US Enacts Additional Iran-Related Sanctions; OFAC Amends Iranian Sanctions Regulations

On January 2, 2013, President Obama signed the National Defense Authorization Act for Fiscal Year 2013 (the “2013 NDAA”) into law. Provisions of the 2013 NDAA, entitled the “Iran Freedom and Counter-Proliferation Act of 2012”, expand Iranian sanctions to target companies that engage in a variety of new activities related to the energy, shipping and shipbuilding sectors of Iran; trade in precious metals and certain industrial materials and software with Iran; and underwriting, insurance or reinsurance services provided with respect to sanctioned Iran-related activities or persons. The new sanctions also target foreign financial institutions that conduct or facilitate financial transactions connected to these sanctioned activities or for Iranian persons on OFAC’s List of Specially Designated Nationals and Blocked Persons.

One week earlier, on December 26, 2012, OFAC amended its Iranian Transactions and Sanctions Regulations (the “ITSR”) to implement portions of the Iran Threat Reduction and Syria Human Rights Act of 2012 (the “ITRA”). Notably, these amendments to the ITSR provide additional detail regarding a recent Executive Order (implementing provisions of ITRA) prohibiting non-U.S. entities that are owned or controlled by a U.S. person from knowingly engaging in transactions with Iran or Iranian entities that would be prohibited for a U.S. person—prohibitions that formerly did not apply to non-U.S. subsidiaries or other entities controlled by U.S. persons.

The attached alert memorandum describes the key features and changes in law resulting from these recent developments.