AML / CFT: US and Canada - additional Iran sanctions

On 21 November 2011, the USA and Canada imposed additional sanctions against Iranian banks.

Following the Financial Action Task Force's note that members should apply "countermeasures" against Iran, the US and Canada's new sanctions were co-ordinated with those imposed by the UK (see story ).

The USA says it has imposed a "special measure against the Islamic Republic of Iran as a Jurisdiction of Primary Money Laundering Concern" - which means a declaration under the USA PATRIOT Act 2001. Details of the finding under the USAPA are published by FinCEN at http://www.fincen.gov/statutes_regs/patriot/pdf/Iran311Finding.pdf.

At the same time, Canada imposed new sanctions. Foreign Affairs and International Trade Canada said "In response to the International Atomic Energy Agency 's November 9, 2011 assessment of Iran's nuclear program, Canada imposed further sanctions against Iran under the SEMA. The new sanctions prohibit financial transactions with Iran, expand the list of prohibited goods to include all goods used in the petrochemical, oil and gas industry in Iran, amend the list of prohibited goods to include additional items that could be used in Iran's nuclear program, and add new individuals and entities to the list of designated persons found in Schedule 1 of the SEMA regulations."

The relevant notices are replicated below

US Treasury Notice (verbatim)

New Sanctions under Executive Order (E.O.) 13590: On November 19, President Obama signed E.O. 13590, which significantly expands existing energy-related sanctions on Iran to authorize sanctions on persons that knowingly provide: 1. Goods, Services, Technology, or Support for the Development of Petroleum Resources:

• The sale, lease, or provision of goods, services, technology, or support to Iran that could directly and significantly contribute to the enhancement of Iran’s ability to develop petroleum resources located in Iran could trigger sanctions if a single transaction has a fair market value of $1 million or more, or if a series of transactions from the same entity have a fair market value of $5 million or more in a 12-month period.

2. Goods, Services, Technology, or Support for the Maintenance or Expansion of the Petrochemical Sector:

• The sale, lease, or provision of goods, services, technology, or support to Iran that could directly and significantly facilitate the maintenance or expansion of its domestic production of petrochemical products could trigger sanctions if a single transaction has a fair market value of $250,000 or more, or if a series of transactions from the same entity have a fair market value of $1 million or more in a 12-month period.

