US Toughening of Iran Sanctions ‘to Impact on Foreign Insurers’
The US Iran Freedom and Counter-Proliferation Act (IFCA) is set to expose foreign insurers to broad new sanctions as of 1 July 2013, according to a report issued by law firm Clyde & Co.
The firm comments that most of the IFCA provisions follow the steady expansion of US-Iran sanctions that began in mid-2010. Two IFCA provisions, found in sections 1246 and 1253 however, appear to significantly close the gap between foreign insurers and their US counterparts (US Persons), which have long been strictly prohibited from almost all dealings involving Iran.
“IFCA is a product of the US Congress, which is not required to explain the meaning of its laws or determine how they are to be enforced,” the firm comments. “For IFCA, these tasks now fall to the president [Obama] and his sanctions enforcement agencies, principally the Treasury Department’s Office of Foreign Assets Controls (OFAC).
“Unfortunately, it is unlikely that either president Obama or OFAC will offer guidance before the IFCA sanctions come into force on 1 July 2013. If previous form dictates process, on that day we can expect the president to issue an executive order to implement the new sanctions, followed months later by promulgation of related OFAC regulations. These actions may (or may not) provide some clarity as to how broadly IFCA Section 1246(A) will be interpreted and enforced, whether foreign insurers that violate IFCA Section 1246 will face penalties under both that provision and the International Emergency Economic Powers Act (IEEPA), and just how the US intends to impose civil and criminal fines and penalties against foreign insurers, some of which may have little or no contact with the US.”
The firm warns that in the interim period, foreign insurers are left in the “unsettling position” of not knowing whether they will soon become subject to almost the same prohibitions and penalties that apply to US Persons.