How the US Decides on Whom to Impose Sanctions

            The following is an excerpt from the U.S. Government Accountability Office's letter to the chair of the House of Representative’s foreign affairs committee detailing the process to determine whether to impose sanctions under the Iran Sanctions Act.

            U.S. sanctions on Iran include those specified in the Iran Sanctions Act of 1996 (Iran Sanctions Act). Section 5(b) of the Iran Sanctions Act authorizes sanctions on persons engaging in various activities that involve weapons of mass destruction or other military capabilities and are related to Iran. You requested that we review how the Department of State (State) has implemented the sanctions provisions in Section 5(b). This report describes the process State and other relevant U.S. agencies use to determine whether to sanction persons under Section 5(b).
 
            To determine the process State and other relevant U.S. agencies use to determine whether to sanction persons under Section 5(b), we obtained documentation and interviewed State officials. We interviewed agency officials at the Department of Energy and the Department of Commerce (agencies identified by State as relevant to the sanctions determination process), and obtained corroborating documentation about their roles in making this determination. In addition, we compared the agencies’ criteria with the relevant requirements in Section 5(b). We obtained documentation from State about the number of sanctions imposed under Section 5(b). We interviewed State officials to obtain additional context relating to the sanctions process. We also reviewed the Federal Register for notifications of Section 5(b) sanctions for the time period August 10, 2012, to May 20, 2014.
 
           We conducted this performance audit from January 2014 to May 2014 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.
 
Background
 
           Section 5(b) of the Iran Sanctions Act requires the President to impose sanctions on any person who has engaged in a transaction that meets all of the following criteria:
• The activity must have occurred on or after August 10, 2012.
• A person must have exported or transferred, or permitted or otherwise facilitated the transshipment of, any goods, services, or technology or other items to any other person.
• The person must have known or should have known that the export, transfer, or transshipment of the goods, services, technology, or other items would likely result in another person exporting, transferring, transshipping, or otherwise providing the goods, services, or technology or other items to Iran.
• The person must have known or should have known that the export, transfer, transshipment, or other provision of the goods, services, technology, or other items to Iran would contribute materially to the ability of Iran to (I) acquire or develop chemical, biological, or nuclear weapons or related technologies or (II) acquire or develop destabilizing numbers and types of advanced conventional weapons.
 
            Section 5(b) also requires the President to impose sanctions on persons engaged in certain joint ventures linked to Iran and involving the mining, production, or transportation of uranium. The President has delegated the decision to impose Section 5(b) sanctions to the Secretary of State.
 
State Leads the Process to Determine Whether to Sanction Persons under Section 5(b) of the Iran Sanctions Act
 
            State’s Bureau of International Security and Nonproliferation’s Office of Counterproliferation Initiatives leads an interagency process to evaluate whether a person’s activities are potentially sanctionable under Section 5(b) of the Iran Sanctions Act or under one or more of other multiple Iran-related sanctions authorities.8Figure 1 illustrates the process for identifying persons meeting sanctions requirements under Section 5(b). The process begins with four State-led interagency working groups. These groups are the Nuclear Interdiction Action Group, the SHIELD Chemical and Biological Weapons Group, the Technology Transfer Working Group, and the Missile Trade Analysis Group.
 
Figure 1: Process for Identifying Persons Meeting Sanctions Requirements under Section 5(b) of the Iran Sanctions Act
 
            *The four working groups include, for example, members from the Department of Energy, the Department of Commerce, and the intelligence community, among others. These working groups are responsible for identifying potential violations of multiple proliferation-related sanctions authorities, including Section 5(b) of the Iran Sanctions Act.
 
            Each working group is chaired by a State official and consists of representatives from several U.S. government departments and agencies such as the Departments of Defense, Commerce, Homeland Security, Treasury, and Energy; the Federal Bureau of Investigation; and various intelligence community agencies. U.S. government officials who participate as subject matter experts on the working groups said that they advise State on transactions related to their respective areas of focus. For instance, the Nuclear Interdiction Action Group, the SHIELD Chemical and Biological Weapons Group, and the Technology Transfer Working Group are responsible for examining sources, including intelligence reports, that may be relevant to provisions of Section 5(b) related to nuclear weapons, chemical and biological weapons, and advanced conventional weapons, respectively. The Missile Trade Analysis Group is responsible for monitoring transfers of missile proliferation concern that are considered relevant to Section 5(b).
 
            Officials from the Office of Counterproliferation Initiatives stated that the working groups are responsible for regularly evaluating reports to identify transactions that are potentially sanctionable under one or more of the multiple Iran-related nonproliferation sanction authorities, including Section 5(b) of the Iran Sanctions Act. State officials said these reports come from a variety of sources, including the intelligence community. Working group representatives said they are in regular communication and meet biweekly or monthly to discuss these reports and their findings to determine whether transactions meet the criteria for sanctions. According to State and other working group officials, the interagency review process relies on criteria as defined in Section 5(b) when assessing a transaction for the potential application of those sanctions. Officials from the interagency working groups said that State directs them to apply these criteria when assessing transactions for the possible imposition of sanctions under Section 5(b). State is in the process of drafting a document to officially outline its Section 5(b) review procedures and the guidance it provides to the participating working group agencies. State officials also said the groups may stop reviewing transactions if they determine available information does not provide a basis for applying sanctions or is not legally sufficient.
 
            Once a working group determines that a transaction appears to demonstrate sanctionable activity under Section 5(b) of the Iran Sanctions Act, the working group chair reports the group’s findings and recommendations to State’s Office of Counterproliferation Initiatives. The office further examines the narrowed list of transactions forwarded by the working groups, informally consulting with working group chairs and legal advisors to clarify technical points and answer questions on transactions identified as potentially sanctionable. For those transactions that appear to demonstrate sanctionable activity, the Office of Counterproliferation Initiatives solicits interagency advice, and drafts and circulates a decision memorandum to relevant stakeholders for clearance. Once the stakeholders have fully cleared the memorandum, the Office of Counterproliferation Initiatives forwards it to the Secretary of State or his/her designee for a final sanctions determination. At any stage of this process, State officials may determine that there is no current basis for applying sanctions. The Office of Counterproliferation Initiatives prepares a report on imposed sanctions for publication in the Federal Register.
 
            According to State officials, the interagency working groups have not identified any cases that meet the legal requirements necessary to impose sanctions under Section 5(b) as of May 19, 2014. Our review of the Federal Register confirmed that State has not imposed any such sanctions as of May 20, 2014.
 
Click here for a PDF of the letter.