On Thursday, January 7, 2015, the House Foreign Affairs Committee is scheduled to markup H.R. 3662, the ‘Iran Terror Finance Transparency Act’. NIAC Action is seriously concerned that the proposed bill would force the United States to breach its commitments under the Joint Comprehensive Plan of Action (“JCPOA”) and, as such, would kill the nuclear agreement and risk isolating the United States while allowing for Iran to renege on its own nuclear concessions.
Major problems with the bill include:
- H.R. 3662 would effectively bar the President from lifting sanctions on Iran’s banks in ways that would contradict U.S. obligations under the JCPOA. It would do so by mandating the President to certify that Iran’s banks had never provided financial services to designated Iranian entities, which is factually impossible considering that almost all of Iran’s major banks have been and are currently designated for doing such.
- H.R. 3662 would force the President to retain the current designations on Iran’s banks in ways that are potentially unlawful. This would open up the United States to lawsuit and, in doing so, undermine the integrity of U.S. sanctions programs.
- H.R. 3662 would target the President’s current licensing authorities in order to limit future modifications to the U.S. trade embargo with Iran. This would reverse a prerogative enjoyed by successive presidents for decades. It would pose a serious threat to any future opportunities to leverage this licensing authority to advance U.S. interests—including humanitarian and human rights interests, as well as to support the people of Iran.
Under H.R. 3662, the President would be barred from lifting certain sanctions outlined in Annex II of the JCPOA – including sanctions on Iranian banks – until the President provided certification as to certain items regarding the activities of designated Iranian persons and entities. For instance, the President would be unable to rescind the sanctions designations of most of Iran’s banks unless he certified that a designated Iranian bank had not knowingly facilitated transactions for or provided financial services to (1) the IRGC or any of its agents or affiliates; (2) a Foreign Terrorist Organization or any person designated as a Specially Designated Global Terrorist; or (3) any person whose property is blocked pursuant to Executive Order 13382 or other related sanctions authorities.
Under this standard, however, the President would never be able to lift sanctions on designated Iranian banks for a simple reason: all of the Iranian banks whose designations will be rescinded as part of the JCPOA were alleged to have facilitated transactions on behalf of Iranian entities designated under EO 13382. Because the President is required to certify that the Iranian banks have never facilitated such transactions, H.R. 3662 – knowingly or not — sets up an impossible standard for the President to meet. As such, H.R. 3662 would force the United States into non-compliance with its JCPOA obligations regardless of whether Iran adheres to its own commitments under the nuclear agreement.
Moreover, even if H.R. 3662 is amended to reflect only whether Iranian banks are currently involved in such listed activities, the proposed legislation could render the designations of Iran’s banks unlawful. Because all of the Iranian banks whose designations will be rescinded upon implementation of the nuclear agreement were designated under the authority EO 13382 – which deals with WMD proliferation – the rescission of Iranian banks’ designations are dependent on the U.S. no longer having concern that such banks are providing financial support for Iran’s WMD programs (i.e., its nuclear program).
However, H.R. 3662 would make the rescission of Iranian banks’ WMD designations dependent on those banks not providing financial services to the IRGC or any of its agents or affiliates (which currently includes the National Iranian Oil Company) or to U.S.-designated FTOs or SDGTs. While the U.S. possesses other sanctions authorities to target such activities, H.R. 3662 would render irrelevant the legal criteria underlying Iranian banks’ WMD designations in ways that might not altogether be permissible under U.S. law. In doing so, H.R. 3662 would complicate the President’s task of lifting the sanctions designations under the JCPOA. At the same time, it could expose the U.S. government to lawsuits to nonetheless lift these sanctions but without Iranian nuclear concessions.
NIAC Action urges legislators to oppose H.R. 3662 as one further attempt to kill the nuclear agreement by those who have long been hostile to any diplomatic resolution between the U.S. and Iran. If adopted, H.R. 3662 would force the U.S. into non-compliance with its JCPOA obligations and create serious consequences for U.S. interests.