If a person is found to have provided a good, service, technology, or support described in E.O. 13590, the Secretary of State, in consultation with other agencies, has the authority to impose sanctions, including prohibitions on: foreign exchange transactions; banking transactions; property transactions in the United States; U.S. Export-Import Bank financing; U.S. export licenses; imports into the United States; loans of more than $10 million from U.S. financial institutions; U.S. government procurement contracts; and, for financial institutions, designation as a primary dealer or repository of U.S. government funds. Designation of Entities under E.O. 13382: The U.S. Department of State has designated the Nuclear Reactors Fuel Company, Noor Afzar Gostar Company, Fulmen Group, and Yasa Part under E.O. 13382 for their role in Iran’s nuclear procurement networks. They support a variety of Iran’s proscribed nuclear procurement activities, including centrifuge development, heavy water research reactor activities, and uranium enrichment. The U.S. Department of the Treasury also has designated Javad Rahiqi, Modern Industries Technique Company (MITEC), Neka Novin, Parto Sanat, Paya Partov, Simatic, and the Iran Centrifuge Technology Company (TESA) under E.O. 13382. These entities are linked to the Atomic Energy Organization of Iran (AEOI), which is a key actor in Iran’s nuclear program as the main Iranian organization for research and development activities in the field of nuclear technology, including Iran’s centrifuge enrichment program and experimental laser enrichment of uranium program. The AEOI was listed in the Annex to E.O. 13382 and has been sanctioned by the United Nations in Security Council resolution 1737. E.O. 13382 blocks the assets under U.S. jurisdiction of the designated persons and prohibits U.S. persons from engaging in transactions involving them. To view the complete list of designations under E.O. 13382, visit link. Identification of the Islamic Republic of Iran as a Jurisdiction of “Primary Money Laundering Concern” Under Section 311 of the USA PATRIOT Act: The U.S. Department of the Treasury identified the Islamic Republic of Iran as a jurisdiction of primary money laundering concern under Section 311 of the USA PATRIOT Act (Section 311) based on Iran’s support for terrorism; pursuit of weapons of mass destruction (WMD); reliance on state-owned or controlled agencies to facilitate WMD proliferation; and the illicit and deceptive financial activities that Iranian financial institutions – including the Central Bank of Iran – and other state-controlled entities engage in to facilitate Iran’s illicit conduct and evade sanctions. In issuing today’s Finding, Treasury has for the first time identified the entire Iranian financial sector; including Iran’s Central Bank, private Iranian banks, and branches, and subsidiaries of Iranian banks operating outside of Iran as posing illicit finance risks for the global financial system. The Finding also creates a clear public record of the scope and depth of Iran’s illicit conduct, detailing the involvement of Iranian government agencies and banking institutions in WMD proliferation, support for terrorism, and other illicit conduct. In particular, the Finding includes new information about the Central Bank of Iran’s role in facilitating Iran’s illicit conduct and Iran’s efforts to evade international sanctions. Today’s action reinforces U.S. and international sanctions already in place against Iran and provides greater certainty that the U.S. financial system is protected from Iranian illicit activity. Treasury’s Financial Crimes Enforcement Network (FinCEN) also today filed a Notice of Proposed Rule Making (NPRM), in which it proposes imposing a special measure against Iran. While current U.S. regulations already generally prohibit U.S. financial institutions from engaging in both direct and indirect transactions with Iranian financial institutions, this action would require U.S. financial institutions to implement additional due diligence measures in order to prevent any improper indirect access by Iranian banking institutions to U.S. correspondent accounts.

Canada Notice (verbatim)

Regulations Amending the Special Economic Measures (Iran) Regulations

Whereas the Governor in Council is of the opinion that the situation in Iran constitutes a grave breach of international peace and security that has resulted or is likely to result in a serious international crisis;Therefore, His Excellency the Governor General in Council, on the recommendation of the Minister of Foreign Affairs, pursuant to subsections 4?(1) to (3) of the Special Economic Measures Acta, hereby makes the annexed Regulations Amending the Special Economic Measures (Iran) Regulations.

AMENDMENTS

1.?The portion of section 3 of the Special Economic Measures (Iran) Regulations1 before paragraph (a) is replaced by the following:

3.?It is prohibited for any person in Canada and any Canadian outside Canada to

2.?The Regulations are amended by adding the following after section 3:

3.1?Section 3 does not apply in respect of

(a) ?loan repayments to any person in Canada, or any Canadian abroad, in respect of loans entered into before July 22, 2010, enforcement of security in respect of those loans, or payments by guarantors guaranteeing those loans;

(b)?pension payments to any person in Canada or any Canadian abroad;

(c) ?any transaction in respect of the accounts at a Canadian financial institution that are used for the regular business of the Embassy of Iran or its consular missions in Canada;

(d)?any transaction in respect of the accounts at an Iranian financial institution that are used for the regular business of the Embassy of Canada or its consular missions in Iran;

(e)?any transaction to international organizations with diplomatic status, United Nations agencies, the International Red Cross and Red Crescent Movement, or Canadian non-governmental organizations that have entered into a grant or contribution agreement with the Department of Foreign Affairs and International Trade and the Canadian International Development Agency, for the purpose of pursuing humanitarian relief work in Iran; and

(f)?any transactions necessary for a Canadian to transfer any existing accounts, funds or investments of a Canadian held with a designated person to a non-designated person.

