AB 978, as amended, Blumenfield. Financial institutions: Iran sanctions.
Existing law generally provides for the regulation and licensure of financial institutions, including, but not limited to, banks and credit unions, by the Department of Business Oversight and the Commissioner of Business Oversight, as specified.
The federal Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 imposes federal sanctions against the Government of Iran, as specified, and, among other duties, requires the Secretary of the Treasury to prescribe regulations to prohibit, or impose strict conditions on, the opening or maintaining in the United States of a correspondent account or a payable-through account by a foreign financial institution that the Secretary of the Treasury finds knowingly engages in certain activities related to the Government of Iran, subject to specified penalties. The federal act also requires the Secretary of the Treasury to prescribe regulations to require a domestic financial institution maintaining a correspondent account or payable-through account in the United States for a foreign financial institution to perform an audit of prohibited activities that may be carried out by the foreign financial institution, report to the Department of the Treasury with respect to transactions or other financial services provided with respect to a prohibited activity, certify that the foreign financial institution is not knowingly engaging in any prohibited activity, to the best of its knowledge, and establish due diligence policies, procedures, and controls reasonably designed to detect whether the Secretary of the Treasury has found the foreign financial institution to knowingly engage in any prohibited activity.
This bill would require the commissioner, when conducting specified examinations, tobegin delete ensure thatend deletebegin insert
examine whetherend insert a licensee that maintains a correspondent account or payable-through accountbegin insert, as defined,end insert is in compliance with the federal Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010, associated federal regulations, and any related presidential executive orders. The bill also authorizes the commissioner to bring an action for a violation of the act, as specified, and requires the commissioner to forward evidence ofbegin delete aend deletebegin insert theend insert violation to the United States Department of the Treasury. This bill would become inoperative when certain conditions are met.
Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.
The people of the State of California do enact as follows:
The Legislature hereby finds and declares all of
2the following:
3(a) In imposing United States sanctions on Iran, Congress and
4the President have determined that the illicit nuclear activities of
5the Government of Iran, combined with its development of
6unconventional weapons and ballistic missiles, and its support of
7international terrorism, represent a serious threat to the security
8of the United States, Israel, and other United States allies in Europe,
9the Middle East, and around the world.
10(b) On July 1, 2010, President Barack Obama signed into law
11H.R. 2194, the federal
Comprehensive Iran Sanctions,
12Accountability, and Divestment Act of 2010 (Public Law 111-195),
13which puts strict limits on any foreign financial institution’s ability
P3 1to open or maintain a correspondent account or a payable-through
2account with United States financial institutions if the Secretary
3of the Treasury determines that such a foreign financial institution
4knowingly does any of the following:
5(1) Facilitates the efforts of the Government of Iran to acquire
6or develop weapons of mass destruction or their delivery systems.
7(2) Provides support for organizations designated by the United
8States as foreign terrorist organizations.
9(3) Facilitates the activities of persons subject to financial
10sanctions pursuant to
United Nations Security Council resolutions
11imposing sanctions on Iran.
12(4) Engages in money laundering or carries out any activity
13
listed above.
14(5) Facilitates a significant transaction or transactions or
15provides significant financial services for Iran’s Revolutionary
16Guard Corps or its agents or affiliates, or any financial institution
17whose property or interests in property are blocked pursuant to
18federal law in connection with Iran’s proliferation of weapons of
19mass destruction or their delivery systems, or Iran’s support for
20international terrorism.
21(c) The federal Comprehensive Iran Sanctions, Accountabilitybegin insert, end insert
22 and Divestment Actbegin insert of 2010end insert (Public Law 111-195) imposes civil
23and criminal penalties on
United States financial institutions that
24know or should have known that foreign financial institutions that
25maintain correspondent accounts or payable-through accounts with
26them are facilitating activities subject to sanctions.
27(d) On December 21, 2011, President Obama signed into law
28H.R. 1540, the federal National Defense Authorization Act for
29Fiscal Year 2012 (Public Law 112-81), which, subject to certain
30exceptions, places strict limits on any foreign financial institution’s
31ability to open or maintain a correspondent account or a
32payable-through account with United States financial institutions
33if the Secretary of the Treasury determines that a foreign financial
34institution knowingly conducted or facilitated any significant
35financial transaction with the Central Bank of Iran.
36(e) The serious and urgent nature of the threat from Iran
37demands that states work together with the federal government
38and American allies to do everything possible, diplomatically,
39politically, and economically to prevent Iran from acquiring a
40nuclear weapons capability.
P4 1(f) There are moral and reputational reasons for this state to not
2engage in business with foreign companies that have business
3activities benefitting foreign states, such as Iran, that commit
4egregious violations of human rights, proliferate nuclear weapons
5capabilities, and support terrorism.
6(g) In 2010, California enacted Chapter 573 of the Statutes of
72010 (Assembly Bill 1650 of the 2009-10 Regular Session) to
8prohibit companies with certain investments in Iran from bidding
9on or entering
into contracts for goods or services with state or
10local governments.
11(h) The concerns of the State of California regarding Iran are
12strictly the result of the actions of the Government of Iran.
Section 25 is added to the Financial Code, to read:
(a) The commissioner, when conducting examinations
15under Section 500 or Section 14250, shall ensure that a licensee
16that maintains a correspondent account or payable-through account
17is in compliance with the Comprehensive Iran Sanctions,
18Accountability, and Divestment Act of 2010 (Public Law 111-195),
19associated federal regulations, and any related presidential
20executive orders. If the commissioner finds that a licensee is in
21violation, the commissioner may bring an action in accordance
22with Section 566 or Section 16200, and shall forward evidence of
23the violation to the United States Department of the Treasury.
24(b) This section shall become
inoperative if both of the following
25conditions occur:
26(1) Iran is removed from the United States Department of State’s
27list of countries that have been determined to repeatedly provide
28support for acts of international terrorism.
29(2) Pursuant to the appropriate federal statute, the President
30determines and certifies to the appropriate committee of the United
31States Congress that Iran has ceased its efforts to design, develop,
32manufacture, or acquire a nuclear explosive device or related
33materials and technology.
begin insertSection 337 is added to the end insertbegin insertFinancial Codeend insertbegin insert, to read:end insert
begin insert(a) The commissioner, when conducting examinations
36under Section 500, 14250, 16150, or 16700, shall examine a
37licensee that maintains a correspondent account or
38payable-through account for compliance with the federal
39Comprehensive Iran Sanctions, Accountability, and Divestment
40Act of 2010 (Public Law 111-195), associated federal regulations,
P5 1and any related presidential executive orders. If the commissioner
2finds that a licensee is in violation, the commissioner may bring
3an action in accordance with Section 566, 14302, 16200, or 16900,
4and shall forward evidence of the violation to the United States
5Department of the Treasury. For purposes of this section,
6“correspondent account” and “payable-through account” have
7the meanings given those terms in Section 5381A of Title 31 of the
8United States Code.
9(b) This section shall become inoperative if both of the following
10conditions occur:
11(1) Iran is removed from the United States Department of State’s
12list of countries that have been determined to repeatedly provide
13support for acts of international terrorism.
14(2) Pursuant to the appropriate federal statute, the President
15determines and certifies to the appropriate committee of the United
16States Congress that Iran has ceased its efforts to design, develop,
17manufacture, or acquire a nuclear explosive device or related
18materials and technology.
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