In addition to freezing any unlikely assets in U.S. jurisdictions, the sanctions require U.S. banks to block, rather than simply reject, transactions with Iranian banks-with the money held indefinitely in a U.S. interest-bearing account until the funds are released by the Treasury Department. "If you reject the transaction, like they've done in the past, they get their money back," says Clif Burns, a partner in the Export Controls Practice Group with Powell Goldstein, a law firm in Washington. "When you block it, it has serious consequences, because they don't get the money back."

For more than 18 years, Iran has flagrantly ignored its safeguards agreement with the International Atomic Energy Agency, violating the Non-Proliferation Treaty with clandestine enrichment research. Iran has denied its nuclear program is a cover for atomic-weapons development. The State Department has been toiling for years to gain support for tougher sanctions from the international community, and has won two U.N. Security Council sanctions resolutions. A third U.N. set of sanctions, not yet resolved, is being held up by the Russians and the Chinese. France and Germany have signaled that the European Union could punish Iran with its own economic sanctions.

However, since the U.S. has prohibited nearly all U.S.-Iran transactions since 1996, the new sanctions offer few new restrictions, notes Victor Comras, a special counsel at The Eren Law Firm in Washington, D.C., who advises the U.S. on counterterrorism financing and economic sanctions.

Burns agrees, saying "This is designed to publicly put pressure on the Iranians and to give banks pause before dealing with Iranian transactions. Part of it was clearly an effort to step up diplomatic pressure. It will, in theory, cause a lot of nervousness on the part of nations dealing with Iran."

To view the article in its entirety, please click here.