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Iran Sanctions Iran Sanctions Updated February 4, 2019 Congressional Research Service https://crsreports.congress.gov RS20871 Iran Sanctions Summary U.S. sanctions have been used extensively by successive Administrations to try to change Iran’s behavior. Sanctions had a substantial effect on Iran’s economy and on some major strategic decisions, but little or no effect on Iran’s regional malign activities. During 2012-2015, when the global community was relatively united in pressuring Iran, Iran’s economy shrank as its crude oil exports fell by more than 50%, and Iran had limited ability to utilize its $120 billion in assets held abroad. The 2015 multilateral nuclear accord (Joint Comprehensive Plan of Action, or JCPOA) provided Iran broad relief from the international and U.S. secondary sanctions as the Obama Administration waived relevant sanctions, revoked relevant executive orders (E.O.s), and corresponding U.N. and EU sanctions were lifted. Remaining in place were a general ban on U.S. trade with Iran and sanctions imposed on Iran’s support for regional governments and armed factions, its human rights abuses, its efforts to acquire missile and advanced conventional weapons capabilities, and the Islamic Revolutionary Guard Corps (IRGC). 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. Iran has defied the Resolution by continuing long-standing support for regional armed factions and development of ballistic missiles. Iran was able to pursue these policies even when strict international economic sanctions imposed significant harm to its economy during 2010-2015. JCPOA sanctions relief 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 sanctions relief contributed to Iranian President Hassan Rouhani’s reelection in the May 19, 2017, vote. Yet, the economic rebound did not prevent sporadic unrest that has erupted since December 2017. 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 would be reimposed after a maximum “wind- down period” of 180 days (ending November 4, 2018). The reimposition of U.S. sanctions is harming Iran’s economy as major companies exit the Iranian economy rather than risk being penalized by the United States. Iran’s oil exports have decreased significantly, the value of Iran’s currency has sharply declined, and economic-based unrest has continued, although not to the point where the regime is threatened. But it remains uncertain how extensively Iran’s economy will be damaged, because the European Union and other countries are trying to keep the economic benefits of the JCPOA flowing to Iran in order to persuade Iran to remain in the JCPOA. To that end, in January 2019 the European countries created a trading mechanism (Special Purpose Vehicle) that presumably can increase trade with Iran by circumventing U.S. secondary sanctions. On November 5, 2018, the Administration granted six-month exceptions to eight countries that the Administration asserts significantly reduced oil imports from Iran— including to China and India even though the two countries combined continued to import over 1 million barrels per day of Iranian crude oil in October. The economic difficulties have prompted Iranian hardliners to urge reconsideration of Iran’s continued adherence to the JCPOA. See also CRS Report R43333, Iran Nuclear Agreement and U.S. Exit, by Paul K. Kerr and Kenneth Katzman; and CRS Report R43311, Iran: U.S. Economic Sanctions and the Authority to Lift Restrictions, by Dianne E. Rennack. 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 Regional Activities ............................................... 4 Sanctions Triggered by Terrorism List Designation .................................................................. 4 Exception for U.S. Humanitarian Aid ................................................................................. 5 Sanctions on States “Not Cooperating” Against Terrorism ...................................................... 6 Executive Order 13224 Sanctioning Terrorism-Supporting Entities ......................................... 6 Use of the Order to Target Iranian Arms Exports ............................................................... 6 Application to the Revolutionary Guard by the Countering America’s Adversaries through Sanctions Act (CAATSA, P.L. 115-44) .............................................................. 6 Implementation ................................................................................................................... 6 Sanctions on Iran’s Malign Regional Activities ........................................................................ 6 Ban on U.S. Trade and Investment with Iran .................................................................................. 7 JCPOA-Related Easing and Reversal ................................................................................. 8 What U.S.-Iran Trade Is Allowed or Prohibited? ...................................................................... 8 Application to Foreign Subsidiaries of U.S. Firms .................................................................. 11 Sanctions on Iran’s Energy Sector.................................................................................................. 11 The Iran Sanctions Act (and Triggers added by other Laws) .................................................. 12 Key Sanctions “Triggers” Under ISA ............................................................................... 12 Mandate and Time Frame to Investigate ISA Violations .................................................. 16 Interpretations of ISA and Related Laws .......................................................................... 18 Implementation of Energy-Related Iran Sanctions ........................................................... 19 Iran Oil Export Reduction Sanctions: Section 1245 of the FY2012 NDAA Sanctioning Transactions with Iran’s Central Bank ............................................................. 21 Implementation ................................................................................................................. 22 Iran Foreign Bank Account “Restriction” Provision ......................................................... 23 Sanctions on Weapons of Mass Destruction, Missiles, and Conventional Arms Transfers ........... 24 Iran-Iraq Arms Nonproliferation Act and Iraq Sanctions Act ................................................. 24 Banning Aid to Countries that Aid or Arm Terrorism List States: Anti-Terrorism and Effective Death Penalty Act of 1996 .................................................................................... 26 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: 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/Use of Dollars ...................................... 30 Recent Developments ....................................................................................................... 30 Punishments/Fines Implemented against Some Banks. .................................................... 30 CISADA: Sanctioning Foreign Banks That Conduct Transactions with Sanctioned Iranian Entities ..................................................................................................................... 31 Congressional Research Service Iran Sanctions Implementation of Section 104: Sanctions Imposed ......................................................... 32 Iran Designated a Money-Laundering Jurisdiction/FATF ....................................................... 32 Use of the SWIFT System ....................................................................................................... 33 Cross-Cutting Secondary
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