On February 2, the U.S. Senate Banking Committee approved by unanimous voice vote the Johnson-Shelby Iran Sanctions, Accountability and Human Rights Act of 2012. The measure aims to put additional economic pressure on Iran’s leaders to end that country’s nuclear weapons program and support of terrorist groups. Perhaps most significantly, the measure aims to cut off Iranian banks, including the Iranian central bank, from the international electronic payment system provided by the Society for Worldwide Interbank Financial Telecommunication (SWIFT).
The proposed legislation, which has not yet been formally introduced, is said to include the following provisions, amongst others:
- Expansion of Human Rights Sanctions: The bill provides for broad sanctions on persons and firms that supply Iran with technologies, such as riot control and surveillance equipment, which the President deems likely to be used by Iran to commit human rights abuses. The bill would also: (1) require sanctions against individuals and firms that engage in censorship; (2) encourage creation of a strategy to promote Internet freedom in Iran; and (3) require expedited processing of Iran-related humanitarian, human rights and democratization aid.
- Extends US Sanctions to Iranian Energy Joint Ventures: The bill would extend sanctions under the Iran Sanctions Act (ISA) to firms engaged in new energy-related joint ventures in which the Iranian government is a substantial partner or investor, or by which Iran could otherwise receive advanced energy technology. These sanctions would apply regardless of where the joint venture is located
- Expands U.S. Sanctions on Suppliers to Iran’s Energy and Petrochemical Sectors: The bill codifies the President’s prior decision to extend U.S. sanctions to Iran’s petrochemical sector. The proposed legislation also expands sanctions to include all suppliers who knowingly provide goods, services or technologies (valued at $1 million or more, or cumulatively $5 million annually) to persons or firms involved in Iran’s energy sector
- Applies Mandatory U.S. Sanctions to Iranian Uranium Mining Joint Ventures: The bill requires sanctions on those who knowingly engage in joint ventures with Iran’s government, or firms or persons acting on behalf of the Iranian government, in the mining, production or transportation of uranium anywhere in the world. A party currently participating in such activity could avoid penalties if they quickly withdraw.
- Expands Current Sanctions Available under ISA: Senior corporate officers and major shareholders of sanctioned firms could be denied entry into the United States and find their assets frozen.
Expands and Accelerates Efforts to Target Iran’s Revolutionary Guard:
- The bill requires the President to identify all known officials, affiliates and agents of the Revolutionary Guard within 90 days of enactment and subject these parties to sanction.
- Additionally, the bill extends the existing U.S. procurement ban to foreign persons who interact with the Revolutionary Guard by requiring all prospective government contractors to certify that neither they nor their subsidiaries have engaged in significant economic transactions with designated Revolutionary Guard officials, agents or affiliates.
- Mandatory Sanctions on Shippers of Weapons of Mass Destruction: The bill would sanction those that provide ships or insure vessels used in the shipment of materials contributing to Iran’s “weapons of mass destruction” or terror promotion activities. Such penalties could also apply to parent or subsidiary firms
- Liability of U.S. Firms for Activities of their Foreign Subsidiaries: The bill requires that U.S. parent companies be subject to civil penalties of up to twice the amount of the transaction if one of their foreign subsidiaries participates in any transaction that would constitute a violation of U.S. sanctions law if it had been made by a U.S. person or taken place in the U.S.
- Mandatory Disclosure of Iran-Related Activity to the SEC: The bill requires all companies traded on any U.S. stock exchange to disclose to the Securities and Exchange Commission (SEC) whether they or their affiliates have engaged in activities that might be subject to sanction under U.S. law. Furthermore, the bill provides for public disclosure of such information by the SEC and transmission of such disclosed information to the President and Congress. After receipt of such disclosures, the President is required to initiate an investigation and determine whether the disclosed activities are sanctionable
- Exclusion of Iranian Students Who Intend to Work in Iran’s Energy Sector or Nuclear Program: The Secretary of State is required to deny visas to Iranian university and graduate students who intend to come to the U.S. to study in energy-related fields upon the Secretary’s determination that such a person intends to return to Iran to work in that country’s energy sector or nuclear program.
Finally, press reports indicate that the Committee adopted an amendment designed to pressure the international banking telecommunications network, SWIFT, to expel Iranian banks, including the Iranian central bank. Such action potentially could deny Iran billions of dollars currently circulating through its economy.
The bill now moves to the full Senate, where most commentators feel that the likelihood of passage is quite strong.