank, Iraq" is separate and distinct from the similarly named entity, "Elaf Bank, Bahrain" [561LIST].

These entities have been entered onto the Part 561 List, which sets out the names of foreign financial institutions sanctioned under CISADA and/or NDAA. They are now prevented from having correspondent banking relationships with US banks, although banks everywhere may now be unwilling to deal with them for fear of being tainted by association.

THE IRAN THREAT REDUCTION AND SYRIA HUMAN RIGHTS ACT OF 2012 (HR 1905) - 10 AUGUST 2012

On 10 August 2012 President Obama signed into law new sanctions legislation in respect of Iran and Syria in the form of the “Iran Threat Reduction and Syria Human Rights Act of 2012 (ITRSHRA)”, (the “Act”).

The new Act strengthens existing sanctions legislation, for example the prohibitions in CISADA with regard to the provision of goods, services, technology and support that enable Iran to develop or expand its domestic production of refined petroleum products and petrochemical products (see section 201 on page 12 of the Act).

Sanctions relating to the abuse of human rights in both Syria and Iran have been strengthened
(see Title IV on page 97 of the Act and Title VII on page 134).

Importantly however there are also some new provisions directly impacting shipping and the provision of related insurance or re-insurance. A detailed summary of the new Act has been prepared by the Eren law firm who have kindly consented to its publication on our website. This summary may be downloaded from the links below, together with a copy of the text of the Act.

We draw specific attention below to the provisions that relate to shipping and insurance.

Section 202 (p.8 of the Act) sanctions entities (including non US entities) that own, operate or control (or provide insurance or reinsurance to) a vessel that is used 90 days after the date of the Act, to transport crude oil from Iran to another country. A controlling beneficial owner must have actual knowledge that the vessel was so used; other persons who own, operate, control or insure the vessel must know or should have known that the vessel was so used. The sanctions will only be imposed if there are sufficient supplies of crude oil from sources other than Iran to allow the significant reduction of purchases from Iran at the time of transportation of the crude oil. In addition, sanctions will not be imposed if the transportation is to a country which has been granted a waiver by virtue of significantly reduced purchases of crude oil from Iran.

Sanctions will not be imposed against insurers and reinsurers that provide insurance for the transportation of crude oil or refined petroleum products from Iran if it is determined that they exercised due diligence in establishing and enforcing official policies, procedures and controls to ensure that they do not provide underwriting services or insurance or reinsurance for such transportation.

Section 202 also sanctions those entities that own, operate, or control vessels, and take steps to conceal the use of such vessels to transport Iranian crude oil or refined petroleum products, for example by suspending the use of the vessel’s satellite tracking device or concealing the ownership, operation or control of a vessel by the Government of Iran, the National Iranian Tanker Company (NITC), the Islamic Republic of Iran Shipping Lines (IRISL), or any other entity determined to be owned or controlled by those bodies. Vessels engaged in the sanctioned activity may be prohibited from entry to US ports for a period of 2 years.

The provisions of section 202 will come into effect 90 days after the date of enactment of the Act.

