Iran Sanctions (name redacted) Specialist in Middle Eastern Affairs January 10, 2018 Congressional Research Service 7-.... www.crs.gov RS20871 Iran Sanctions Summary The multilateral nuclear accord (Joint Comprehensive Plan of Action, or JCPOA) provides 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 the International Atomic Energy Agency (IAEA) certification that Iran had complied with the stipulated nuclear dismantlement 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. 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 was able to develop its nuclear and missile programs and to assist pro-Iranian regional groups and governments even when strict sanctions were in place. Also remaining in place is a general ban on U.S. trade with and investment in Iran, including regulations barring transactions between U.S. and Iranian banks, and U.S. sanctions imposed because of Iran’s support for terrorism, its human rights abuses, its interference in specified countries in the region, and its missile and advanced conventional weapons programs, as well as sanctions on the Islamic Revolutionary Guard Corps (IRGC) and designated commanders, subunits, and affiliates. Some additional sanctions on these entities and activities were made mandatory by the Countering America’s Adversaries Through Sanctions Act (P.L. 115-44), which also increases sanctions on Russia and North Korea. As part of a shift to assertively counter Iran’s regional activities and strategic weapons programs, as articulated by President Donald Trump on October 13, 2017, the Trump Administration has threatened to cease implementing the JCPOA unless Congress and U.S. allies successfully address the agreement’s weaknesses. Thus far, the Administration has continued to implement the agreement by exercising waivers of sanctions laws suspended in accordance with the JCPOA, while continuing to impose sanctions on missile- and IRGC-related entities and on Iranian human rights violators. Were the Administration to decide to end U.S. participation in the JCPOA outright, it could revoke waivers, decline to renew waivers, or act under the Iran Nuclear Agreement Review Act (P.L. 114-17) to allow Congress to decide whether to reimpose sanctions. The reimposition of U.S. secondary sanctions would undoubtedly harm Iran’s economy. Iran’s economy shrank by 9% in the two years that ended in March 2014, before stabilizing since 2015 as a result of modest sanctions relief under an interim nuclear agreement. Sanctions caused Iran’s crude oil exports to fall from about 2.5 million barrels per day (mbd) in 2011 to about 1.1 mbd by mid-2013, and made inaccessible more than $120 billion in Iranian reserves held in banks abroad. Sanctions relief has enabled Iran’s oil exports to return to nearly presanctions levels, allowed Iran to regain access to funds held abroad and reintegrate into the international financial system, and helped Iran achieve about 7% overall economic growth in 2016, with similar growth in 2017. Foreign energy firms have begun making new investments in Iran’s energy sector and major aircraft manufacturers have sold Iran’s commercial airlines new passenger aircraft. The relief from sanctions on Iran’s most vital sectors helped Iran’s President Hassan Rouhani politically, contributing to his victory in the May 19, 2017, presidential election, but did not satisfy significant economic grievances in Iran that sparked widespread unrest in December 2017- January 2018. 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 ......................... 3 Sanctions Triggered by Terrorism List Designation .................................................................. 4 Exception for U.S. Humanitarian Aid ................................................................................. 4 Sanctions on States Designated as “Not Cooperating” Against Terrorism ............................... 5 Executive Order 13224 Sanctioning Terrorism-Supporting Entities ......................................... 5 Executive Orders Sanctioning Iran’s Involvement in Iraq and Syria ........................................ 6 Ban on U.S. Trade and Investment with Iran .................................................................................. 6 What U.S.-Iran Trade Is Allowed or Prohibited? ...................................................................... 7 Application to Foreign Subsidiaries of U.S. Firms ................................................................... 9 Sanctions on Iran’s Energy Sector ................................................................................................. 10 The Iran Sanctions Act (Including Triggers and Applications Added by CISADA, ITRSHRA, IFCA, and Other Laws) ..................................................................................... 10 Key Sanctions “Triggers” Under ISA ................................................................................ 11 Mandate and Time Frame to Investigate ISA Violations .................................................. 15 Interpretations and Implementation of ISA and Related Laws ......................................... 18 Oil Export 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 ..................................... 22 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 ...................................................... 25 Iran-North Korea-Syria Nonproliferation Act ......................................................................... 25 Executive Order 13382 on Proliferation-Supporting Entities ................................................. 26 Foreign Aid Restrictions for Named Suppliers of Iran............................................................ 27 Sanctions on “Countries of Diversion Concern” ..................................................................... 28 Financial/Banking Sanctions ......................................................................................................... 28 Targeted Financial Measures ................................................................................................... 28 Ban on Iranian Access to the U.S. Financial System .............................................................. 29 CISADA: Sanctioning Foreign Banks That Conduct Transactions with Sanctioned Iranian Banks ....................................................................................................................... 30 Implementation of Section 104: Sanctions Imposed ......................................................... 31 Iran Designated a Money-Laundering Jurisdiction/FATF ....................................................... 31 Sanctions on Iran’s Cyber and Transnational Criminal Activities ................................................. 32 Executive Order 13694 (April 1, 2015) .................................................................................. 32 Executive Order 13581 (July 25, 2011) .................................................................................. 32 Implementation ................................................................................................................. 32 Divestment/State-Level Sanctions ................................................................................................. 32 Sanctions and Sanctions Exemptions to Support Democratic Change/Civil Society in Iran ........ 33 Expanding Internet and Communications Freedoms .............................................................. 33 Congressional Research Service Iran Sanctions Countering Censorship of the Internet: CISADA, E.O. 13606, and E.O. 13628 .............. 33 Laws and Actions to Promote Internet Communications by Iranians ............................... 34 Measures to Sanction Human Rights Abuses and Promote the Opposition