President Obama Signs Act Enhancing Iran Sanctions

Last week, President Obama signed into law enhanced energy and financial sanctions against Iran. The new law, the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (the "Act"), imposes tough new penalties aimed at persuading Iran to stop its illicit nuclear program. Targets of the Act range from business entities involved in refined petroleum sales to international banking institutions doing business with Iranian banks or Iran's Islamic Revolutionary Guard Corps ("IRGC").

The Senate and House acted in quick succession on Thursday, June 24th to overwhelmingly approve the Act – by 99-0 and 408-8 margins, respectively – just two weeks after the United Nations Security Council approved a fourth round of sanctions against Iran because of its refusal to abandon its uranium enrichment program. This congressional action comes after the Obama Administration's diplomatic efforts have made little progress with respect to Iran's nuclear program and its support of terrorist-branded Islamic groups, and sends a clear message to Iran that its pursuit of a nuclear weapons capability will not come without an economic price.

The Act strengthens the underlying Iran Sanctions Act ("ISA"), implemented in 1996, by imposing new sanctions on businesses involved in supplying Iran with refined petroleum, including gasoline and jet fuel, which Iran must import because of its weak refining ability. In addition, the Act presents foreign banks doing business with blacklisted Iranian entities with a choice – cease activities or be denied access to America's financial system. These enhanced sanctions also:

Expand the scope of sanctions authorized under ISA by imposing sanctions on foreign companies, including insurance, financing and shipping companies, that sell goods, services or know-how to Iran that assist in development of Iran's energy sector; Ban US banks from engaging in financial transactions with foreign banks doing business with Iran's IRGC, or otherwise facilitating Iran's illicit nuclear program or its support of terrorism; Hold US banks accountable for actions by their foreign subsidiaries; Require that companies bidding on US government procurement contracts certify that they are not doing business with Iran; Tighten the existing US embargo on Iranian goods by curbing the number of exempted products; Increase substantially the criminal penalties for sanctions violations by US entities; Impose significant financial penalties and travel...