Tougher Sanctions Are Working, But Iran Finds Loopholes
As American businesses continue to invest in Iran's energy sector, funding Iran's illicit quest for nuclear weapons, U.S. Senators Kirsten Gillibrand (D-NY) and Mark Kirk (R-IL), and U.S. Representatives Ted Deutch (D-FL) and Dan Burton (R-IN) today introduced the Iran Transparency and Accountability Act. The bipartisan legislation would require companies to disclose any sanctionable investments in Iran in their quarterly and annual reports to the Securities and Exchange Commission (SEC), and require U.S. banks to report sanctionable activities by their foreign correspondent banks.
The new legislation builds on the Comprehensive Iran Sanctions, Accountability and Divestment Act
"When companies do business with Iran, they fund Iran's nuclear development, endanger America's national security, the security of Israel and all our allies," Senator Gillibrand said. "If we can bring greater transparency to any investment being made in Iran, we can defund the nuclear militarization of one of the world's most hostile nations. Companies must make a choice: do business with Iran, or have access to the U.S. economy."
"Americans should have the right to know if their investments are empowering a regime that threatens our national security, endangers the very existence of Israel, and risks destabilizing the entire Middle East," said Congressman Deutch. "By mandating self-disclosure and subjecting this information to public scrutiny, we afford the American people the opportunity to ensure their investment dollars are not undermining our national security objectives. In addition, this new level of transparency will enhance our ability to enforce the sanction laws against Iran already on the books."
"As the Iranian regime continues its pursuit of nuclear weapons and the Iranian people struggle for freedom, Congress must do more to expose companies that violate our laws and undermine our sanctions policies," Senator Kirk said. "This bipartisan legislation would hold bad actors accountable for subsidizing a dangerous and hostile regime."
Congressman Burton said, "A nuclear-armed Iran would perhaps irreversibly undermine the global non-proliferation regime and spur a nuclear arms race in the Middle East. Furthermore a nuclear armed Iran could cripple the world's economy by merely threatening to halt oil shipments through the Straits of Hormuz. Bringing greater transparency to any investment being made in Iran is critical to ensuring that sanctions are being enforced because there is still time for sanctions to work; but this window of opportunity will not be open for long. This bill is about asking the business community to standing up and be counted, do you stand with the rest of the world or do you stand with the Iranian regime."
The Iran Transparency and Accountability Act closes banking and securities law loopholes by extending the SEC's explicit authority to require the disclosure of business dealings in Iran by reporting companies, and requiring new Treasury regulations calling for banks' reports. Studies indicate that at least eight companies with listed affiliates on the NYSE or NASDAQ support Iran's energy sector, in addition to18 U.S. banks that do business with foreign banks that also service Iranian institutions. Iran then uses these banking and securities law loopholes to gain access to U.S. markets, enabling them to circumvent sanctions, fund their nuclear ambitions, and continue supporting terrorist networks.
Iran's Islamic Revolutionary Guard Corps (IRGC) and its many front companies in the Iranian energy industry pose significant legal and reputational risks to publicly traded companies doing business in Iran. The IRGC has been identified by the U.S. as a key player in Iran's nuclear program, the regime's brutal human rights abuses against its own people, and President Mahmoud Ahmadinejad's efforts to suppress Iran's democratic movement.
In addition to requiring reporting companies to disclose sanctionable investments in Iran or business with the IRGC to the SEC, the legislation would: (CISADA) signed by President Obama last year to require companies to divest from Iran's energy sector or face sanctions. Iran, the world's leading state sponsor of terrorism, has continued to defy the United States and the international community by pursuing the enrichment of weapons-grade uranium. A nuclear-armed Iran would pose an existential threat to Israel and endanger U.S. national security by spurring a nuclear arms race in an already volatile Middle East region.
* Require the SEC to publicly post the list of reporting companies investing in Iran on its website, and provide that information directly to the President, the General Services Administration, and the appropriate Congressional committees.
* Require the President to investigate and determine within 180 days of receiving the SEC report any self-disclosures by companies that could lead to sanctions.
The bill also requires the Treasury Secretary to promulgate rules within 90 days of passage to implement a CISADA requirement that U.S. financial institutions report on any correspondent accounts with foreign banks that violate Iran sanctions.
As Iran attempts to take advantage of loopholes, increased sanctions have the effect of isolating the country from international commerce. Almost all of the world's largest international traders in refined petroleum products divested from Iran following last year's passage of tougher sanctions law, which also helped stem the flow of foreign investment and skilled labor for its energy sector that comprises 80 percent of Iran's export earnings.
Additionally, the U.S. State Department estimates that $50 to $60 billion in upstream energy investments have been frozen as a result of the threat of sanctions.