3.?(1)?Subsection 4?(1) of the Regulations is amended by adding the following after paragraph (b):

(b.1)?any goods used in the petrochemical, oil or natural gas industry, other than

(i) ?goods that are required to be exported, sold, supplied or shipped further to a contract entered into before November 22, 2011, and

(ii)?goods the export, sale, supply or shipping of which is prohibited by paragraph (b);

(2)?Subparagraph 4?(1)?d)?(ii) of the Regulations is replaced by the following:

(ii)?items 5400 and 5505, unless the export, sale, supply or shipment of the good is otherwise prohibited by these Regulations.

4.?Section 5 of the Regulations is amended by striking out “or” at the end of paragraph (b), by adding “or” at the end of paragraph (c) and by adding the following after paragraph (c):

(d) ?provide or acquire any financial services to, from or for the benefit of, or on the direction or order of, Iran or any person in Iran, other than

(i)?financial services that are required to be provided or acquired further to a contract entered into before November 22, 2011,

(ii)?financial services the provision or acquisition of which are otherwise prohibited by these Regulations,

(iii)?financial services in respect of pension payments to any person in Canada or any Canadian abroad,

(iv)?financial services in respect of pension payments to any person in Iran,

(v) ?financial services in respect of the accounts at a Canadian financial institution that are used for the regular business of the Embassy of Iran or its consular missions in Canada,

(vi)?financial services in respect of the accounts at an Iranian financial institution that are used for the regular business of the Embassy of Canada or its consular missions in Iran, or for the personal banking of their employees,

(vii) ?financial services in respect of non-commercial remittances of $40,000 or less sent to or from Iran or any person in Iran, if the person providing the financial services keeps a record of the transaction, and

(viii) ?financial services in respect of any transaction with international organizations with diplomatic status, United Nations agencies, the International Red Cross and Red Crescent Movement, or Canadian non-governmental organizations that have entered into a grant or contribution agreement with the Department of Foreign Affairs and International Trade and the Canadian International Development Agency, for the purpose of pursuing humanitarian relief work in Iran.

5.?Section 7 of the Regulations is replaced by the following:

7.? It is prohibited for any person in Canada and any Canadian outside Canada to provide a vessel that is owned or controlled by, or operating on behalf of, the Islamic Republic of Iran Shipping Lines with insurance services, or stevedoring, bunkering and lighterage and similar services, for the vessel’s operation or maintenance.

6.?The Regulations are amended by adding the following after section 8:

8.1? The prohibitions in sections 4 to 8 do not apply with respect to an activity that has as its purpose the safeguarding of human life, disaster relief, or the providing of medicine or medical supplies.

7.?The heading before section 13 and sections 13 and 14 of the Regulations are repealed.

8.?Items 6, 8, 13, 15, 17, 29, 92, 130, 161, 174 and 183 of Part 1 of Schedule 1 to the Regulations are repealed.

9.?Part 1 of Schedule 1 to the Regulations is amended by adding the following after item 279:

280.?Advanced Fibres Development Company

281.?Ansar Bank

282.?Aras Farayande

283.?Arfa Paint Company (also known as Arfeh Company)

284.?Arya Niroo Nik

285.?Ashtian Tablo (also known as Bals Alman)

286.?Azarab Industries

287. ?Bank Kargoshaee (also known as Bank Melli Iran Investment Company (BMIIC) and Bank Melli Printing and Publishing Company (BMPPC))

288.?Bank Refah

289.?Banque Sina

290.?Bonab Research Centre

291.?Bonyad Taavon Sepah

292.?EDBI Exchange Company, Tehran-based

293.?EDBI Stock Brokerage Company

294.?Electronic Components Industries (ECI)

295.?EMKA Company

296.?ESNICO (Equipment Supplier for Nuclear Industries Corporation)

297.?Etemad Amin Invest Company Mobin

298.?Fajr Aviation Composite Industries

299.?Farasepehr Engineering Company

300.?Fulmen (also known as Fulmen Company)

301.?Hafize Darya Shipping Lines (HDSL)

302.?Hirbod Co.

