Initially for a 180 day period
On 11 June 2012 it was announced by the US Department of State that India, Malaysia, South Korea, South Africa, Sri Lanka, Turkey and Taiwan have been exempted for a period of 180 days from the provisions of section 1245(d)(1) of the National Defence Authorization Act of 2012 (“NDAA”). The 180 day exemption is renewable upon review. These seven countries are not exempted from any other US sanctions against Iran, other than those in Sec. 1245(d)(1) of the NDAA for 2012.
Section 1245 of the NDAA provides:
1. For the blocking of all assets found within US jurisdiction belonging to any Iranian financial institution.
2. All private financial institutions (US or foreign) that knowingly conduct or facilitate any significant transactions with the Central Bank of Iran, or with any Iranian financial institution which has been designated by the US, are subject to being sanctioned by the U.S. The sanction provided for in the NDAA is that the foreign financial institution will be prohibited from opening or maintaining correspondent accounts with US financial institutions. In other words, they will be shut out of the U.S. financial system.
3. Transactions involving the sale of food, medicine or medical devices to Iran are exempt from the NDAA. For all other transactions, except petroleum purchases from Iran, the provisions of Sec. 1245 of the NDAA went into effect on 29 February 2012.
4. As to the purchase of petroleum from Iran, or the sale of petroleum products to Iran, the provisions of Sec. 1245 are to go into effect on 28 June 2012. However, the NDAA provides that depending on the availability and price of alternative supplies, this provision of the NDAA relating to the purchase of petroleum products from Iran may be held in abeyance.
5. On 20 March 2012 the US exempted 11 countries from the prohibition on purchasing petroleum products from Iran, because it found that each of those countries had significantly reduced its volume of crude oil purchases from Iran. (Those countries were: Belgium, the Czech Republic, France, Germany, Greece, Italy, the Netherlands, Poland, Spain, the UK and Japan.)
6. Now, on 11 June 2012, the US has exempted 7 countries for a 180 day period, renewable upon review. These countries have also been exempted because they have significantly reduced the level of their crude oil imports from Iran. The US is essentially trying to balance its efforts to deprive Iran of oil revenue (which could be used in its nuclear program) against ensuring that allies can obtain the crude oil they need for energy purposes from world markets. The US will exempt a country from the full prohibition of financial transactions relating to oil purchases from Iran if they see that said country has significantly reduced its overall purchases of Iranian crude.
7. Note that an exemption from Sec. 1245(d)(1) is not an exemption from Sec. 104(c) of CISADA, which remains in effect and which essentially prohibits a foreign financial institution from engaging in any activity which supports terrorism or Iran’s efforts to acquire/develop weapons of mass destruction, money laundering, etc.
Source: The Standard P&I Club