Section 203 (p. 10 of the Act) sanctions any person who, after the date of the Act, exported, transferred, permitted or otherwise facilitated the transhipment of, goods, services, technology, or other items that such person knew or should have known would likely end up in Iran and could contribute materially to Iran’s ability to acquire or develop chemical, biological or nuclear weapons or destabilizing numbers and types of advanced conventional weapons. Sanctions available under this and other provisions may include termination of access to the US banking system, blocking of transactions or use of any property in the U.S. or under U.S. jurisdiction, and ineligibility to enter into contracts with the U.S. Government.
Section 211 (p.15of the Act) provides for the blocking and prohibiting of all transactions in all property and interests in property of sanctioned entities, if such property and interests in property are in the United States, come within the United States, or are or come within the possession or control of a United States person. For the purposes of this Section a sanctioned entity is one that after the date of the Act knowingly sells, leases or provides a vessel, or provides insurance or reinsurance, or any other shipping service for the transportation to or from Iran of goods that could materially contribute to the activities of the Government of Iran with respect to the proliferation of weapons of mass destruction or support for acts of international terrorism. Sanctions may be applied to successor entities or those exercising ownership or control over sanctioned entities.
Section 211 (p. 15of the Act) also requires the Secretary of the Treasury to report, not later than 90 days after the date of enactment of the Act, identifying operators of vessels and other persons that conduct or facilitate significant financial transactions with persons that manage ports in Iran that have been designated for the imposition of sanctions.
Section 212 (p.16 of the Act) imposes sanctions on persons who after the date of the Act knowingly provide underwriting services or insurance or reinsurance for the National Iranian Oil Company (NIOC) or the National Iranian Tanker Company (NITC) or successor entities to either company. Sanctions will however not be imposed on insurers who have exercised due diligence in establishing and enforcing official policies, procedures and controls to prevent the provision of underwriting services or insurance/reinsurance to NIOC, NITC or successor companies.
Section 218 (p. 21 of the Act) prohibits foreign entities owned or controlled by US persons from engaging in transactions with the Government of Iran or any person subject to Iranian jurisdiction, if the transaction would be prohibited if performed by a US person or in the US. US parent companies will face liability for violations of sanctions by their foreign subsidiaries.
Section 312 requires the Secretary of the Treasury, no later than 45 days after the date of the enactment of the Act, to determine whether the National Iranian Oil Company (NIOC) or the National Iranian Tanker Company (NITC) is an agent or affiliate of Iran’s Islamic Revolutionary Guard Corps (IRGC), and to report to Congress on these determinations and the reasons for them. If they are determined to be so, then foreign persons who knowingly engage in significant transactions with NIOC or NITC after 24 September 2012 could be exposed to US sanctions. (On September 24, 2012, Secretary of the Treasury determined that NIOC is an agent or affiliate of IRGC. Based on the information then available, the Secretary was not able to determine whether NITC is an agent or affiliate of the IRGC).

“Knowingly” as used in Sections 202, 203 and 211 means that the entity either had actual knowledge or “should have known” (constructive knowledge) of the sanctionable activity. Members should beware that those seeking to enforce sanctions may adopt a view of what an operator “should have known” that differs from that of the operator itself in the performance of its commercial activities.

This new Act and other existing US laws create a range of sanctions which is broad in its scope and effect and which impact non- US persons trading with Iran and engaged in transactions wholly outside the US. Ambiguities in drafting increase the reach of the sanctions and the risk of potential infringements. In the light of this Members are urged to continue to exercise a high degree of caution and due diligence in relation to their activities involving Iran. It may be advisable to obtain legal advice in respect of the performance of existing and proposed new contracts involving Iran, in order to avoid violations of sanctions and the imposition of severe penalties.

OFAC DETERMINATION CONCERNING NATIONAL IRANIAN OIL COMPANY ("NIOC") - 24 SEPTEMBER 2012

Pursuant to the Iran Threat Reduction and Syria Human Rights Act 2012 ("ITSHRA") (effective from 10 August 2012), the US Treasury was to determine, by 24 September 2012, whether NIOC or NITC are agents or affiliates of the Islamic Revolutionary Guards Corp. If they are determined to be so, then foreign persons who knowingly engage in significant transactions with NIOC or NITC after 24 September 2012 could be exposed to US sanctions.

The Treasury has determined that NIOC is an agent or affiliate of IRGC. It has not been able to determine whether NITC is.

For entities in countries who benefit from a US exemption due to that country having significantly reduced its imports of Iranian crude oil, (this list includes, amongst others, China India, South Korea and the UK), the threat of sanctions under this Act does not apply. However, it must be borne in mind that:

Any significant transaction with any other sanctioned entity, such as Iranian designated banks, may result in sanctions, irrespective of whether the transaction involves the purchase of petroleum products or involves NIOC; and
The exemption referred to above expires on 1 January 2013, and if the exemption is not renewed, then a foreign person will be exposed to potential US sanctions if they then do significant business with NIOC;
It remains prohibited to provide insurance, reinsurance or underwriting services for NIOC or NITC pursuant to ITSHRA

Copies of an OFAC FAQ concerning this determination can be downloaded from the link set out below.

