Expansion of US Sanctions against Iran for non-US entities from 1 July 2013

The US sanctions regime against Iran is being expanded as of 1 July 2013.  This latest expansion of the regime has potentially serious consequences for US and non-US entities involved with marine transportation and marine insurance.

The additional sanctions form part of the National Defence Authorization Act for Fiscal Year 2013 (“NDAA 2013”) which contains a section entitled “Iran Freedom and Counter-Proliferation Act of 2012” (“IFCA”). It is IFCA that includes the additional sanctions against non-US persons engaged in trade with Iran.

With effect from 1 July 2013, the following sectors are targeted and /or subjected to additional measures by the US:

• Transactions with Iran’s Energy, Shipping and Shipbuilding Sectors and its Ports.
• Iran’s automotive industry.
• Transactions with Those on the Specially Designated Nationals (“SDN”) List.
• Transactions Involving Precious Metals and Raw Materials.
• Insurance, Reinsurance & Underwriting Activities

Of particular significance is §1246  of IFCA  which specifically imposes sanctions on insurers who insure any Iran-related activity for which sanctions have been imposed under any U.S. law.  There is a statutory exception for insurers who have exercised due diligence in an effort to avoid providing insurance for prohibited activities. However, in view of the broad scope of the new provision it is anticipated that the US authorities will expect insurers to be proactive in exercising due diligence.

The IG has published a briefing note on the new measures. This briefing note may be read here. Clarification on certain aspects has been sought from the Office of Foreign Assets Control (OFAC) and the US State Department and will be made available in due course.