On July 30, 2012, the US imposed sanctions on a PRC financial institution, Bank of Kunlun, for violating US sanctions against Iran. The sanctions effectively bar the bank from directly accessing the U.S. financial system, prohibiting it from opening correspondent or payable-through accounts in the United States. The decision marks the second time in the past six months that the US has imposed sanctions on a PRC organization for violating the sanctions regime against Iran.

The sanctions were based on allegations that Bank of Kunlun violated the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (CISADA) by processing payments in excess of several hundred million dollars on behalf of Iranian banks. Bank of Kunlun, which is owned by China National Petroleum Corp (CNPC), one of the largest state-owned enterprises and the largest oil producer in China, reportedly served as an intermediary bank to help channel Iranian payments to regional banks in China.

Also on July 30, 2012, the Obama administration ordered a new round of economic sanctions for foreign financial institutions and the Iranian energy sector. The new measures give the US Department of Treasury new powers to impose sanctions on non-US financial institutions which have "knowingly conducted or facilitated" any "significant financial transaction" with the National Iranian Oil Company (“NIOC”) or Naftiran Intertrade Company (“NICO”) for the purchase of petroleum, petroleum products, or petrochemical products from Iran. Organizations that violate the new sanctions may be effectively banned from participating in US financial markets.

On August 1, 2012, both houses of the US Congress approved new sanctions against Iran which target persons or companies that work in Iran's petroleum or natural gas sector. The measures will also impose sanctions on anyone who mines uranium with Iran; sells, leases or provides oil tankers to Iran; or provides insurance or reinsurance to either the National Iranian Oil Company or the National Iranian Tanker Company. These new proposed sanctions will have effect with approval by President Obama, which is expected to come within days.

The US sanctions regime against Iran is changing rapidly and enforcement actions are on the rise. We will continue to provide updates on the regime as the situation develops.