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Continuing its laser-like focus on Iran, Congress is set to markup a new sanctions bill – H.R. 3662, the ‘Iran Terror Finance Transparency Act’ – this Thursday in the House Foreign Affairs Committee (“HFAC”).

The bill would, amongst other things, prohibit the President from de-listing certain designated Iranian banks scheduled for sanctions relief under the Joint Comprehensive Plan of Action (“JCPOA”) until the President provides a certification to Congress. That certification would involve assurance that the Iranian bank “has not knowingly…facilitated a significant transaction…or provided significant financial services for or on behalf of:

(A)      Iran’s Revolutionary Guards Corps or any of its agents or affiliates whose property or interests in property are blocked pursuant to [IEEPA];

(B)      a foreign terrorist organization for or on behalf of a person whose property or interests in property have been blocked pursuant to Executive Order 13224…; and

(C)      a person whose property or interests in property are blocked pursuant to [IEEPA] in connection with Iran’s proliferation of weapons of mass destruction or delivery systems for weapons of mass destruction, or to further Iran’s development of ballistic missiles and destabilizing types and amounts of conventional weapons;

…and no longer knowingly engages in illicit or deceptive financial transactions or other activities.” (The bill would also require separate certification before the President could rescind the designations of any foreign persons on the SDN List scheduled for sanctions relief pursuant to Attachment 3 or 4 to Annex II of the JCPOA, or rescind the designation of Iran as a jurisdiction of primary money laundering concern pursuant to 31 U.S.C. § 5318A).

Read literally, the Iran Terror Finance Transparency Act would likely bar the President from ever lifting the EO 13382 designations of Iranian banks. Pursuant to Section 2(c)(1) of the proposed bill, the President would have to provide certification that Bank Sepah – as an example – had not knowingly provided significant financial services to Iranian persons or entities designated for sanctions under Executive Order 13382. But that is factually impossible in consideration of the fact that the U.S. Department of the Treasury has previously alleged that “Bank Sepah provide[d] financial support and services to Iran’s Aerospace Industries Organization (“AIO”), Shahid Hemmat Industries Group (“SHIG”), and the Shahid Bakeri Industries Group (“SBIG”)” – all of which were listed in the Annex to EO 13382 and thus designated for sanctions under that Order. Because the language of Section 2(c)(1) of the Iran Terror Finance Transparency Act is not time-sensitive, the President would have to refute the U.S. government’s prior allegation regarding Bank Sepah and claim that Bank Sepah had not provided significant financial services to designated Iranian persons or entities under EO 13382.  Needless to say, that is unlikely to be done.

In other words, then, the Iran Terror Finance Transparency Act has created an impossible standard for the President, whereby the current EO 13382 designations of certain Iranian banks  would remain in place ad infinitum until Congress either repealed the pending legislation or passed successive legislation overriding the bill.

But that’s far from the only flaw I can identify in this legislation. Briefly, another is that the Iran Terror Finance Transparency Act would force the President to retain current EO 13382 designations of Iranian banks in situations where the designation criteria may no longer be met. Indeed, by its own terms, the proposed bill could keep an Iranian bank like Bank Sepah designated under EO 13382 for its provision of significant financial services to Hezbollah – a U.S.-determined Foreign Terrorist Organization. (Providing financial services to Hezbollah – absent an alleged connection to Iran’s WMD proliferation activities – would not serve as a ground for designation under EO 13382 – even if it might serve as ground for designation under separate sanctions authorities). As written, the bill would prohibit the President from lifting the EO 13382 designation until the President could certify that Bank Sepah, as an example, was not providing such services to Hezbollah.  Needless to say, the legality of such a measure would be subject to serious dispute.

Tomorrow, I will discuss another troubling aspect of this proposed legislation involving its amendments to the President’s current statutory authorities to amend certain sanctions programs via licensing.

 

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