Section 218 of the “Iran Threat Reduction and Syria Human Rights Act of 2012
," which was signed by President Obama into law on August 10, 2012, significantly expands the scope of U.S. sanctions against Iran by extending the full range of restrictions to the activiteis of non-U.S. entities owned or controlled by U.S. persons (including U.S. companies). This provision specifies that the President shall, "[n]ot later than 60 days after [August 10, 2012]," prohibit non-U.S. entities owned or controlled by a U.S. person from knowingly engaging, directly or indirectly, in transactions with Iran if those activities would be prohibited if engaged by a U.S. person or in the United States. The President has not yet implemented this provision but companies should assess further the activities of their non-U.S. subsidiaries in light of the possible exposure once this provision becomes effective.
The new legislation also contains a number of other new restrictions that expand the Iran Sanctions Act, as amended in 2010, primarily targeting the petroleum, petrochemical, oil and natural gas, and financial sectors. Those extra-territorial measures apply to the activities of non-U.S. entities even if they have no U.S. nexus. The legislation also contains sanctions with respect to human rights abuses in Syria and Iran. For more information about this new legislation, see the Hogan Lovells client alert.