UK: Sanctions Update - September 2012

Last Updated: 19 September 2012
Article by Douglas R. Maag and Mia Finsness

US Executive Order 13622 and the Iran Threat Reduction and Syria Human Rights Act of 2012

The US government recently put into effect important new sanctions measures concerning Iran. On 30 July 2012 President Obama signed Executive Order 13622 expanding extraterritorial sanctions on Iran's petroleum sales. Eleven days later, the President signed into law the Iran Threat Reduction and Syrian Human Rights Act, which contains sweeping new and expanded sanctions largely (but not exclusively) targeting Iran's energy sector. These new sanctions have applicability to both US and non-US persons (individuals, companies and other entities), and significantly broaden the landscape of US sanctions on Iran.

Executive Order 13622: "Authorizing Additional Sanctions With Respect to Iran" (EO 13622)

Section 1 of EO 13622 authorizes the US Secretary of the Treasury to impose sanctions against "foreign financial institutions" (including foreign banks) that "knowingly" conducted or facilitated a "significant financial transaction" either (1) with the National Iranian Oil Company or Naftiran Intertrade Company (subject to a limited exception), or (2) "for the purchase or acquisition" of petroleum, petroleum products, or petrochemical products from Iran. Upon finding a violation of Section 1, the foreign financial institution may be prohibited from opening, or have strict conditions imposed upon its opening or maintaining, correspondent or payable-through accounts in the US, effectively preventing the foreign financial institution from processing USD payments.

Section 2 of EO 13622 authorizes the US Secretary of State to impose sanctions against any foreign person (not just a financial institution) who has "knowingly" engaged "in a significant transaction for the purchase or acquisition" of petroleum, petroleum products, or petrochemical products from Iran. Violators may be prohibited from obtaining certain loans from US banks, prohibited from foreign exchange transactions in the US, prohibited from engaging in transfers of credit or payment through US banks, have their US assets blocked (i.e., frozen), and have restrictions imposed upon or be prohibited from having their goods imported into the US. Notably, sanctions will not be imposed under Section 2, however, unless both:

(1) The President has determined that there is a sufficient supply of petroleum and petroleum products from countries other than Iran to permit a significant reduction in the volume of such purchases from Iran. The President has made such determinations on 30 March 2012 and on 11 June 11 2012

(2) An exemption has not been granted under the National Defense Authorization Act of 2011 to the country with primary jurisdiction over the person purchasing the Iranian petroleum or petroleum products. To date, exemptions have been granted to Belgium, the Czech Republic, France, Germany, Greece, Italy, the Netherlands, Poland, Spain, the United Kingdom, Japan, India, South Africa, Malaysia, South Korea, Sri Lanka, Taiwan, Turkey, Singapore and China

Section 5 of EO 13622 provides for sanctions against any person who materially assists, sponsors or provides financial, material, or technological support, or goods or services to, the National Iranian Oil Company, Naftiran Intertrade Company or the Central Bank of Iran. Section 5 provides that the property and interests in property in the US of a person determined to have breached its provisions are blocked.

As in most US sanctions, the term 'knowingly" under EO 13622 means, "with respect to conduct, a circumstance or a result that a person has actual knowledge, or should have known, of the conduct, the circumstance, or the result." There are no specific dollar thresholds for triggering the EO 13622 sanctions, but the US Treasury Department expects to consider the following factors to determine whether a transaction is "significant": the size, number, and frequency; type, complexity, and commercial purpose; the level of awareness or involvement by management; whether the activity or payment illustrates a pattern or practice or an isolated event; the ultimate economic benefit conferred upon the sanctions target; and whether the transactions involved the use of deceptive financial practices to obscure the identities of the parties involved.

The Iran Threat Reduction and Syria Human Rights Act of 2012 ("ITRA")

ITRA is the third significant sanctions law passed by the US Congress over the past two years, building upon the Comprehensive Iran Sanctions, Accountability, and Divestment Act in September 2010 (CISADA) and the National Defense Authorization Act in December 2011 (NDAA). Unlike the relatively narrow focus of CISADA and the NDAA, however, ITRA's measures are wide-ranging.

