Iran Sanctions - Foreign Press Centers

Iran Sanctions
Sanctioning Against Dealings With Iran’s Central Bank/Section
1245 of the FY2012 National Defense Authorization Act (P.L. 112-81)
The November 21, 2011, designation, above, did not satisfy those in Congress who believed that
additional action was needed to cut off Iran’s Central Bank. That view was based on information
that it was helping other Iranian banks circumvent the U.S. and U.N. banking pressure, and on the
basis that it is the prime conduit to pay Iran for oil shipments. Some argued the Treasury
Department should designate the Central Bank as a proliferation entity under Executive Order
13382 or a terrorism supporting entity under Executive Order 13224, but the Administration did
not do so.
In November 2011, provisions to sanction foreign banks that deal with Iran’s Central Bank were
incorporated into a broader Iran sanctions bill, H.R. 1905, discussed below. A separate Central
Bank sanctions provision was introduced by Senator Mark Kirk and Senator Robert Menendez as
an amendment to a FY2012 national defense authorization bill. The provision was modified
slightly in conference action on the bill—H.R. 1540—enacted and signed on December 31, 2011
(P.L. 112-81). The initiative built on an August 9, 2011, a letter signed by 92 Senators was sent to
President Obama urging “a comprehensive strategy to pressure Iran’s financial system by
imposing sanctions” on the Central Bank of Iran.
The provision, Section 1245 of P.L. 112-81, provides for the following:
• Requires the President to prevent a foreign bank from opening an account in the
United States—or impose strict limitations on existing U.S. accounts—if that
bank processes payments through Iran’s Central Bank.
• The provision applies to non-oil related transactions with the Central Bank of
Iran 60 days after enactment (by February 29, 2012). However, sanctions on
banks transacting payments to Iran’s Central Bank for oil can trigger only after
180 days (by June 28, 2012).
• The provision applies to a foreign central bank only if the transaction with Iran’s
Central Bank is for oil purchases.
• Provides for a renewable waiver of 120 days duration if the President determines
that doing so is in the national security interest.
• On February 27, 2012, the Department of the Treasury announced regulations to
implement this law.
• The provision applies to transactions to pay for purchases of Iranian oil only after
180 days. It also applies only if the President certifies to Congress that the oil
market is adequately supplied and that the parent country of the foreign bank in
question has not significantly reduced its purchases of oil from Iran. If such
certification is made, the exemption applies to any transaction with the Central
Bank, not only for oil. The certification is to be issued 90 days after enactment
(by March 30, 2012), based on a report by the Energy Information
Administration to be completed 60 days after enactment (by February 29, 2012).
The Administration had initially opposed the provision. In testimony, Under Secretary Cohen told
the Senate Foreign Relations Committee on December 2, 2011, that the Administration strongly
opposed the provision because it could lead to a rise in oil prices that would actually benefit Iran.
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