EXECUTIVE ORDER 13628 - “AUTHORISING THE IMPLEMENTATION OF CERTAIN SANCTIONS SET FORTH IN THE IRAN THREAT REDUCTION AND SYRIA HUMAN RIGHTS ACT OF 2012 AND ADDITIONAL SANCTIONS WITH RESPECT TO IRAN” 9 OCTOBER 2012

Executive Order 13628 of 9 October 2012, “Authorizing the Implementation of Certain Sanctions Set Forth in the Iran Threat Reduction and Syria Human Rights Act of 2012 and Additional Sanctions with Respect to Iran,” (“EO 13628”) implements certain statutory requirements of the Iran Threat Reduction and Syria Human Rights Act of 2012 (the “ITRSHRA”), including amendments to the Iran Sanctions Act (“ISA”), the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (CISADA), amending the Iran Sanctions Act, and Executive Order 13622. Specifically, EO 13628, among other things:

clarifies the sanctions that may be imposable pursuant to ISA;
clarifies language used in Executive Order 13622 concerning the imposition of sanctions on financial institutions and other persons that knowingly engage a significant transaction for the purchase and acquisition of petroleum, petroleum and petroleum products from Iran, and shipments of such petroleum and products to countries that have received Presidential waivers;
creates a new prohibition on foreign subsidiaries of U.S. persons; and
implements the property blocking and other requirements of Sections 204, 402, and 403 of the ITRSHRA.

Section 1 of EO 13622, pursuant to the National Defence Authorisation Act for Fiscal Year 2012 (“NDAA”), authorises the imposition of sanctions on foreign financial institutions found to have knowingly conducted or facilitated any significant financial transaction (i) with the National Iranian Oil Company (“NIOC”) or Naftiran Intertrade Company (“NICO”), or (ii) for the purchase or acquisition of petroleum, petroleum products, or petrochemical products, from Iran.

Section 2 of EO 13622 authorises the imposition of sanctions on any person upon determination that the person has knowingly, on or after 31 July 2012, engaged in a significant transaction for the purchase or acquisition of petroleum, petroleum products or petrochemical products from Iran.

Sanctions under EO 13622 are not imposable if the foreign financial institution or person is under the primary jurisdiction of a country that has received a Presidential waiver, by reason of that country having significantly reduced the volume of its crude oil purchases from Iran.

EO 13628 removes the above-mentioned requirement that foreign financial institutions and other persons be under the primary jurisdiction of a country that has received a Presidential waiver. Although not expressly stated in the Order, US attorneys comment that the implication and reasonable interpretation of this clarification is that foreign financial institutions and other persons will not be subject to sanctions if their transactions are for the purchase of, for example, crude oil from Iran, and such purchase is by an entity in and the shipment is to a country that has received a Presidential waiver. This appears to clarify that, for instance, a ship owner domiciled in a non-waiver country, will not face U.S. sanctions for providing a vessel for carriage of Iranian oil to a country that has the benefit of a waiver. It also appears to mean that, at least so far as US sanctions are concerned, insurers from non-waiver countries may insure the voyage. Previously, it was thought to be the case that all such parties were required to be under the primary jurisdiction of a country benefitting from a waiver. OFAC and other US government agencies charged with administering sanctions recognise that transactions ordinarily incidental and necessary to give effect to an authorized or non-sanctionable transaction are also authorized or non-sanctionable (as long as such transactions do not involve US persons and have no nexus to the United States).

Note (1): Although US attorneys have put forward the foregoing interpretation of the effect of EO 13628, it is not a guarantee. Every case is fact-sensitive, and we urge ship owners and others to seek and obtain competent legal advice regarding US Iran sanctions before proceeding with a transaction involving exports of oil, petroleum products and petrochemical products from Iran; and also to ensure that such transactions are not prohibited under the laws of other jurisdictions directly applicable to the ship owner, insurers or other parties, and to the transaction. In particular it should be borne in mind that EU Regulation 267/2012 has imposed a ban on the import, purchase and transport of Iranian crude oil, petroleum products and petrochemical products, and the provision of insurance and reinsurance related to those activities. This prohibition directly affects the Club.

Note (2): To date, the U.S. State Department has issued a total of 20 country-specific waivers. The first tranche was issued on March 20, 2012, exempting Japan and ten members of the European Union [Belgium, Czech Republic, France, Germany, Greece, Italy, the Netherlands, Poland, Spain, and the UK] from the NDAA’s petroleum-related sanctions. A second tranche was issued on June 11, 2012 covering India, South Africa, Malaysia, South Korea, Sri Lanka, Taiwan and Turkey. The third and most recent tranche of waivers was announced on June 28, 2012, exempting Singapore and China. As a result of these waivers, financial institutions and affected persons pursuant to EO 13622 in a total of twenty major economies will be exempt from NDAA and related EO 13622 sanctions for the 180 day period of the waiver. Each waiver may be renewed for subsequent 180-day periods or withdrawn if countries increase their imports of Iranian oil.

