New Sanctions Further Constrain Iranian Oil Revenues
The United States is taking a number of actions that tighten sanctions on Iran’s access to its oil revenues. Key provisions of the Iran Threat Reduction and Syria Human Rights Act of 2012 (TRA) that went into effect, expand the scope of sanctionable transactions with the Central Bank of Iran and designated Iranian financial institutions by restricting Iran’s ability to use oil revenue held in foreign financial institutions as well as preventing repatriation of those funds to Iran.
“Our policy is clear – so long as Iran continues to fail to address the concerns of the international community about its nuclear program, the U.S. will impose tighter sanctions and intensify the economic pressure against the Iranian regime,” said Treasury Under Secretary for Terrorism and Financial Intelligence David S. Cohen.
It has been over 180 days since the President signed the TRA. Section 504 of the TRA amends existing sanctions in the National Defense Authorization Act for Fiscal Year 2012 (NDAA) that target the Central Bank of Iran, designated Iranian financial institutions and Iran’s energy sector. At the 180-day mark, section 504 narrows the exception for countries that have significantly reduced their purchases of Iranian crude oil so that the exception now only applies to financial transactions that facilitate bilateral trade between the country granted the exception and Iran. For the exception to apply to a financial transaction, funds owed to Iran as a result of such bilateral trade will now have to be credited to an account located in the country granted the exception and may not be repatriated to Iran.
This provision will significantly increase economic pressure on Iran by restricting Iran’s repatriation of oil revenue. In addition to effectively “locking up” Iranian oil revenue overseas, this provision sharply restricts Iran’s use of this revenue for bilateral trade and severely limits Iran’s ability to move funds across jurisdictions.
For full details on the new sanctions, click HERE.