The move toward tightening sanctions on Iran has moved up a notch as proposed legislation would target global insurers who provide insurance or reinsurance on any deals with Iran that are forbidden by U.S. law.
Bloomberg reported that the proposed legislation, drafted by Rep. Brad Sherman, D-Calif. and Sen. Mark Kirk, R-Ill., would levy penalties on underwriters providing coverage for such deals as oil and gas investments or insurance for banks or companies subject to sanctions by the U.S.
While the legislation is expected to affect mostly Asia-Pacific and Russian underwriters, because most European companies have already either cut or eliminated deals involving Iran, it could take a toll on any companies still doing such business.
Nigel Kushner, chief executive of Whale Rock Legal, a London-based law firm whose clients include companies engaged in legal trade with Iran, was quoted saying that if there were any European Union or U.S. entities that still provided insurance to non-Iranian entities involved in Iranian deals, “this will be the nail in the coffin preventing them from doing so.”
The EU banned European companies from doing such business in 2010. In the U.S., companies must get a special license from the government before they are permitted to engage in Iran-related underwriting.
Mark Dubowitz, executive director of the Foundation for the Defense of Democracies, a Washington research institute, was quoted saying that the proposed legislation “broadens the scope of U.S. sanctions to target Asian, Russian and other insurance and reinsurance companies looking to backfill on deals abandoned by their U.S. and European competitors.”
He continued, “If you are insuring the sale of Iranian petroleum without an exception granted to your country under the U.S. central bank sanctions law, underwriting a major oil or natural gas project in Iran, or insuring the sale of parts and components for Iran’s nuclear program, you could be the target of these new measures.”
Kirk and Sherman are also seeking to expand sanctions to Iranian banks and foreign financial institutions, including central banks that are engaged in non-oil transactions with Iran.