Iran sanctions impact US business.

• Author: Sherman, Michael D.
• Position: LEGAL ISSUES

U.S. business entities face a growing number of legal obligations as U.S. economic sanctions on Iran expand. Accordingly, it is increasingly important for companies doing business internationally to address sanctions compliance as part of their risk management.

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In October, as directed by Congress, the Department of the Treasury issued a regulation that, in essence, "deputizes" U.S. financial institutions to gather information from their foreign customers--i.e. from foreign financial institutions for which the U.S. institution has correspondent accounts. The regulation requires a U.S. institution, upon request from Treasury, to ask a foreign financial institution customer about transactions or certain other financial services it may be providing to sanctioned Iranian entities.

The U.S. institution then must report to Treasury, which will decide whether to impose sanctions on the foreign bank, including possibly denying it access to the entire U.S. banking system.

For some time, the Iranian Transaction Regulations have prohibited U.S. companies from doing business, directly or indirectly, with Iran. The October regulation reflects a trend by the U.S. government to find novel and ereative ways to control the conduct of wholly foreign entities and, in the process, impose new legal obligations on an entire U.S. industry (banking).

In fact, Congress had intended the legal obligations to be even greater on the banking industry. The...