New U.S. sanctions on Iran became effective this month pursuant to the Iran Freedom and Counter-Proliferation Act of 2012 (IFCA) and Executive Order 13645. The sanctions adopt an approach similar to the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (CISADA) by targeting companies’ involvement in certain sectors of the Iranian economy. The new sanctions also further expand the extraterritorial scope of U.S. sanctions on Iran.
Among other measures, IFCA requires the President to impose sanctions on entities that are determined to be involved in certain activities linked to the energy, shipbuilding, or shipping sectors of the Iranian economy. Involvement in activities linked to trade in precious metals, graphite, certain industrial materials and software, and automotive items could also expose companies to sanctions pursuant to IFCA and Executive Order 13645. Other new measures include sanctions on activities related to insurance and reinsurance, dealings in Iranian currency, diversion of goods, and petrochemical exports from Iran.
IFCA further expands the extraterritorial scope of U.S. sanctions by targeting the activities of non-U.S. companies outside the U.S. Under IFCA, non-U.S. companies may be subject to sanctions by U.S. authorities if they materially assist, sponsor, or provide financial, material, or technological support to Specially Designated Nationals or entities involved in the Iranian energy, shipping, or shipbuilding sectors. Non-U.S. companies should continue to carefully monitor the scope of expanding U.S. sanctions and evaluate their exposure to possibly severe penalties from U.S. authorities.
For more information about the contents of this newsletter, or about Kelley Drye's International Trade Practice, please contact practice group chair Kathleen Cannon or partner Paul Rosenthal, who acts as editor of this publication.