Australian Government imposes further sanctions on Iranian individuals and entities

Key Takeaways

• Australia has imposed financial sanctions and travel bans on an additional seven (7) Iranian individuals and entities.

   

• The Australian Government has also identified the need for continued focus on managing foreign influence and the potential for interference.

   

Australia’s increased sanctions on Iran

Australia has imposed its fourth tranche of sanctions on Iran since December 2022. On 13 September 2023, the Minister for Foreign Affairs, Penny Wong, designated for targeted financial sanctions and travel bans a further four (4) persons and three (3) entities involved in Iranian law enforcement, media and censorship.

These new sanctions have been described by the Government as a response to egregious human rights violations in Iran, aimed at individuals and entities considered to oppress women and girls. The new sanctions have been imposed almost a year after the death of Mahsa "Jina" Amini in police custody in Tehran, and follow recent comments by Australia’s Minister for Home Affairs, Clare O’Neil that foreign interference is an urgent priority for the Australian Government and now constitutes a bigger domestic threat than terrorism.

The Department of Foreign Affairs maintains a Consolidated List of all persons and entities listed under Australia’s sanctions laws. It is a serious criminal offence to violate an Australian sanctions measure. These sanctions are especially relevant for entities that have dealings with Iran or Iranian nationals, including entities owned or controlled by Iranian nationals. In particular banks, financial institutions, universities, import and export businesses, as well as energy and resource providers, should assess their supply chain and associated sanctions screening.

Risk mitigation steps include:

1. Examining your supply chain and customer base to ensure you are not dealing with any persons or entities captured by these new financial sanctions.
2. Evaluating your existing and prospective contracts, operations and other business activities for their exposure to sanctions.
3. Reviewing whether existing due diligence, screening, and monitoring procedures are sufficient to manage potential sanction risks across these business activities.
4. Considering the policies of banks and financial institutions, which can often exceed the legal requirements imposed under sanctions laws.
5. Implementing updated training for employees with respect to the new sanctions and in particular those roles that have exposure to customers or suppliers overseas, as well as procurement, finance, risk, compliance and legal functions.

Under the Australian sanctions on Iran, the export or supply of goods on the Defence and Strategic Goods List (DSGL) is likely to be restricted. The Defence Trade Controls Act 2012 (Cth) regulates the export of goods listed on the DSGL and is currently under independent review. The Terms of Reference for this review are publicly available and written submissions are invited until Sunday 29 October 2023.

Foreign Influence Transparency Scheme

The Foreign Influence Transparency Scheme Act 2018 (Cth) requires registration of certain activities taken on behalf of a foreign principal in accordance with its Foreign Influence Transparency Scheme. Registrable activities include political lobbying and communications activities. It is a criminal offence not to comply with this Scheme, which commenced on 10 December 2018 with the aim of providing the public with visibility regarding the level of foreign influence on Australia's government and politics.

Given the growing risk posed by foreign influence and the potential for foreign interference, it is important that businesses with such exposure have procedures to manage the associated risk. For example, the University Foreign Interference Taskforce, which included involvement of the Australian Government, have produced the 2021 ‘Guidelines to Counter Foreign Interference in the Australian University Sector’. The Guidelines note at page 6:

Australia’s university sector is one of the sectors at risk in our community, given it is at the leading edge of policy, research and scientific development. Its work leads to the development of proprietary and other sensitive information critical to the development of new technologies, medicines, techniques and practices that are fundamental to Australia’s social and economic prosperity. However, there are those who seek to interfere in the university sector. This can manifest itself as seeking to inappropriately influence course content, research directions, and student and staff actions.

The Guidelines provide helpful insight as to what universities, but also more broadly what business can do to manage the risk of foreign interference, namely:

• Have a clear risk assessment and reporting framework to identify and escalate potential interference.
• Have communication plans and education programs that raise awareness and support mitigation of the foreign interference risks.
• Conduct risk based due diligence on persons and entities that are at risk of foreign interference, including identification of foreign affiliations, relationships and financial interests.

These procedures have a broader application and can be utilised in conjunction with existing controls be they conflicts of interest, anti-money laundering, anti-bribery and corruption, supply chain management and procurement, to enhance compliance.