Iran Sanctions
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Iran Sanctions (name redacted) Specialist in Middle Eastern Affairs May 11, 2018 Congressional Research Service 7-.... www.crs.gov RS20871 Iran Sanctions Summary The multilateral nuclear accord (Joint Comprehensive Plan of Action, or JCPOA) provided Iran broad relief from U.S., U.N., and multilateral sanctions on Iran’s civilian economic sectors, including U.S. secondary sanctions (sanctions on foreign firms that do business with Iran). On January 16, 2016, upon International Atomic Energy Agency (IAEA) certification that Iran had complied with the stipulated JCPOA nuclear commitments, U.S. Administration waivers of relevant sanctions laws took effect, relevant executive orders (E.O.s) were revoked, and corresponding U.N. and EU sanctions were lifted. Remaining in place were a general ban on U.S. trade with Iran; and U.S. secondary sanctions imposed on Iran’s regional “malign activities,” its human rights abuses, its efforts to acquire missile and advanced conventional weapons capabilities, and the Islamic Revolutionary Guard Corps (IRGC) and affiliates. Some additional sanctions on these entities and activities were made mandatory by the Countering America’s Adversaries through Sanctions Act (CAATSA, P.L. 115-44), which also increases sanctions on Russia and North Korea. On May 8, 2018, President Trump announced that the United States would no longer participate in the JCPOA and that all U.S. secondary sanctions suspended to implement the JCPOA would be reimposed. There is to be an allowed “wind-down period” of a maximum of 180 days (November 4, 2018), at which time foreign entities that violate the applicable U.S. laws might be penalized. U.S. licenses for the sale by Airbus and Boeing of commercial aircraft to Iran Air and other Iranian airlines are being revoked. Under U.N. Security Council Resolution 2231, nonbinding U.N. restrictions on Iran’s development of nuclear-capable ballistic missiles and a binding ban on its importation or exportation of arms remain in place for several years. However, Iran has continued to support regional armed factions and to develop ballistic missiles despite the U.N. restrictions, and did so even when strict international economic sanctions were in place during 2010-2015. The reimposition of U.S. secondary sanctions will likely harm Iran’s economy, but the degree to which it does so will depend on the extent to which foreign governments and companies cooperate with the reimposed sanctions. During 2012-2015, Iran’s economy shrank by 9% per year, crude oil exports fell from about 2.5 million barrels per day (mbd) to about 1.1 mbd, and more than $120 billion in Iranian reserves held in banks abroad were restricted. JCPOA sanctions relief has enabled Iran to increase its oil exports to nearly presanctions levels, regain access to foreign exchange reserve funds and reintegrate into the international financial system, achieve about 7% yearly economic growth, attract foreign investments in key sectors, and buy new passenger aircraft. The relief from sanctions on Iran’s most vital sectors contributed to Iranian President Hassan Rouhani’s reelection in the May 19, 2017, vote. Yet, perceived economic inequities and grievances constituted a key component of the widespread unrest in December 2017-January 2018. Should the reimposition of U.S. sanctions harm Iran’s economy significantly, there is substantial potential for Iranian leaders to decide to cease participating in the JCPOA. See also CRS Report R43333, Iran Nuclear Agreement, by (name redacted) and (name redacted); and CRS Report R43311, Iran: U.S. Economic Sanctions and the Authority to Lift Restrictions, by (name redacted) . Congressional Research Service Iran Sanctions Contents Overview and Objectives ................................................................................................................ 1 Blocked Iranian Property and Assets ............................................................................................... 1 Executive Order 13599 Impounding Iran-Owned Assets .......................................................... 3 Sanctions for Iran’s Support for Terrorism and Destabilizing Regional Activities ......................... 4 Sanctions Triggered by Terrorism List Designation .................................................................. 4 Exception for U.S. Humanitarian Aid ................................................................................. 5 Sanctions on States Designated as “Not Cooperating” Against Terrorism ............................... 5 Executive Order 13224 Sanctioning Terrorism-Supporting Entities ......................................... 5 Application to the Revolutionary Guard by the Countering America’s Adversaries through Sanctions Act (CAATSA, P.L. 115-44) .............................................................. 6 Implementation ................................................................................................................... 6 Executive Orders Sanctioning Iran’s Involvement in Iraq and Syria ........................................ 6 Ban on U.S. Trade and Investment with Iran .................................................................................. 6 JCPOA-Related Easing and Reversal ................................................................................. 7 What U.S.-Iran Trade Is Allowed or Prohibited? ...................................................................... 7 Application to Foreign Subsidiaries of U.S. Firms ................................................................. 10 Sanctions on Iran’s Energy Sector ................................................................................................. 10 The Iran Sanctions Act (Including Triggers and Applications Added by CISADA, ITRSHRA, IFCA, and Other Laws) ...................................................................................... 11 Key Sanctions “Triggers” Under ISA ................................................................................ 11 Mandate and Time Frame to Investigate ISA Violations .................................................. 15 Interpretations and Implementation of ISA and Related Laws ......................................... 18 Iran Oil Export Reduction Sanctions: Section 1245 of the FY2012 NDAA Sanctioning Transactions with Iran’s Central Bank ............................................................. 21 Implementation: Exemptions Issued ................................................................................. 21 Foreign Exchange Reserves “Lock Up” Provision of ITRSHRA ..................................... 23 Sanctions on Weapons of Mass Destruction, Missiles, and Conventional Arms Transfers ........... 24 Iran-Iraq Arms Nonproliferation Act and Iraq Sanctions Act ................................................. 24 Anti-Terrorism and Effective Death Penalty Act of 1996 ....................................................... 25 Proliferation-Related Provision of the Iran Sanctions Act ...................................................... 26 Iran-North Korea-Syria Nonproliferation Act ......................................................................... 26 Executive Order 13382 on Proliferation-Supporting Entities ................................................. 27 Arms Transfer and Missile Sanctions in the Countering America’s Adversaries through Sanctions Act (CAATSA, P.L. 115-44). .................................................................. 27 Foreign Aid Restrictions for Named Suppliers of Iran............................................................ 28 Sanctions on “Countries of Diversion Concern” ..................................................................... 29 Financial/Banking Sanctions ......................................................................................................... 29 Targeted Financial Measures ................................................................................................... 29 Ban on Iranian Access to the U.S. Financial System .............................................................. 30 CISADA: Sanctioning Foreign Banks That Conduct Transactions with Sanctioned Iranian Entities ..................................................................................................................... 31 Implementation of Section 104: Sanctions Imposed ......................................................... 32 Iran Designated a Money-Laundering Jurisdiction/FATF ....................................................... 32 Cross-Cutting Secondary Sanctions: The Iran Freedom and Counter-Proliferation Act (IFCA) ........................................................................................................................................ 33 Congressional Research Service Iran Sanctions Implementation ................................................................................................................. 34 Sanctions on Iran’s Cyber and Transnational Criminal Activities ................................................. 34 Executive Order 13694 (April 1, 2015) .................................................................................. 34 Executive Order 13581 (July 25, 2011) .................................................................................. 35 Implementation ................................................................................................................. 35 Divestment/State-Level Sanctions ................................................................................................