Section 204 of ITRSHRA expands the range of sanctions available under the Iran Sanctions Act of 1996 (as amended) by providing for the following additional sanctions:

Prohibition on US persons on investing in or purchasing significant amounts of equity or debt instruments of a sanctioned person.
Denial of entry into the US of any foreign person who is determined to be a corporate officer, or principal of, or a shareholder with a controlling interest in, a sanctioned person.

These additional prohibitions are now enacted pursuant to Section 1 of EO 13628.

Section 402 of ITRSHRA provides for the imposition of an asset freeze against property and interests in property that come within the U.S. or are or come within the possession or control of any U.S. person, of persons who are determined to have knowingly, after 10 August 2012, transferred, or facilitated the transfer of, goods or technologies, or certain hardware, software or other technologies or services, or materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to Iran which are likely to be used to commit serious human rights abuses against the people of Iran. This measure is enacted pursuant to Section 2 of EO 13628.

Section 403 of ITRSHRA provides for amendments to CISADA to include the imposition of sanctions against persons who engage in censorship or other related activities against citizens of Iran. This is enacted pursuant to Section 3 of EO 13628.

Section 218 of ITRSHRA provides for the implementation of measures:

prohibiting any foreign entity owned or controlled by a U.S. individual or U.S. company from knowingly engaging directly or indirectly in most transactions with Iran, the Iranian government, or Iranian entities to the same extent as such prohibitions apply to U.S. persons;
making the U.S. parent company liable for the violations of its foreign subsidiaries and makes it subject to civil penalties.

These measures are enacted pursuant to Section 4 of EO 13628. Civil penalties for the foreign subsidiary’s violation shall be applied to the U.S. parent company to the same extent that they would apply to a U.S. person for the same conduct. The U.S. parent company can avoid penalties if it divests or terminates its business with its foreign subsidiary not later than 6 February 2013. Merely causing the foreign subsidiary to cease doing business with Iran is unlikely to be sufficient to allow the U.S. company to take advantage of this provision.

Copies of EO 13628 and a related OFAC FAQ can be downloaded from the links set out below.

EXECUTIVE ORDER 13628 OF OCTOBER 9, 2012 AND OFAC “FINAL RULE” AMENDING IRANIAN TRANSACTIONS AND SANCTIONS REGULATIONS” - 22 OCTOBER 2012

Recent changes in US Iran sanctions law, among other things, block the assets and other property of the Government of Iran and Iranian financial institutions, and extends OFAC jurisdiction to owned or controlled foreign subsidiaries of U.S. companies.

New Executive Order

Executive Order 13628 issued on October 9, 2012, implements many of the provisions of the Iran Threat Reduction and Syria Human Rights Act of 2012 (“ITRSHRA”) (US Iran/Syria sanctions legislation enacted into law in August 2012). As a result of Executive Order 13628 many of the OFAC prohibitions now contained in the ITSR (discussed below) are applicable to non-U.S. entities that are owned or controlled by a U.S. entity by virtue of Section 218 of ITRSHRA , which prohibits any foreign entity owned or controlled by a U.S. individual or U.S. company from knowingly engaging directly or indirectly in most transactions with Iran, the Iranian Government, or Iranian entities to the same extent as such prohibitions apply to U.S. persons, and which also makes the U.S. parent company liable for the violations of its foreign subsidiaries.

New Regulations – The ITSR

On 22 October 2012 OFAC published a “Final Rule” in the Federal Register which amends the Iranian Transactions Regulations (31 CFR Part 560) (ITR) and renames them the “Iranian Transactions and Sanctions Regulations” (ITSR).

In addition to implementing new provisions and deleting some former provisions, the ITSR consolidate into one regulation several prohibitions, licencing provisions (in respect of the export of agricultural commodities, medicine and medical devices), and definitions that were previously found in previous executive orders and guidance notes. Importantly, OFAC’s promulgation of the ITSR implements prohibitions mandated by recent US sanctions legislation (the National Defence Authorisation Act for Fiscal Year 2012 (“NDAA”)) and a subsequent related Executive Order, (Executive Order 13599), requiring the blocking of the property and interests in property of the Government of Iran and Iranian financial institutions, including the Central Bank of Iran. Prior to the NDAA and Executive Order 13599, the U.S. sanctions against Iran did not entail a blocking or freeze of assets or property unless the Iranian entities were determined to be engaged in nuclear proliferation.

