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Proposed Australian Sanctions on Iran and their Impact on Australian Industry- World ECR January 2013

On January 10th of this year, just weeks after Australia became a member of the UN Security Council, Australian Foreign Minister Bob Carr announced proposed amendments to existing Australian sanctions on Iran. The tightened sanctions are being made in an attempt to increase pressure on Iran to comply with their nuclear non-proliferation obligations.

Australia’s Department of Foreign Affairs and Trade has said the new sanctions will enhance Australia’s existing UN and Autonomous sanctions and impose tighter financial and travel restrictions on individuals and entities in the financial, trade, energy and transport sectors.

Since May of 2010, the Australian Government has been in the process of reforming the way in which autonomous sanctions are applied under Australian law. A new legislative framework, including the Autonomous Sanctions Act 2011, and the recently implemented Autonomous Sanctions Regulations 2011 (the Regulations), are seen as key to increasing compliance with, and the effectiveness of, Australia’s UN and autonomous sanctions measures.

The newly announced sanctions, which are currently being drafted, will become Australian law as amendments to the existing Regulations. The amendments will contain more stringent prohibitions on financial transactions between Australian and Iranian banks, an expanded list of goods and materials prohibited for export, and a further restriction on the provision of financial and other services. There will be a brief period of public consultation on the proposed amendments before the new sanctions are formally registered and implemented.

Impact on Industry
Australian-based companies that have direct or indirect dealings with the Iranian government, Iranian companies or Iranian individuals should review the Regulations in conjunction with the proposed amendments and determine how their operations may be affected. The Regulations contain relatively broad definitions of key terms including ‘arms of related material’ and ‘financial services’, which can lead to pitfalls for many organisations. Therefore, careful review of business operations against key definitions, as well as specific restrictions and prohibitions in the Regulations, is prudent for all Australian companies and their foreign subsidiaries.

Australian companies may make their opinion on the proposed sanctions known to the Minister for Foreign Affairs through making a formal written submission during the public consultation period. However, the Australian Government will not likely accept any recommendations proposed by industry that seek to delay the commencement of the amended regulations or contravenes Australia’s international obligations. The exposure draft of the newly proposed sanctions will be available on the Department of Foreign Affairs and Trade website before the end of March 2013.

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