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The Morning Risk Report: Critics Question Impact of U.S. Sanctions on Iran |
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Visitors shop for goods at retail stores lining an arcade inside the Iran's Grand Bazaar in Tehran on Aug. 6, 2018. PHOTO: Ali Mohammadi/Bloomberg News
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Good morning. The U.S. began its process of re-imposing sanctions on Iran, taking credit for weakening the Iranian economy and forecasting the next tranche of measures, which come into effect in November.
Skeptics, however, say the administration’s unilateral approach won’t cut as deep as it thinks, The Wall Street Journal reports. Though the U.S. walked from the nuclear agreement, the other parties remain and Europe has vowed to prevent the U.S. sanctions from hurting its relations with Iran.
Beginning Tuesday, the U.S. prohibits Iran’s access to U.S. dollars, puts sanctions on Iran’s trade in gold or precious metals, outlaws the purchase of Iranian sovereign debt and puts sanctions on the Iranian automotive sector. Tougher measures come into effect Nov. 5, when the U.S. will cut off Iranian oil exports and put sanctions on the country’s shipping industry.
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Sanctions attorneys speaking to Risk & Compliance Journal said companies should expect aggressive enforcement of the re-imposed sanctions but that penalties may not come until after the second tranche takes effect.
"It will be some time before the re-imposed sanctions actually result in a designation or an enforcement action," said Sean Kane, an attorney in Dechert LLP's international trade group.
The phased roll-out will cause companies to recognize the reality of the situation. "People are going to wake up and say, 'Wow, this is real,'" said Mario Mancuso, who leads the Kirkland & Ellis LLP international trade and national security practice.
The sanctions coming back into force in November are more significant, he said.
The timeline for the measures was laid out in May, when President Trump announced his exit from the nuclear deal with Iran. Senior administration officials talking to reporters on Monday took credit for Iran’s recent economic decline and protests, currency struggles and an exodus of companies from Iran since his announcement, saying the pressure campaign is working.
“The point of our sanctions pressure--this economic pressure campaign--is to deny the regime the financial resources that it needs to finance terrorism and its nuclear missile programs and other dangerous activity around the Middle East," said one official. "We're very pleased that nearly 100 international firms have announced their intent to leave the Iranian market, particularly in the energy and the finance sectors.”
Europe has tried to keep the deal in place in the months since Mr. Trump’s announced exit, and on Monday Brussels said it would protect companies seeking to stay in Iran. U.S. officials waived off Europe’s efforts, and sanctions attorneys said companies will have to decide which legal regime they need to comply with, and consider the repercussions.
"EU-based companies that have re-entered Iran may be forced to pull out," wrote Glen Kelley, a partner in the international trade-focused firm Jacobson Burton Kelley PLLC, in a presentation to clients about the re-imposition of sanctions.
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Denmark’s public prosecutor for special economic crime launched a criminal investigation against Danske Bank A/S for potential money-laundering offenses. The investigation relates to transactions carried out through the bank’s Estonian branch. Danske Bank said it is assisting prosecutors.
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| Exclusive From Risk & Compliance Journal |
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Former Barbadian minister arrested for allegedly laundering bribes. The former minister of industry of Barbados appeared in U.S. federal court Monday on charges he laundered bribes from a Barbadian insurance company in exchange to help the firm secure government contracts.
Donville Inniss, who lives in Tampa, Fla., and in Barbados, was arrested Friday and charged with two counts of money laundering and a conspiracy count. Neither Mr. Inniss nor his lawyer, a public defender, immediately responded to requests for comment.
Mr. Inniss allegedly took part in a scheme to launder $36,000 in bribes he received from executives of a Barbadian insurance company. He allegedly used his position as minister of industry to help the firm get two government contracts, prosecutors say.
Mr. Inniss concealed the bribes by receiving them through a bank account in the name of a dental company with an address in Elmont, N.Y., prosecutors say. -- Samuel Rubenfeld
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Federal Deposit Insurance Corp. Chairman Jelena McWilliams says she is ready to re-evaluate rules on bank capital, small-dollar loans and investments in low-income areas. Her top priorities? Examining the regulatory burden on small banks, speeding up her agency’s review of bank-charter applications, and helping banks introduce new financial products for underserved communities, WSJ reports.
The European Commission is considering rules to mandate uniform chargers for cell phones, Reuters reports, as phone companies have been slow to act on the request. The EC says a common charger would cut down on electronic waste and be more convenient for consumers.
New York's attorney general sued the Trump administration to get more information about a program the state says allows companies that fail to pay workers to escape penalties, Reuters reports.
Swiss money manager GAM Holding AG said Monday the star fund manager it suspended last week breached the firm’s gifts and entertainment policy, may have failed to carry out due diligence on investments, and used his personal email for work purposes, WSJ reports. Attempts to reach the manager were unsuccessful.
