February 22, 2021 | Insight

Biden Administration Should Not Provide Sanctions Relief for Terrorism

February 22, 2021 Insight

Biden Administration Should Not Provide Sanctions Relief for Terrorism

As President Joe Biden looks to rejoin the 2015 Iran nuclear agreement, or Joint Comprehensive Plan of Action (JCPOA), Iran is likely to pressure the Biden administration to provide broad sanctions relief, including to entities targeted since 2015 for financing terrorism. The new administration and its supporters should resist such pressure and keep U.S. terrorism sanctions in place – particularly those targeting the Central Bank of Iran (CBI).

One of the JCPOA’s core weaknesses was that it imposed temporary, reversible restrictions on Iran’s nuclear program in return for permanent, comprehensive sanctions relief. The Biden administration should not make the same mistake; undermining the global terrorism sanctions regime in order to achieve a temporary, reversible agreement with the Iranians is not a price the United States should be willing to pay.

Iran’s Well-Documented History of Terrorism

Iran has been designated as a state sponsor of terrorism since 1984 and is currently labeled by the State Department as “the world’s worst state sponsor of terrorism.” This designation derives from Iran’s long history of providing financial and material support to terrorist organizations such as Hezbollah, al-Qaeda, Hamas, and others, collectively responsible for the deaths of thousands of Americans.

Iranian financial institutions, including the CBI, have played a key role in these activities. The CBI has long been identified as the principal Iranian government entity responsible for providing funding to terrorist organizations. In 2006, then-Secretary of State Condoleezza Rice labeled Iran “the central banker of terrorism.” In 2007, the U.S. Financial Crimes Enforcement Network (FinCEN) issued an advisory on the Iranian financial system, reminding financial institutions about U.S. sanctions applied to Iranian government-owned banks and other entities owing to their links to terrorist activity and proliferation. Subsequent designations by the U.S. Treasury Department noted the role of the CBI in financing terrorism.

In November 2011, under the Obama administration, FinCEN published a draft rule designating Iran as a jurisdiction of primary money laundering concern, based on the fact that “Iranian financial institutions, including the Central Bank of Iran … and other state-controlled entities, willingly engage in deceptive practices to disguise illicit conduct” such as support for proliferation and terrorism. While not binding, banks largely complied with the draft rule.

In September 2019, the Trump administration designated the CBI as a Specially Designated Global Terrorist (SDGT) under Executive Order (EO) 13224, for providing “billions of dollars to the Islamic Revolutionary Guards Corps (IRGC), its Qods Force (IRGC-QF) and its terrorist proxy, Hizballah.”

In October 2019, FinCEN also issued a new evidentiary finding and a final rule designating Iran as a jurisdiction of primary money laundering concern and imposing binding restrictions for U.S. banks under Section 311 of the USA PATRIOT Act. FinCEN stated that “Iran has developed covert methods for accessing the international financial system and pursuing its malign activities, including misusing banks and exchange houses, operating procurement networks that utilize front or shell companies, exploiting commercial shipping, and masking illicit transactions using senior officials, including those at the Central Bank of Iran.”

Finally, the Hizballah International Financing Prevention Amendments Act of 2018 (HIFPAA) included a provision imposing mandatory sanctions against agencies or instrumentalities of a foreign state that have “provided significant financial support for or to, or significant arms or related materiel to, Hizballah.” Thus, the application of terrorism sanctions against the CBI is at the very least consistent with the mandatory sanctions provided for in HIFPAA.

Divorce Terrorism Sanctions From JCPOA Considerations

Notably, a recent analysis published by the Atlantic Council argued that the Treasury Department’s 2019 designation of the CBI “represented a departure from the practices of past US administrations, which have historically applied such designations only to groups and persons cited for direct participation in terrorism or support for acts of terrorism or Iran-inspired political violence,” whereas “the Trump administration justified its designation policy on the grounds that the sanctioned economic entities were generating the revenue and financial channels with which Iran supported regional factions that have committed acts of terrorism.”

This is a flawed argument. Issued in the aftermath of the terrorist attacks of September 11, 2001, EO 13224 created the SDGT designation and provided expanded legal authorities for the State Department and Treasury Department to target individuals and entities responsible for carrying out terrorist activities. EO 13224 was itself an outgrowth of a terrorism sanctions regime specifically targeting organizations disrupting Middle East peace.

