American Club Circular No. 01/12 1 JANUARY 05, 2012 CIRCULAR NO. 01/12 TO MEMBERS OF THE ASSOCIATION Dear Member: ADDITIONAL US ECONOMIC SANCTIONS WITH RESPECT TO IRAN Members should be aware that on December 31, 2011, and effective immediately, the United States government again strengthened and expanded the scope of economic sanctions on Iran. The new sanctions, among other things, penalize foreign financial institutions that engage in certain business with Iran’s central bank, Bank Markazi, and in transactions in regard to the sale to, or purchase from, Iran of petroleum and petroleum products. Background On December 31, 2011, President Obama signed into law new economic sanctions against Iran which were contained within the larger National Defense Authorization Act for 2012 (the “Act”). The new sanctions under the Act In summary, of relevance to Members, the new sanctions under the Act:  require the President to block the property of, and prohibit all transactions with or involving, Iranian financial institutions (the new law strengthens and codifies existing sanctions in this regard);  60 days after the Act (i.e. 60 days after December 31, 2011), require the President to prohibit or restrict the opening and maintaining in the United States of a correspondent account or payable-through account by a foreign financial institution that the President determines has knowingly conducted or facilitated any significant financial transaction with the central bank of Iran or another Iranian financial institution; and authorize the President to impose sanctions with respect to the central bank of Iran. However, it should also be noted that: i. The conduct or facilitation of a transaction for the sale of food, medicine, or medical devices to Iran is excluded from the foregoing sanctions; and ii. The prohibition or restriction of the opening and maintaining in the United States of a correspondent account or payable-through account will apply to foreign financial institutions owned or controlled by the government of a foreign country, including a central bank of a foreign country, if it engages in a financial transaction for the sale or purchase of petroleum or petroleum products to or from Iran that is conducted or facilitated 180 days after December 31, 2011, and the President determines that there is a sufficient supply of petroleum or petroleum products from countries other than Iran to permit a significant reduction in the volume of petroleum and petroleum products purchased from Iran by or through a foreign financial institution. American Club Circular No. 01/12 2 However, in the context of paragraph (ii) above, it should also be noted that the following exception applies. Subject to certain timeframes, the foregoing sanctions will not be imposed against a foreign financial institution if the President determines that there is a sufficient supply of petroleum or petroleum products from countries other than Iran to permit a significant reduction in the volume of petroleum and petroleum products purchased from Iran by or through a foreign financial institution, and the President determines that the country with primary jurisdiction over the foreign financial institution has significantly reduced its volume of crude oil purchases from Iran. Additionally, as to waiver, the sanctions entailing a prohibition or restriction on the opening and maintenance of a correspondent account or payable-through account for a foreign financial institution ma