OFAC has implemented these measures into the ITSR as follows:

Section 560.211 implements the blocking requirements for all property and interest in property of the Government of Iran, Iranian financial institutions and others acting on behalf of such entities, whether or not they are listed by OFAC as a Specially Designated National (“SDN”) that were previously in place under Executive Order 13599;

Section 560.212 makes null and void any transfer of funds in violation of the ITSR;

Section 560.213 requires that blocked funds be held in interest-bearing accounts in the United States if blocked by U.S. persons and in similar interest-bearing accounts outside the United States if blocked outside the United States; and

Sections 560.322 to 560.327 define key terms in the new blocking prohibitions noted above or used elsewhere in the ITSR, including “blocked account”, “blocked property”, “interest” “Iranian financial institution”, “transfer” and “U.S. financial institution”.

Like the prohibitions of the ITR which they replace, the prohibitions and requirements of the ITSR apply to U.S. persons and to transactions that have a U.S. nexus or connection.

Copies of Executive Order 13628, the Final Rule, and a related OFAC FAQ can be downloaded from the links set out below.

UPDATED IRANIAN FINANCIAL SANCTIONS REGULATIONS (31 CFR PART 561) – 8 NOVEMBER 2012

The Iranian Financial Sanctions Regulations (“IFSR”) were originally published on 16 August 2010 to implement sanctions under Sections 104(c) and (d) and other related provisions of CISADA. They were further amended on 27 February 2012 to implement Section 1245(d) of the National Defence Authorisation Act 2012 (“NDAA”). With the publication on 8 November 2012 of amended Iranian Financial Sanctions Regulations (“IFSR”), OFAC has implemented sections 214 to 216 of the Iran Threat Reduction and Syria Human rights Act 2012 (“ITRSHA” ) or as defined by OFAC on November 8, 2012, the (“TRA”).

The ITRSHA, which was signed into law on 10 August 2012, contains measures targeting Iran’s energy and shipping sectors and those who support these sectors. A number of these measures require further implementing legislation in order to bring them into effect. Executive Order 13628 of 9 October 2012, gave effect to various sections of ITRSHA, including sections 204, 218, 402 and 403. The amended IFSR now implement the following provisions of ITRSHA:

Section 214 of ITRSHA provides for the imposition of sanctions on foreign financial institutions with respect to facilitating the activities of subsidiaries and agents of persons sanctioned by United Nations Security Council resolutions. Section 214(b) required the Secretary of the Treasury to implement these measures by making revisions to section 104 of CISADA. Under Section 104(c)(2)(B) of CISADA, a foreign financial institution facilitating the activities of a person subject to financial sanctions pursuant to a United Nations Security Council resolution that imposes sanctions with respect to Iran, engages in sanctionable activity. This provision is now amended by expanding this category of sanctionable activity to include facilitation by a foreign financial institution of the activities of ‘‘a person acting on behalf of or at the direction of, or owned or controlled by,’’ a person sanctioned under such United Nations Security Council resolutions.

For example, Bank Melli Iran and its branches and subsidiaries are subject to sanctions under a UN Security Council Resolution. A loan to a proxy of or front for Bank Melli Iran by a European bank or the European bank’s use of its correspondent accounts in the United States to permit transfers by a proxy of or front for Bank Melli Iran could lead to the imposition of sanctions pursuant to section 214 ITRSHA and the IFSR.

Prior to November 8, 2012, section 215 of ITRSHA provided for the imposition of sanctions on foreign financial institutions with respect to transactions with foreign financial institutions sanctioned for certain activities relating to terrorism or proliferation of weapons of mass destruction. The amended IFSR now authorize the imposition of CISADA sanctions on a foreign financial institution that knowingly facilitates significant transactions or provides significant financial services for a ‘‘person’’ (formerly, a ‘‘financial institution’’) whose property and interests in property are blocked pursuant to the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.) in connection with Iran’s proliferation of WMD or Iran’s support for international terrorism.

