BILL ANALYSIS Ó
AB 978
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Date of Hearing: May 8, 2013
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 978 (Blumenfield) - As Amended: April 25, 2013
Policy Committee: Banking and
Finance Vote: 11-0
JEDE 8-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill requires the Commissioner of Financial Institutions to
ensure state-chartered financial institutions are in compliance
with the federal Comprehensive Iran Sanctions, Accountability,
and Divestment Act of 2010 and associated regulations, and
states the bill will become inoperative if either Iran is
removed from the Department of State's list of countries
supporting terrorism or if the President certifies Iran has
stopped trying to make a nuclear weapon.
FISCAL EFFECT
Minor absorbable costs to the Department of Financial
Institutions to monitor compliance with federal law.
COMMENTS
1)Purpose. According to the author, California continues to aid
Congress in its efforts to increase economic pressure on Iran
to cease its pursuit of nuclear weapons. The author argues the
serious and urgent nature of the threat from Iran demands that
states, together with the federal government, do everything
possible to prevent Iran from acquiring nuclear weapons
capability. The author adds AB 978 would ensure
state-chartered banks are reviewed regularly for compliance
with federal Iran sanctions developed to stem the flow of
funds to Iran and terrorists groups as identified by the
federal government.
2)Background . Financial institutions in the U.S. and California,
AB 978
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irrespective of state or federal charters, must comply with
sanctions established by federal statute and/or Presidential
executive order. The mere fact that a bank or credit union is
regulated by a state regulator does not lesson, nor detract
from their compliance responsibilities with these and a
multitude of other federal laws. A failure of these entities
to comply with the myriad of sanctions or the United States
Treasury Department's Office of Foreign Assets Control list
could result in severe federal penalties.
The Iran Sanctions Act, requires the U.S. Department of the
Treasury to prohibit, or impose strict conditions on, an
account in this country or a payable-through account for a
foreign financial institution that the U.S. Department of the
Treasury finds knowingly facilitates the efforts of Iran to
acquire or develop weapons of mass destruction, or provides
support for organizations designated as foreign terrorist
organizations. This includes the efforts of the Central Bank
of Iran or any other Iranian financial institution, Iran's
Islamic Revolutionary Guard Corps and other individuals or
third parties.
3)Previous legislation .
a) AB 1650 (Feuer/Blumenfield), Chapter 573, Statutes of
2010, prohibits California governments from contracting
with companies doing restricted business in Iran.
b) AB 2160 (Blumenfield) Chapter 479, Statutes of 2012,
prevents investments in Iran from counting as assets that
would otherwise be considered when judging the financial
solvency of insurers to do business in California.
1)There is no registered opposition to this bill.
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081