Bill Text: CA AB978 | 2013-2014 | Regular Session | Chaptered
Bill Title: Financial institutions: Iran sanctions.
Spectrum: Partisan Bill (Democrat 5-0)
Status: (Passed) 2013-08-26 - Chaptered by Secretary of State - Chapter 139, Statutes of 2013. [AB978 Detail]
Download: California-2013-AB978-Chaptered.html
BILL NUMBER: AB 978 CHAPTERED
BILL TEXT
CHAPTER 139
FILED WITH SECRETARY OF STATE AUGUST 26, 2013
APPROVED BY GOVERNOR AUGUST 26, 2013
PASSED THE SENATE JULY 8, 2013
PASSED THE ASSEMBLY AUGUST 8, 2013
AMENDED IN SENATE JUNE 10, 2013
AMENDED IN ASSEMBLY APRIL 25, 2013
AMENDED IN ASSEMBLY APRIL 15, 2013
INTRODUCED BY Assembly Member Blumenfield
(Coauthors: Assembly Members Brown, Fox, and Medina)
(Coauthor: Senator Correa)
FEBRUARY 22, 2013
An act to add Section 337 to the Financial Code, relating to
financial institutions.
LEGISLATIVE COUNSEL'S DIGEST
AB 978, 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, to examine whether a licensee that maintains
a correspondent account or payable-through account, as defined, 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 of the violation to the United States Department of the
Treasury. This bill would become inoperative when certain conditions
are met.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature hereby finds and declares all of the
following:
(a) In imposing United States sanctions on Iran, Congress and the
President have determined that the illicit nuclear activities of the
Government of Iran, combined with its development of unconventional
weapons and ballistic missiles, and its support of international
terrorism, represent a serious threat to the security of the United
States, Israel, and other United States allies in Europe, the Middle
East, and around the world.
(b) On July 1, 2010, President Barack Obama signed into law H.R.
2194, the federal Comprehensive Iran Sanctions, Accountability, and
Divestment Act of 2010 (Public Law 111-195), which puts strict limits
on any foreign financial institution's ability to open or maintain a
correspondent account or a payable-through account with United
States financial institutions if the Secretary of the Treasury
determines that such a foreign financial institution knowingly does
any of the following:
(1) Facilitates the efforts of the Government of Iran to acquire
or develop weapons of mass destruction or their delivery systems.
(2) Provides support for organizations designated by the United
States as foreign terrorist organizations.
(3) Facilitates the activities of persons subject to financial
sanctions pursuant to United Nations Security Council resolutions
imposing sanctions on Iran.
(4) Engages in money laundering or carries out any activity listed
above.
(5) Facilitates a significant transaction or transactions or
provides significant financial services for Iran's Revolutionary
Guard Corps or its agents or affiliates, or any financial institution
whose property or interests in property are blocked pursuant to
federal law in connection with Iran's proliferation of weapons of
mass destruction or their delivery systems, or Iran's support for
international terrorism.
(c) The federal Comprehensive Iran Sanctions, Accountability, and
Divestment Act of 2010 (Public Law 111-195) imposes civil and
criminal penalties on United States financial institutions that know
or should have known that foreign financial institutions that
maintain correspondent accounts or payable-through accounts with them
are facilitating activities subject to sanctions.
(d) On December 21, 2011, President Obama signed into law H.R.
1540, the federal National Defense Authorization Act for Fiscal Year
2012 (Public Law 112-81), which, subject to certain exceptions,
places strict limits on any foreign financial institution's ability
to open or maintain a correspondent account or a payable-through
account with United States financial institutions if the Secretary of
the Treasury determines that a foreign financial institution
knowingly conducted or facilitated any significant financial
transaction with the Central Bank of Iran.
(e) The serious and urgent nature of the threat from Iran demands
that states work together with the federal government and American
allies to do everything possible, diplomatically, politically, and
economically to prevent Iran from acquiring a nuclear weapons
capability.
(f) There are moral and reputational reasons for this state to not
engage in business with foreign companies that have business
activities benefitting foreign states, such as Iran, that commit
egregious violations of human rights, proliferate nuclear weapons
capabilities, and support terrorism.
(g) In 2010, California enacted Chapter 573 of the Statutes of
2010 (Assembly Bill 1650 of the 2009-10 Regular Session) to prohibit
companies with certain investments in Iran from bidding on or
entering into contracts for goods or services with state or local
governments.
(h) The concerns of the State of California regarding Iran are
strictly the result of the actions of the Government of Iran.
SEC. 2. Section 337 is added to the Financial Code, to read:
337. (a) The commissioner, when conducting examinations under
Section 500, 14250, 16150, or 16700, shall examine a licensee that
maintains a correspondent account or payable-through account for
compliance with the federal Comprehensive Iran Sanctions,
Accountability, and Divestment Act of 2010 (Public Law 111-195),
associated federal regulations, and any related presidential
executive orders. If the commissioner finds that a licensee is in
violation, the commissioner may bring an action in accordance with
Section 566, 14302, 16200, or 16900, and shall forward evidence of
the violation to the United States Department of the Treasury. For
purposes of this section, "correspondent account" and
"payable-through account" have the meanings given those terms in
Section 5381A of Title 31 of the United States Code.
(b) This section shall become inoperative if both of the following
conditions occur:
(1) Iran is removed from the United States Department of State's
list of countries that have been determined to repeatedly provide
support for acts of international terrorism.
(2) Pursuant to the appropriate federal statute, the President
determines and certifies to the appropriate committee of the United
States Congress that Iran has ceased its efforts to design, develop,
manufacture, or acquire a nuclear explosive device or related
materials and technology.