The largest U.S. aluminum maker wants an exemption from tariffs designed to bolster domestic metal production. WSJ reports Alcoa Corp. on Monday asked the Trump administration for an exemption from tariffs on aluminum imported from Canada, where the company makes a raw form of the metal that it rolls into sheet for beverage cans at a U.S. plant.
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Alcoa Corp. on Monday asked the Trump administration for an exemption from tariffs on aluminum imported from Canada. Shown here is a worker at an Alcoa plant in Hungary in 2006. PHOTO: Sean Gallup/Getty Images
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Facebook Inc. wants your financial data. WSJ reports the social-media giant has asked large U.S. banks to share detailed financial information about their customers, including card transactions and checking-account balances, as part of an effort to offer new services to users.
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An independent oversight group told the United Nations it needs to improve safeguards for whistleblowers and to make it easier for workers to report bad behavior and efforts to retaliate against those who come forward, Reuters reports.
Carl Icahn went public with his campaign to scuttle Cigna Corp.’s $54 billion plan to buy Express Scripts Holding Co. WSJ reports The billionaire activist investor sent an open letter Tuesday urging fellow Cigna shareholders to vote against the deal, which he calls a “$60 billion folly” carrying a “ridiculous” price tag.
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Prosecutors in Slovenia indicted 15 people for graft for taking gifts tied to sales of medical equipment and medicine, Reuters reports. Some of those indicted also were charged with bribery and money laundering.
Brian France, chief executive of NASCAR, is taking an indefinite leave after being arrested on charges of drug possession and driving while intoxicated, Washington Post reports. Mr. France was arrested Sunday in Sag Harbor, N.Y.
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Erik Jones makes his way through a turn during a NASCAR Cup Series auto race on Sunday in Watkins Glen, N.Y. PHOTO: Julie Jacobson/Associated Press
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The U.S. moved to reimpose punishing sanctions on Iran and threatened even-tougher measures as the Trump administration increases pressure on the Tehran regime to negotiate or step aside, WSJ reports. Oil prices are up on the news, Reuters reports, adding President Trump says any country that continues to do business with Iran will lose the U.S. as a trading partner.
An inferno combining two fires burning just north of Napa County’s wine-growing region in Northern California had scorched more than 283,000 acres as of Monday in what officials described as the largest wildfire in the state’s history, WSJ reports.
Property insurers are relying on more drones, small aircraft and artificial intelligence to accelerate claims but this push for speed could pose new headaches for the industry, WSJ reports. Last year marked the first widespread use of aerial technology to pinpoint damages and evaluate losses quickly, but some insurers have reopened claims from that period because initial repair estimates turned out to be too low, according to executives and regulators.
Saudi Arabia’s diplomatic rupture with Canada risks complicating the kingdom’s efforts to woo foreign investors as it seeks to overhaul its economy, WSJ reports. Saudi Arabia on Monday gave Canada’s ambassador 24 hours to leave the country after Canada’s Foreign Ministry criticized Saudi Arabia for arresting human-rights activists. Reuter's reports Canada's foreign minister said the country will always stand up for human rights around the world.
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Russian companies routinely face harassment from law-enforcement officials seeking to extort money or expropriate businesses, according to business owners, lawyers and activists, WSJ reports. President Vladimir Putin’s authoritarian rule relies on security officials and political heavyweights who use their authority not only to squash political opponents but also to squeeze companies for payoffs, seize them on behalf of rivals or take them over for themselves, critics say.
Cisco Systems Inc. will get a $400 million payment from Arista Networks Inc. to end its court fight with the rival network-equipment maker, Reuters reports. Cisco sued Arista, claiming it swiped intellectual property.
A trial judge ignored “fundamental principles of economics and common sense” when he allowed AT&T Inc.’s acquisition of Time Warner Inc., the Justice Department argued Monday, WSJ reports, as a host of new details about the antitrust trial became public for the first time. The DOJ continues to challenge the deal even after the companies completed the transaction in June upon winning a six-week trial.
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Short on cash, battered by investors and pronounced dead by critics recently, MoviePass will soon begin limiting customers to three movies a month, a major change from its current allowance of one a day, WSJ reports. The policy changes come after a tumultuous several weeks during which MoviePass briefly stopped working in most theaters and parent company Helios & Matheson Analytics had to borrow money at a high interest rate to stay afloat.
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Follow the WSJ Risk & Compliance Team on Twitter: @WSJRisk, @srubenfeld, @BenDiPietro1 and @LikelyMara.
Send complaints, comments and kudos to Ben DiPietro at ben.dipietro@wsj.com.
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