September 9, 2016

Memo: Oppose DeSantis Amendment

Members of Congress should vote no on the Rep. DeSantis’ amendment to H.R. 2357 (the “Accelerating Access to Capital Act of 2015”). This amendment is unnecessary, risks undermining U.S. obligations under the Joint Comprehensive Plan of Action (JCPOA), and undermines potential engagement with important elements of Iranian society.
The DeSantis amendment would require issuers of U.S. securities to disclose all business dealings in or with Iran or with the Government of Iran. Under current U.S. law (Sec. 219 of the Iran Threat Reduction Act), issuers of U.S. securities are already required to disclose transactions with the following Iranian entities:
  • The Government of Iran; 
  • The Central Bank of Iran;
  • Iran’s petroleum industry;
  • The IRGC; and
  • Certain sanctioned Iranian persons or entities. 
The DeSantis amendment would extend this disclosure requirement to cover transactions with private and non-sanctioned entities in Iran. If passed, this would create a deterrent to companies interested in engaging in permissible transactions with private individuals and businesses in Iran who are not connected to the government or IRGC. Targeting non-governmental and non-IRGC actors only serves to undermine those elements in Iran who have supported engagement and continue to support a more moderate direction for the country.
Furthermore, this amendment would disincentive businesses from re-engaging Iran in a manner that would risk undermining U.S. obligations under JCPOA. Businesses have demonstrated their reluctance to return to the Iranian market due to persistent legal and reputational risks involving Iran-related transactions. Under the JCPOA, the U.S. is required:
  • “to make best efforts in good faith…to prevent interference with the realization of the full benefit by Iran of the sanctions lifting specified [in Annex II],”
  • “to refrain from any action inconsistent with the letter, spirit, and intent of the JCPOA that would undermine its successful implementation,” and
  • to “refrain from imposing exceptional or discriminatory regulatory or procedural requirements in lieu of the sanctions or restrictive measures covered by the JCPOA.”
Forcing companies to disclose their permissible dealings with Iranian persons or entities will undeservedly expose them to reputational harms, including potential pressure campaigns by outside groups seeking to unravel the JCPOA by undermining the sanctions relief. Iran would have a fair argument to make that this disclosure requirement would interfere with its realization of the full benefits of the sanctions-lifting under the JCPOA and would be inconsistent with the intent of the JCPOA and undermine its successful implementation. Congress should vote down this unnecessary and counterproductive amendment.
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