American Club Circular No. 35/11 1 NOVEMBER 30, 2011 CIRCULAR NO. 35/11 TO MEMBERS OF THE ASSOCIATION Dear Member: ADDITIONAL U.S. ECONOMIC SANCTIONS WITH RESPECT TO IRAN Members whose vessels trade in or with Iran should be aware that on November 21, 2011 and effective immediately, the United States government has expanded the scope of economic sanctions on Iran. Although it would appear from the language of the new law that the categories of sanctionable activities have been expanded (primarily, insofar as shipping is concerned, by expanding the definitions of prohibited cargoes from “refined petroleum products” or those which contribute to Iran’s ability to produce refined petroleum products, to “all goods, services and technology that...could...enhance Iran’s ability to develop petroleum resources...”), preliminary indications are that the US Department of State is presently taking the view that the purchase and lifting of crude oil from Iran would not be deemed to be sanctionable activity under the terms of the new law. Background On November 21, 2011, the United States Government took three additional steps to increase the economic sanctions pressure on Iran. These steps consisted of (i) the issuance of Executive Order 13590, (ii) the designation of Iranian entities and individuals found to have engaged in nuclear proliferation activities, and (iii) the identification of Iran as a jurisdiction of “primary money laundering concern”. Each step is reviewed in detail below. Executive Order 13590. In Executive Order 13590 signed by President Obama, the United States expanded the universe of activity in or with respect to Iran that could lead to the imposition of U.S. sanctions against persons (entities and individuals) engaging in such activity. The Executive Order expands the universe of sanctionable activity that is already spelled out under the Iran Sanctions Act of 1996 (ISA), as amended by the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (CISADA). Executive Order 13590 provides for the imposition of sanctions on persons that knowingly provide: A. Goods, services, technology, or support for the development of petroleum resources in Iran. The sale, lease, or provision of goods, services, technology, or support to Iran which could directly and significantly contribute to the maintenance or enhancement of Iran’s ability to develop petroleum resources located in Iran could trigger sanctions if a single transaction has a fair market value of $1 million or more, or if a series of transactions from the same entity have a fair market value of $5 million or more in a 12-month period. American Club Circular No. 35/11 2 B. Goods, services, technology, or support for the maintenance or expansion of the petrochemical sector in Iran. The sale, lease, or provision of goods, services, technology, or support to Iran that could directly and significantly facilitate the maintenance or expansion of its domestic production of petrochemical products could trigger sanctions if a single transaction has a fair market value of $250,000 or more, or if a series of transactions from the same entity have a fair market value of $1 million or more in a 12-month period. Under the Executive Order, the term "knowingly," with respect to a conduct, a circumstance, or a result, means that the person has actual knowledge, or should have known, of the conduct, the circumstance, or the result. The term "petroleum resources" includes petroleum,