For example, a significant transfer of funds by an Asian bank, or the extension of a significant amount of credit or a bank guarantee by an Asian bank, to IRISL could trigger the imposition of sanctions under section 215 of ITRSHA and the IFSR – even though IRISL is not a blocked financial institution. IRISL is, however, a blocked person (entity or individual) under the U.S.’s nuclear non-proliferation sanctions against Iran.

Section 216 of ITRSHA provides for the regulations prescribed under CISADA to apply, to the same extent that they apply to a foreign financial institution found to knowingly engage in an activity described in CISADA section 104(c)(2), to a foreign financial institution that the Secretary of the Treasury finds (1) Knowingly facilitates, or participates or assists in, an activity described in section 104(c)(2) of CISADA; (2) attempts or conspires to facilitate or participate in such an activity; or (3) is owned or controlled by a foreign financial institution that the Secretary finds knowingly engages in such an activity.

For example, under regulations implementing section 104(c)(2), OFAC may prohibit or impose strict conditions on the opening or maintaining in the United States of a correspondent account or a payable through account by a foreign financial institution if OFAC finds that the foreign financial institution knowingly engages in any sanctionable activities.

Copies of the Federal Register notice extract setting out the changes to the IFSR discussed above can be downloaded from the link set out below.

OFAC SDN DESIGNATION UPDATES – 8 NOVEMBER 2012

With effect from 8 November 2012, 7 individuals and 8 entities, including National Iranian Oil Company, have been added to OFAC’s SDN List.

In addition, changes have also been made to the designation details of a large number of already designated entities. References following each SDN indicate the sanctions programme pursuant to which the person or entity has been designated. The reference “[IFSR]” has been added to indicate that each of the persons and entities in the list are now designated by reason of the IFSR sanctions programme as well as “NPWMD” (the nuclear proliferation programme), and/or “IRGC” (the Iranian Revolutionary Guards programme). The identifiers after each designated entity provide notice to the public regarding the sanctions programme pursuant to which the entity has been designated and the sanctions prohibitions/regulations that apply to and govern transactions with or involving such entities.

The appearance of SDNs with their identifiers provide notice to foreign persons that their transactions with such SDNs could implicate prohibitions applicable to U.S. persons, or lead to the imposition of U.S. sanctions against such foreign persons. Therefore, to avoid prohibitions or the imposition of sanctions, non-U.S. or foreign persons should ensure that any transaction with or involving an entity on OFAC’s SDN list does not come within U.S. jurisdiction and that it is also not a type of activity or transaction that could lead to the imposition of US sanctions against a non-U.S. person or foreign person.

U.S. STATE DEPARTMENT SANCTIONS INFORMATION AND GUIDANCE - 8 NOVEMBER 2012

The U.S. State Department has published Public Notice 8086 on 8 November 2012 providing policy guidance and setting out details of the range of its authority to make determinations regarding sanctions on individuals and entities under various pieces of legislation including The Iran Sanctions Act 1996 ("ISA"), as amended, including by CISADA dated 1 July 2010 and The Iran Threat Reduction and Syria Human Rights Act dated 10 August 2012 ("ITRSHA"), and Executive Orders 13224 dated 23 September 2001, 13382 dated 28 June 2005,13590 dated 20 November 2011, 13622 dated 30 July 2012, and 13628 dated 9 October 2012.

In Part I of the Notice, a section on the ISA comments on types of sanctionable activities in respect of which sanctions may be imposed, and lists the 12 types of sanctions which the Secretary of State has at their disposal. The section describing the provisions of and Secretary of States powers under Executive Orders 13590, 13622, and 13628 lists definitions of prohibited cargoes such as "petroleum", "petroleum products", and "petrochemical products". Under Section 212 of ITRSHA persons that knowingly provide underwriting services or insurance or reinsurance for the National Iranian Oil Company, the National Iranian Tanker Company, or a successor entity to either company, may be sanctioned.

Part II of the Notice sets out guidance on the provisions of CISADA and ITRSHA relating to the transfer of "sensitive technology" to Iran and Syria. Under Section 211 of ITRSHA, sanctions may be imposed pursuant to EO 13224 in connection with the provision of vessels, insurance or any other shipping service for the transportation of goods to or from Iran that could materially contribute to the activities of the Government of Iran with respect to support for acts of international terrorism. Also under Section 211 of ITRSHA, sanctions may be imposed pursuant to EO 13382 in connection with the knowing sale, lease or provision of vessels, insurance, or any other shipping service for the transportation to or from Iran of goods that could materially contribute to the activities of the Government of Iran with respect to the proliferation of weapons of mass destruction.

