US warns of pain to firms found evading renewed Iran sanctions

Bloomberg

The US gave a stark warning to companies around the world: Evading sanctions on Iran will hurt.
“I promise you that doing business in Iran in defiance of our sanctions will ultimately be a much more painful business decision than pulling out of Iran,” Secretary of State Michael Pompeo said at a news conference in Washington, after the US imposed penalties on 700 individuals, banks, ships, aircraft and companies tied to Iran’s energy and financial industries.
Vowing “swift, severe penalties” to those caught violating sanctions, Pompeo said the US pressure’s campaign has cost Iran $2.5 billion in oil revenue since May. But oil traded close to a six-month low as Pompeo’s tough talk was softened by his announcement of temporary waivers from penalties for eight governments.
Facing criticism from some US conservatives who didn’t think he should issue any waivers, President Donald Trump said that he didn’t want to shock energy markets by forcing all buyers to halt Iranian oil purchases.
“We want to go a little bit slower because I don’t want to drive the oil prices in the world up,” Trump told reporters in Washington. “It would cause a shock to the market.”
Pompeo confirmed that the eight governments granted waivers from oil sanctions are China, India, Italy, Greece, Japan, South Korea, Taiwan and Turkey. He said the waivers were only temporary measures to ease their transition from Iranian crude and avoid destabilising the energy market. But some Republicans in Congress have vowed legislation to eliminate the waivers, and Iran’s President Hassan Rouhani ridiculed them.
“That the US is forced to exempt eight nations from sanctions on oil sales when it had previously said it wants to cut Iran’s oil sales to zero, isn’t that a sign of Iran’s victory and the US backing off?” Rouhani said.
Pompeo said more than 100 companies have already withdrawn from the Iranian market since May, and the US has shown in the past its willingness to heavily fine violators of American sanctions. French bank BNP Paribas SA agreed to pay $8.9 billion in July 2014 for violating US sanctions against Sudan, Cuba and Iran. Germany’s Commerzbank AG agreed to pay $1.45 billion for moving funds through the US financial system for Sudan and Iran. The waivers announced largely confirmed expectations in the energy market and eased concerns about the prospects of a tight global market at the end of the year. West Texas Intermediate crude for December delivery dropped as much as 1 percent to $62.52 a barrel on New York Mercantile Exchange, the lowest since April 9, before recovering 0.6 percent to $63.52 as of 1:51 pm London time.

‘AGGRESSIVE’ ENFORCEMENT
The administration’s pledges to be “aggressive” in enforcement of the sanctions indicates that US individuals and companies in violation could face high penalties or even the threat of jail time, according to John Smith, who left Treasury in May as a civil servant leading the unit that issues and enforces sanctions and is now a partner at the law firm Morrison & Foerster.
Treasury Secretary Steven Mnuchin added 700 entities to the sanctions list, bringing it to 900. Among those listed for the first time were 50 Iranian banks, 200 individuals, and shipping vessels tied to Iran’s shipping and energy sector and more than 65 Iranian aircraft. The only path to sanctions relief is for Iran’s leaders to halt its support for terrorism and abandon its nuclear ambitions “immediately,” Mnuchin said, adding that the US is watching the Iranian regime with “laser focus.”
Exceptions to sanctions will be made for humanitarian purchases, such as for food and medicine, though the statements on didn’t indicate how those would be determined
or approved.