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Treasury Department Publishes New Iran Sanctions Regulations

The U.S. Department of the Treasury, Office of Foreign Assets Control (OFAC) published today Congressionally mandated regulations to implement the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (CISADA).  President Barack Obama signed CISADA into law earlier this summer.

While CISADA specifically targets Iran’s energy sector, the law is already having a ripple effect in other industries tied to oil and gas.  Shippers, insurers, and energy company suppliers, among others, are going to have to reassess exports and dealings with Iran.  Companies that do business with the U.S. federal government will also need to take stock of dealings in the Middle East region, especially when working with companies that have extensive holdings or business dealings in the region.

One of the more interesting CISADA provision is parent company liability for acts by subsidiaries that the parent had “reason to know” could lead to a violation of U.S. law.  For folks who have followed U.S. policy toward Iran for many years, this element of the law starts to close the legal noose, albeit it does not appear completely, on subsidiary liability concerns for U.S. and foreign corporations.

Another industry that will likely feel CISADA’s pinch is the financial services sector.  Under the divestment provisions, advocates of terrorism divestment won a significant victory as the law makes it easier for state and local governments to divest themselves of, or to prohibit, investments of public funds in companies that invest in Iran.

How has Iran responded to these and other pressures?  Besides the usual vitriol, Iranian officials announced earlier today that it is pressing forward with plans to construct a new uranium enrichment site (meaning that it is likely already under construction).  The Russians will be lending a hand with the effort that includes a physical plant built on the side of a mountain.  Exporter of U.S. heavy machinery, parts, and components needed for boring into mountain sides are on notice.

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