303.?Hosseini Nejad Trading Company

304.?Industrial Development & Renovation Organization (IDRO)

305.?Iran Centrifuge Technology Company

306.?Iran Insurance Company

307.?Iran Marine Industrial Company (SADRA)

308.?Iran Saffron Company

309.?Iranian Aviation Industries Organization (IAIO)

310.?Loghman Pharmaceutical & Hygienic Co.

311.?Marou Sanat

312.?MASNA (Moierat Saakht Niroogahye Atomi Iran) (also known as Managing Company for the Construction of Nuclear Power Plants)

313.?Mehr Bank

314.?Melli Agrochemical Company PJS

315.?Moallem Insurance Company

316.?Neda Industrial Group

317.?Neka Novin

318.?Noavaran Pooyamoj

319.?Noor Afza Gostar

320.?Parto Sanat Company

321.?Paya Partov (also known as Paya Parto)

322.?Post Bank of Iran

323.?Pouya Control

324.?Raka

325.?Research Institute of Nuclear Science & Technology

326.?Safa Nicu

327.?Sakhte Turbopomp va Kompressor (SATAK)

328.?Sapid Shipping Co. (also known as Safiran Payam Darya Shipping Lines (SAPID))

329.?Sepanir Oil and Gas Energy Engineering Company

330.?Shahid Ahmad Kazemi Industrial Group

331.?Shahid Beheshti University (SBU)

332.?Shakhese Behbud Sanat

333.?Shetab Gaman

334.?Shetab Trading

335.?Shipping Computer Services Company (SCSCOL)

336.?Shomal Cement Company

337.?Soroush Sarzamin Asatir Ship Management Company

338.?South Way Shipping Agency Company Limited

339.?SUREH (Nuclear Reactors Fuel Company)

340.?Taghtiran (also known as Taghtiran Kashan Company)

341.?Tajhiz Sanat Shayan (TSS)

342.?Technology Cooperation Office (TCO) of the Iranian President’s Office

343.?Tidewater Middle East Co.

344.?Y.A.S. Company Limited

345.?Yasa Part

10.?Items 20 and 22 of Part 2 of Schedule 1 to the Regulations are repealed.

11.?Part 2 of Schedule 1 to the Regulations is amended by adding the following after item 47:

48.?Javad Rahiqi

12.?Items 30 and 47 of Schedule 2 to the Regulations are repealed.

13.?Schedule 2 to the Regulations is amended by adding the following after item 60:

Item	Goods	Description
61.	Absolute pressure transducers	Absolute pressure transducers capable of measuring absolute pressures below 100kPa, and specially designed parts and software for them.
62.	Diamond core drilling tools	Diamond core drilling tools of all specifications.
63.	Electrical resistivity tomography equipment	Specially designed equipment for electrical resistivity tomography, capable of mineral surveying.
64.	Gamma-ray spectrometers	Gamma-ray spectrometers of all types and specifications, and specially designed parts and software for them.
65.	Gravimeters and gravity gradiometers	Gravimeters and gravity gradiometers of all specifications, and specially designed parts for them.
66.	LIDAR systems	Light detection and ranging (LIDAR) systems, equipment and components, designed for geophysical surveying.
67.	GPR systems	Ground penetrating radar (GPR) systems, equipment and components, designed for geophysical surveying.
68.	Magnetometers and magnetic gradiometers	Magnetometers, magnetic gradiometers, and their compensation systems, of all specifications, and specially designed parts for them.
69.	Mass spectrometers	Mass spectrometers of all types and specifications and specially designed parts and software for them.
70.	Numerically controlled machine tools	Numerically controlled machine tools of all types, and specially designed parts and software for them.
71.	Reflection seismological equipment	Reflection seismological equipment of all specifications and specially designed parts for it.

APPLICATION PRIOR TO PUBLICATION

14.?For the purpose of paragraph 11?(2)?a) of the Statutory Instruments Act, these Regulations apply before they are published in the Canada Gazette.

COMING INTO FORCE

15.?These Regulations come into force on the day on which they are registered.