American Club Circular No. 12/12 1 AUGUST 6, 2012 CIRCULAR NO. 21/12 TO MEMBERS OF THE ASSOCIATION Dear Member: UNITED STATES SANCTIONS AGAINST IRAN: NEW DEVELOPMENTS Members are asked to note recent developments in the United States with respect to sanctions against Iran. On July 31, 2012, President Obama issued an Executive Order (EO) imposing, with immediate effect, additional sanctions on activity involving Iran. The new EO gives new sanctions powers to both the US Department of the Treasury and the US Department of State. It authorizes the Secretary of the Treasury to impose financial sanctions on foreign financial institutions which have knowingly conducted or facilitated certain significant financial transactions with the National Iranian Oil Company (NIOC) or Naftiran Intertrade Company (NICO), or for the purchase or acquisition of petroleum or petroleum products from Iran through any channel. In addition, the new EO empowers the US Treasury to impose sanctions on foreign institutions which have knowingly conducted or facilitated significant transactions for the purchase or acquisition of petrochemical products from Iran. Finally, the EO provides authority for the US Treasury to block the property, and interests in property, of any person determined to have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services in support of, NIOC, NICO, or the Central Bank of Iran, or the purchase or acquisition of US bank notes or precious metals by the Government of Iran. The three numbered sections below in bold summarize specifically the new categories of activity under the new EO which may lead to the imposition of sanctions. I. The EO authorizes the U.S. Treasury Department, with certain exceptions, to impose sanctions on a foreign financial institution that has knowingly conducted or facilitated any significant financial transaction: i. with the National Iranian Oil Company (NIOC) or Naftiran Intertrade Company (NICO); ii. for the purchase or acquisition of petroleum or petroleum products from Iran; or iii. for the purchase or acquisition of petrochemical products from Iran. For the above-mentioned sanctionable activities, the US Treasury Department may prohibit the opening, and prohibit or impose strict conditions on the maintaining, in the United States, of a correspondent account or a payable-through account by a foreign financial institution. Sanctions, however, shall not apply if the country with primary jurisdiction over the foreign financial institution has decreased its oil purchases and imports from Iran. Sanctions shall also not apply with respect to any American Club Circular No. 21/12 2 person conducting or facilitating a transaction for the sale of food, medicine, or medical devices to Iran or when the underlying transaction has been authorized by the US Treasury Department. II. The new EO, subject to a few narrow exceptions, also authorizes the imposition of sanctions on persons (individuals and entities) that: i. knowingly, on or after July 31, 2012, engage in a significant transaction for the purchase or acquisition of petroleum or petroleum products from Iran; ii. knowingly, on or after July 31, 2012, engage in a significant transaction for the purchase or acquisition of petrochemical products from Iran; iii. is a successor entity to a person engaging in the activity mentioned above; iv. owns or controls a person determined to have engaged in the activity above