Samuel Rubenfeld – Wall Street Journal
Tough U.S. sanctions on Iran signed into law last August went into effect Wednesday as the Treasury Department announced new designations targeting the state broadcaster, its director as well as three other entities.
The sanctions, which were implemented in October, are part of a broader effort to target Iran for not complying with U.S. and Western pressure to halt its nuclear program.
Among other things, the law closes loopholes in existing sanctions on Iran, and adds penalties for those aiding Iran’s petroleum, petrochemical, insurance, shipping and financial sectors. It also broadens the list of available programs under which sanctions can be imposed on Iranian individuals and entities.
Parent companies of foreign subsidiaries violating sanctions can be targeted, and Treasury laid out in December how companies can exit the Iranian market before March 8 without violating the measures.
Erich Ferrari, the principal at Ferrari & Associates, a boutique law firm specializing in U.S. sanctions, said in a brief interview that his clients began winding down transactions long ago. “A lot of people saw this coming down the pipeline and took whatever necessary steps” to prepare for it, he said.
Key provisions of the sanctions went into effect on Wednesday, including a section that amended existing sanctions on Iran’s central bank, blacklisted Iranian financial institutions and the country’s oil sector, Treasury said in a statement.
One provision narrows the waivers granted to countries for reducing their Iranian crude imports so that the exception only applies to bilateral trade between Iran and that country, Treasury noted Wednesday. For specific transactions resulting from the trade, the funds will be locked in the country and barred from being repatriated back to Iran.
Treasury said in the statement the provision will “significantly increase economic pressure on Iran,” restricting its use of revenue for trade and limiting Tehran’s ability to move funds.
Ferrari said the liability under the provision falls on the foreign financial institutions within the 20 countries that have received waivers from the State Department.
“The question is whether the foreign financial institution is willing to expose itself to sanctions and thereby lose its correspondent payable-through account in the U.S.,” he said.
How each country with the waiver deals with those financial institutions that choose to keep doing business with Iran will come down on a case-by-case basis, but it’s too early to guess, Ferrari said.
Also Wednesday, Treasury said it placed sanctions on Iran’s state broadcaster and its director, Ezzatollah Zarghami, under its authority in the executive order implementing the August law to target those impeding the free flow of information in Iran.
Citing information from human rights groups, Treasury said Iran is using state-media transmissions to trample dissent. Zarghami has admitted to jamming Western networks, Treasury said, citing Iranian state media reports.
Treasury also placed sanctions on the Iranian Cyber Police, which it said has worked with other Iranian cyber units to filter websites, monitor Internet behavior, and hack email accounts related to political action on the Web.
It also targeted the Communications Regulatory Authority and the Iran Electronics Industries, which was previously placed under sanctions in September 2008.
“We will also target those in Iran who are responsible for human rights abuses, especially those who deny the Iranian people their basic freedoms of expression, assembly and speech,” said David Cohen, undersecretary of Treasury for terrorism and financial intelligence, in the statement.