On June 5, 2013, President Obama issued the Executive Order 13645 “Implementing Sanctions Set Forth in the Iran Freedom & Counter-Proliferation Act of 2012” that would become effective on July 1, 2013.
EO 13645 implements several statutory provisions of Iran Freedom and Counter-proliferation Act (IFCA) of 2012 but also imposes additional sanctions.
The new Order, like other recent U.S. sanctions against Iran, targets non U.S. financial institutions and commercial businesses but now threatens to freeze the U.S. assets of non-U.S. persons who engage in transactions with certain Iranian governmental agencies and enterprises or other sanctioned persons. It also expands the threat of sanctions to:
- Iran’s automotive sector: sanctions can be imposed on a foreign financial institution has “knowingly conducted or facilitated any significant financial transaction” either (i) on behalf of any Iranian person included on the SDN List (other than one designated solely with the [IRAN] tag) or (ii) on or after the effective date of the EO, for the “sale, supply, or transfer to Iran of significant goods or services used in connection with the automotive sector of Iran.”;
- Iran’s currency: sanctions can be imposed on a foreign financial institution if it “knowingly conducted or facilitated any significant transaction” related to the “purchase or sale of Iranian rials or a derivative, swap, future, forward, or other similar contract whose value is based on the exchange rate of the Iranian rial” or “maintained significant funds or accounts outside the territory of Iran denominated in the Iranian rial”;
- Persons providing assistance to Iranian listed on the Specially Designed Nationals;
- Entities involved in the transport or marketing of Iranian’s exports of Petroleum/Petrochemicals.
Additionally, the EO and Office of Foreign Assets Control (OFAC) made statements in connection with the issuance of this Order to clarify a number of issues and provisions of the IFCA.
Non-U.S. companies that intend to continue trade with Iran after July 1, 2013, face not only potential sanction by the U.S., but also commercial risks such as:
- refusal by banks to process any transaction connected to Iran;
- denial of coverage by insurance companies in fear of being sanctioned.