A copy of the Notice can be downloaded from the link set out below.

IRAN FREEDOM AND COUNTER-PROLIFERATION ACT 2012 - 2 JANUARY 2013

On 2nd January 2013, President Obama signed into law the Iran Freedom and Counter-Proliferation Act of 2012 (the “Act”). This Act expands the category of activities by non-US persons involving Iran that could result in the imposition of sanctions against such non-US persons, and provides for the blocking of the property of additional Iran sanctions targets. The sanctions set out in the Act will be applicable from 2 July 2013, 180 days after its enactment.

Section 1244 provides for the designation of, and imposition of an asset freeze with respect to, the energy, shipping, and shipbuilding sectors of Iran, including port operators in Iran, based on findings made by Congress that those sectors are providing revenue to the Government of Iran to support its nuclear proliferation activities. It also provides for the imposition of sanctions against or with respect to persons that sell, supply, or transfer significant goods and services used in connection with the energy, shipping, or shipbuilding sectors of Iran, including the National Iranian Oil Company, the National Iranian Tanker Company, and the Islamic Republic of Iran Shipping Lines. Sanctions will not be imposed in connection with transactions for the sale of agricultural commodities, food, medicine, or medical devices to Iran or for the provision of humanitarian assistance to the people of Iran. Nor does this Section apply with respect to the exportation from Iran of petroleum or petroleum products to a country to which the President has granted a waiver under NDAA 2012 on the basis of that country having significantly reduced its imports of Iranian crude oil.

Section 1245 provides for the imposition of sanctions with respect to a person who knowingly sells, supplies, or transfers, directly or indirectly to or from Iran:

a precious metal;
materials described in section 1245(d), including graphite, raw or semi-finished metals such as aluminium and steel, coal, and software for integrating industrial processes, to/for :
- the energy, shipping or shipbuilding sectors of Iran or sectors of the Iranian economy controlled directly or indirectly by the Iranian Revolutionary Guard Corps;
- any Iranian person listed on the OFAC SDN List
- use in connection with the nuclear, military, or ballistic missile programmes of Iran.

Sanctions may be imposed even if the materials are resold, retransferred or otherwise supplied to/for the persons, or programmes or to an end-user in the sectors described above, therefore where shipment or transport of these materials is contemplated, careful due diligence will be needed in relation to their end use.

Section 1246 provides for the imposition of sanctions against persons who knowingly provide underwriting services or insurance or reinsurance to or for (i) any activity with respect to Iran for which sanctions have been imposed under the various Iran sanctions laws of the United States, including this Act, the Iran Sanctions Act 1996, the Comprehensive Iran Sanctions, Accountability and Divestment Act of 2010 (“CISADA”), and the Iran Threat Reduction and Syrian Human Rights Act 2012; (ii) any activity in the energy, shipping or shipbuilding sectors of Iran for which sanctions are imposed under the Act; (iii) the sale, supply or transfer to or from Iran of the materials described in Section 1245 (d); (iv) any person designated for the imposition of sanctions in connection with Iran’s proliferation of WMD including WMD delivery systems; or (v) any Iranian person listed on the OFAC SDN List.

Sanctions will not be imposed in connection with the provision of underwriting services or insurance or reinsurance for the sale of agricultural commodities, food, medicine, or medical devices to Iran or for the provision of humanitarian assistance to the people of Iran. Sanctions will also not be imposed with respect to a person that provides underwriting services or insurance or reinsurance if such a person has exercised due diligence and established and enforced official policies, procedures and controls to ensure the person does not underwrite or enter into a contract to provide insurance or reinsurance for any activity which could lead to the imposition of sanctions under the Act.

Section 1252 provides that 180 days after the enactment of the Act and annually thereafter through 2016, the US administration shall submit to Congress reports that contain:

a list of large or otherwise significant vessels that have entered seaports in Iran controlled by Tidewater Middle East Company and information regarding the owners and operators of such vessels; and
a list of all airports at which aircraft owned or controlled by an Iranian carrier on which sanctions have been imposed by the United States have landed.

We are grateful to The Eren Law Firm for permission for their Economic Sanctions Update on this subject to be made available via this website, which can be viewed and downloaded from the link below, together with a copy of the relevant sections of the NDAA.