Senate Bill Creates New Sanctions in Attempt to Close Iran Loophole
A new Senate bill would require the U.S. to place additional sanctions on foreign banks in an attempt to block Iran’s access to foreign exchange reserves and limit the ability of certain Iran entities to conduct transactions in foreign currencies. The Iran Sanctions Loophole Elimination Act, introduced May 8, would place sanctions on foreign banks that knowingly facilitate transactions in non-local currency for the Central Bank of Iran, or any other entity within blacklisted Iranian sectors. The legislation makes such sanctions effective May 9 -- meaning the sanctions would be retroactive. The bill could be attached to Iran sanctions legislation in the House later this month.
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“We are putting financial institutions around the world on notice that, effective tomorrow, you must halt all foreign currency transactions on behalf of blacklisted Iranian banks and sectors or risk being cut off from the U.S. financial market,” the Senators said. “If you are facilitating a transaction for the CBI, [National Iranian Oil Company] or a host of other blacklisted Iranian companies, and the transaction is not being conducted in your local country’s currency, you will be held accountable,” said the bill’s sponsors: Sens. Mark Kirk, R-Ill., Joe Manchin, D-W.V., Susan Collins, R-Me., Bill Nelson, D-Fla., and John Cornyn, R-Texas.
The senators cite reports that Iran uses its foreign bank accounts to circumvent American and European sanctions; converting Iranian rials into foreign money, especially euros, to finance imports and stabilize the budget. Congress has taken up this issue before. In February, a group of Senators wrote a letter to the European Union urging closure of this “euro loophole.” In March, the Senate passed a budget amendment supporting the impetus behind this new bill. Read the bill (here).