Today, Congressman Brad Sherman (D -- CA), the Ranking Member of the House Foreign Affairs Subcommittee on Terrorism, Nonproliferation, and Trade, introduced new legislation, the Iran Financial Sanctions Improvement Act, with several new provisions to tighten international financial pressure on Iran's banking sector. The bill is cosponsored by Congresswoman Ileana Ros-Lehtinen, Chairman of the House Foreign Affairs Committee. Senator Mark Kirk (R- IL) is expected to introduce similar measures in the Senate.
The bill would expand current efforts to sanction the Society for Worldwide Interbank Financial Telecommunication (SWIFT) unless it discontinue the practice of allowing Iranian banks to utilize its communications services. Currently, the European Union is considering measures to prevent SWIFT from doing business with some Iranian banks, reportedly only the Central Bank of Iran and other "designated" Iranian banks. Sherman's new legislation applies to all Iranian banks -- the bill would sanction the SWIFT network as long as it conducted services on behalf of any Iranian bank.
SWIFT handles secure communications between banks internationally, sending payment orders that are settled through accounts that the banks have with each other. Every time banks make payments for one of their customers to an account in another bank, they utilize the SWIFT system. Iran's banks would find it very difficult to process most transactions without the benefit of the system, and trade with the outside world would become even more cumbersome for Tehran.
These provisions included in this bill will be introduced in the Senate as an amendment to the Iran Sanctions, Accountability and Human Rights Act of 2012 by Senator Mark Kirk.
"As Tehran brazenly continues its pursuit of a nuclear weapon, we need to leave no stone unturned in our effort to financially pressure and isolate Iran," Sherman said. "If Iran cannot process payments with SWIFT members, Iran will find that its remaining trading partners either give up entirely, or will demand more in payment for what they send to Iran, or demand to pay less for what they buy from the Iranians."
Sherman is also the lead Democratic cosponsor of legislation already introduced in the House, H.R. 3880 that would penalize the SWIFT network if it does not stop doing business with Iranian banks.
Sherman's new bill would also similarly expand Section 104 of CISADA, the Comprehensive Iran Sanctions, Accountability, and Divestment Act, which provides for sanctions against financial entities that engage in transactions with designated Iranian banks. The new bill would apply this provision to all Iranian banks -- not just those that are designated by the Treasury Department.
Another provision in Sherman's sanctions bill would expand the Menendez-Kirk provision in the National Defense Authorization Act (NDAA) that targeted the Central Bank of Iran (CBI). The new bill would expand the NDAA provisions to sanction not only those companies that facilitate transactions on behalf of CBI, but also those who hold financial assets on behalf of CBI. A 2009 court decision revealed that an American bank had been ordered to freeze almost $2 billion worth of debt securi¬ties belonging to Iran. The funds were at the bank in the name of Clearstream, a Luxembourg-based clearinghouse and bank owned by the Deutsche Börse Group. Under the new bill, these types of activities on behalf of CBI would be subject to stiff penalties.
Additionally, the new Sherman bill contains provisions to clarify the imposition of current sanctions law to cover the provision of insurance or underwriting for any sanctionable act with regard to business with or in Iran would be subject to sanctions themselves.
"We must expand financial sanctions against the Iranian banking sector to include all Iranian banks -- not just the Central Bank of Iran and those roughly twenty banks already designated by the Treasury Department," continued Sherman.
"I urge my colleagues in the House and Senate to confer quickly once the Senate passes it's bill and send the toughest possible Iran sanctions bill to the President that puts increasingly pressure on Iran's faltering economy," said Sherman. "We cannot relent as long as Tehran is full speed ahead towards a nuclear weapon."