On August 16, 2010 the Office of Foreign Assets Control ("OFAC") within the United States Department of the Treasury issued the Iranian Financial Sanctions Regulations ("IFSR") to implement provisions of the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 ("CISADA"). In a surprise move that caught many off-guard, OFAC issued the IFSR as a final rule with certain prohibitions effective immediately and well ahead of the statutory deadline, noting that it was acting with unusual speed because of "the President's commitment to rigorous implementation" of the new Iran sanctions.

The IFSR applies not only to United States financial institutions, including banks, trust companies, securities brokers and dealers, commodity futures and options brokers and dealers, foreign exchange merchants, investment companies, insurance companies, and money service businesses, but also to securities and commodities exchanges, clearing corporations, and employee benefit plans, and to U.S. holding companies, U.S. subsidiaries, and other U.S. affiliates of these entities. In addition, the regulations prohibit foreign entities that are owned or controlled by U.S. financial institutions from engaging in certain prohibited transactions. The new and unprecedented requirements of the IFSR, including obligations with respect to foreign correspondent and payable-through accounts and the direct application of certain sanctions to foreign subsidiaries of U.S. financial institutions, raise a number of unresolved issues regarding how companies can ensure compliance and avoid the possible assessment of severe penalties.

Topics discussed:

• The background of the IFSR, including the passage of CISADA and the Iran sanctions legislative precedents;
• The new prohibitions and strict conditions on the opening or maintenance of correspondent accounts and payable through accounts in the United States for certain foreign financial institutions to be named in future orders or regulations issued by the Secretary of the Treasury or added to an Appendix to the IFSR;
• The differences between the IFSR and the requirements under the Bank Secrecy Act applicable to foreign financial institution correspondent and payable through accounts;
• The direct application to foreign companies that are owned or controlled by U.S. financial institutions of the prohibition on knowingly engaging in transactions with or benefitting Iran's Islamic Revolutionary Guard Corps ("IRGCC") or any of its agents or affiliates whose property or interests are blocked pursuant to IEEPA;
• The broad definition of "knowingly" to include, not only actual knowledge, but also instances where a person "should have known, of the conduct, circumstances, or result."

Judith Lee — Co-Chair of the firm's International Trade Regulation and Compliance practice. Named in Chambers USA: America's Leading Lawyers for Business Guide as a Leading International Trade Lawyer in 2007 – 2010, and included in Euromoney's 2007 and 2008 "Guide to the World's Leading International Trade Lawyers," U.S. Section. Practice focus involves all aspects of international trade regulation, including USA Patriot Act compliance, Foreign Corrupt Practices Act, economic sanctions and embargoes, export controls, customs, international privacy issues, international intellectual property issues and international labor issues.

Amy Rudnick — Co-chair of the firm's Financial Institutions Group and a member of the White Collar Defense and Investigations practice. Former Director of the Department of the Treasury's Office of Financial Enforcement. Ranked nationally as a leading lawyer for Financial Services Regulation in the 2010 guide of Chambers USA: America's Leading Lawyers for Business. Specializes in representing clients in connection with criminal, civil, and regulatory enforcement proceedings and in providing legal advice regarding anti-money laundering laws and regulations, including the Bank Secrecy Act, as amended by the USA PATRIOT Act.

Jim Slear — Member of the firm's International Trade Regulation and Compliance practice. Former Air Force Chief Trial Counsel in Asia and Federal Court Trial Attorney for the Air Force's Commercial Litigation Division. Regularly advises clients regarding compliance and enforcement matters concerning the sanctions laws and regulations administered by the Office of Foreign Assets Control ("OFAC"), the International Traffic in Arms Regulations ("ITAR"), the Export Administration Regulations ("EAR"), the Foreign Corrupt Practices Act ("FCPA"), and regarding matters before the Committee on Foreign Investment in the United States ("CFIUS").

MCLE Credit Information:

This program has been approved for credit in accordance with the requirements of the New York State Continuing Legal Education Board for a maximum of 1.0 credit hour, of which 1.0  credit hour may be applied toward the areas of professional practice requirement.  This course is NOT approved for transitional credit.

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