Important provisions of ITRA include the following:

  • Section 201 contains new sanctions against persons who (1) invest in construction of Iran's transportation infrastructure if its primary purpose is to support the delivery of refined petroleum products, (2) participate in petroleum joint ventures in which the Iranian government is a substantial partner or investor, or (3) provide support for Iran's development of petrochemical products
  • Section 202 contains new sanctions in respect of the shipping of Iranian petroleum. Sanctions are provided against persons who are controlling beneficial owners of, or otherwise own, operate, control or insure a vessel that, 90 days after the enactment of ITRA, was used to transport crude oil from Iran to another country (subject to certain knowledge standards), unless the destination of such crude oil is a country that has been granted an exception under the NDAA. Sanctions are also provided against such persons if they permit the operator of a vessel to conceal that it is transporting Iranian crude or refined petroleum by suspending the vessel's satellite tracking device or concealing or obscuring ownership, operation or control of the vessel by the Iranian government, the National Iranian Tanker Company, the Islamic Republic of Iran Shipping Lines, or any other entity determined to be owned or controlled by these entities. Vessels subject to these sanctions may be refused entry to US ports for a period of two years. These sanctions will not be imposed upon persons who provide underwriting services, insurance or reinsurance if they are determined to have "exercised due diligence in establishing and enforcing official policies, procedures, and controls to ensure" against engaging in the conduct sanctioned in Section 202
  • Section 204 expands from three to five the number of sanctions to be imposed upon sanctioned persons under the Iran Sanctions Act, and adds three new sanctions to the "menu" of twelve. These new sanctions provide for: (1) a prohibition against US persons' investing in the debt or equity of the sanctioned person, (2) denial of entry into the US for corporate officers of the sanctioned person, and (3) the blocking of assets of principal executive officers of the sanctioned person
  • Section 211 authorizes sanctions against a person who knowingly sells or otherwise provides a vessel or insurance, reinsurance or other shipping services "for the transportation to or from Iran of goods that could materially contribute to" Iran's proliferation of weapons of mass destruction or support for terrorism. Upon breach of this provision, the sanctioned person is subject to asset blocking and prohibition of transactions with US persons or in the US. Persons subject to sanction under Section 211 include not only the person who engaged in the conduct, but also such person's parent company if it had actual knowledge or should have known of the subsidiary's conduct, as well as the person's subsidiaries who knowingly engaged in the conduct
  • Section 212 provides a menu of new sanctions applicable to insurers and reinsurers. Specifically, Section 212 provides for sanction against persons who knowingly provide "underwriting services or insurance or reinsurance for the National Iranian Oil Company or the National Iranian Tanker Company" (or their successors). The President is required to impose 5 of the 12 sanctions on the "menu" upon determining that a person provided such underwriting services, insurance or reinsurance. There are three important exceptions provided for in Section 212:
    • First, the President is authorized not to impose the sanctions upon a person providing such underwriting services, insurance or reinsurance if the person is determined to have "exercised due diligence in establishing and enforcing official policies, procedures, and controls to ensure" against engaging in the sanctioned conduct
    • Second, sanctions will not be imposed for the provision of underwriting services, insurance or reinsurance related to provision of agricultural commodities, food, medicine or medical devices to Iran, or for the provision of humanitarian assistance to the Iranian people
    • Third, the President is authorized not to impose the sanctions if the President "receives reliable assurances that the person will terminate the provision of underwriting services or insurance or reinsurance" for the National Iranian Oil Company or the National Iranian Tanker Company (and their successors) within 120 days of enactment of ITRA (i.e., by 8 December 2012)
  • Section 213 imposes sanctions against persons who purchase, subscribe to or facilitate issuance of sovereign debt by the Iranian government, or of any entity owned or controlled by the Iranian government
  • Section 216 requires that regulations implementing CISADA sanctions that apply to foreign financial institutions be revised to encompass a broader range of institutions
  • Section 217 codifies into law various sanctions imposed by Presidential Executive Orders
  • Section 218 provides that new sanctions shall be imposed upon US companies for conduct by their "owned or controlled" foreign subsidiaries and other foreign entities if such conduct would be prohibited if engaged in by the US company. This provision contains a safe harbor if the US company divests or terminates its business with the foreign entity within 180 days of enactment of ITRA
  • Section 219 requires companies listed on US stock exchanges to make disclosures of sanctions violations in their public reports
  • Section 302 calls for imposition of sanctions against persons who knowingly materially assist, sponsor or provide financial, material or technological support to Iran's Revolutionary Guard Corps or its officials, agents or affiliates whose property and interests in property are blocked in the US
  • Section 504 requires a finding that a country granted an NDAA exception reduce its Iranian crude imports to zero in order to receive a further exemption
  • Titles IV and VII of ITRA provide for additional sanctions in respect of human rights abuses in Iran and Syria
  • Regulatory action will follow in due course to implement and clarify provisions of ITRA.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.