Specifically, it was created as a global authority to target terrorist financiers that accessed the U.S. financial system. In 2019, the EO was expanded to include the application of secondary sanctions on any individuals or entities, including financial institutions, that allow their services to be used by SDGTs. This expansion further increased the risk associated with banking terrorists. As noted above, the CBI’s activities provide ample evidence to justify its designation.

Indeed, in 2017 – while the United States remained a participant in the JCPOA – Congress near-unanimously directed that terrorism sanctions under EO 13224 be imposed on the IRGC and entities connected to it, noting the IRGC’s role as the “arm of the Government of Iran for executing its policy of supporting terrorist and insurgent groups.” The very nature of EO 13224 ensures that this applies to IRGC supporters and facilitators, such as the CBI.

The Atlantic Council analysis states that “Iranian leaders are demanding the lifting of any US sanction that prevents its economic entities from operating freely in the global economy.” As such, the analysis says, the Biden administration might have to “justify de-listing all Iranian economic entities—even those with terrorism designations—on the grounds that the de-listing is a necessary sacrifice for the broader objective of ensuring that Iran does not become a nuclear weapons state.”

This is a false choice that the Biden administration and Congress should reject. There is no evidence to suggest that Iranian support for terrorist organizations has ceased; effectively creating a list of terror-financing entities exempt from sanctions would undermine the basis of U.S. terrorism sanctions writ large.

In his testimony before the Senate Foreign Relations Committee, Secretary of State Antony Blinken stated that “there is nothing inconsistent” between the JCPOA and U.S. terrorism sanctions on the CBI. This view is consistent with a 2018 article co-authored by former Obama administration senior official Ambassador Dennis Ross, arguing “the sanctions relief provided under the JCPOA should not be interpreted as a blanket immunity for Iranian officials, banks and other government instrumentalities to expand their illicit activities. If such a person or entity is found to be connected to the Revolutionary Guard, terrorism, missile proliferation and human rights abuses, it most certainly can and should be subject to sanctions—even if sanctions for that person or entity were initially suspended by the JCPOA.”

Finally, the Atlantic Council analysis stated: “The Trump administration and many of its predecessors have tended to characterize Iran’s support for these groups as support for terrorism or as ‘malign activities.’ However, it can be argued that Iran’s embrace of armed factions represent implementation of a strategic ‘playbook’ to build influence throughout the region and secure its national interests.”

Any attempt by the Biden administration that would directly or indirectly legitimize Iran-sponsored terrorism ignores the grave national security threat such terrorism poses. Tehran continues to aid Iraqi terrorist organizations such as Kataib Hezbollah, Harakat al-Nujaba, and Asaib Ahl al-Haq, whose members were responsible for the deaths of hundreds of U.S. personnel in Iraq.

Iran also supports Yemen’s Ansar Allah, which has perpetrated repeated attacks on international shipping and aviation. The U.S. State Department has designated the IRGC, Hezbollah, and Hamas as foreign terrorist organizations, and the U.S. Congress has voted time and again to impose sanctions on all three.

It is also important to recall that Democratic and Republican administrations have determined that for over a decade, Tehran has “allowed [al-Qaeda] facilitators to operate a core facilitation pipeline through” Iranian territory, “enabling [al-Qaeda] to move funds and fighters to South Asia and Syria.”

The large body of publicly available evidence that the CBI has played key a role in financing terrorism warrants its designation as an SDGT. The Biden administration could significantly, if not fatally, undermine the credibility of U.S. terrorism sanctions if it were to lift or waive terrorism designations against the CBI or other Iranian entities based on a desire to provide Iran JCPOA-related sanctions relief, rather than based on evidence that those entities have verifiably ceased financing or facilitating terrorism.

For the safety and security of all Americans, there should be no “tradeoff” when it comes to terrorism directed, sponsored, and/or supported by Iran and a limited, temporary, and flawed nuclear agreement with Tehran.

Matthew Zweig and Alireza Nader are senior fellows at the Foundation for Defense of Democracies (FDD), where Richard Goldberg is a senior advisor. They all contribute to FDD’s Iran Program and Center on Economic and Financial Power (CEFP). For more analysis from Matthew, Alireza, Richard, the Iran Program, and CEFP, please subscribe HERE. Follow the authors on Twitter @MatthewZweig1 and @AlirezaNader and @rich_goldberg. Follow FDD on Twitter @FDD and @FDD_Iran and @FDD_CEFP. FDD is a Washington, DC-based, nonpartisan research institute focusing on national security and foreign policy.

Issues:

Al Qaeda Hezbollah Iran Iran Global Threat Network Iran Nuclear Iran Sanctions Jihadism Sanctions and Illicit Finance