Blumenfield Bill to Crack Down on Banks Tied to Iran Heads to Governor's Desk

AB 978 continues Blumenfield’s leadership in California on effort to prevent Iran from acquiring nuclear weapons capability.

SACRAMENTO – The California State Assembly today voted for final passage of legislation authored by now Los Angeles City Councilmember Bob Blumenfield to ensure that state-chartered banks and credit unions are not funneling money to terrorist groups and the Government of Iran.

Supported by the Jewish Public Affairs Committee of California, Assembly Bill (AB) 978, authored by Blumenfield during his time in the Assembly, passed with a 73-1 vote following a unanimous vote in the State Senate. The bill now moves to Governor Jerry Brown’s desk for his signature.

“I am pleased that California will continue to take steps against an Iranian regime that continues to seek nuclear weapons capability,” said Blumenfield.  “Iran’s ongoing resistance to international cooperation jeopardizes regional stability and ongoing efforts to achieve Middle-East peace. It is crucial that state and local entities do their part to ensure that sanctions are properly enforced.”

AB 978 was inspired by the New York State Department of Financial Services discovery last year that Standard Chartered Bank had a number of transactions with Iran for nearly a decade. Some reports calculated 60,000 transactions worth $250 billion.  Blumenfield’s legislation directs the California Commissioner of Financial Institutions to incorporate into paper reviews and audits of state-chartered financial institutions that occur every two years, at a minimum. This oversight will ensure that state-licensed financial institutions have appropriate policies and procedures to prevent the maintenance and opening of accounts with foreign financial institutions that illegally assist Iran. Any problems would be met with fines and must be reported to the U.S. Treasury Department for prosecution.

Financial transactions between U.S. and Iranian financial institutions are generally prohibited. In some cases, fund transfers through third-country banks are permitted for family remittances, travel-related remittances, and transactions authorized by the U.S. Treasury Department. U.S. persons are prohibited from engaging in any transactions with banks OFAC has identified for their involvement in the financing of either weapons of mass destruction or terrorism.

As an Assemblymember, Blumenfield was a recognized leader in efforts to curtail California’s financial ties with Iran. In 2012, he authored AB 2160 to prohibit California-based insurance companies from scoring as assets any investments in companies with ties to Iran’s energy sector on documents filed with the Department of Insurance that demonstrate financial solvency and, therefore, the ability to provide insurance in California. In 2011, he authored AB 1151 to increase transparency on California’s largest public pension funds as they divest from Iran. In 2010, he authored AB 1650 to prohibit the state and local governments from pursuing contracts with companies that do business in Iran’s energy sector.  AB 1650 has become a model now being replicated in states across the country.

“As long as Iran continues to seek nuclear weapons in defiance of international law, I will continue to work to ensure that sanctions against the regime are vigorously enforced, whether at the federal or state level, or here in the City of Los Angeles,” concluded Blumenfield.

The City of Los Angeles has long supported efforts to curtail Iran’s development of nuclear weapons. The City Council adopted positions of support for both AB 1151 and AB 1650 and in 2006 moved unanimously to denounce then Iranian President Ahmadinejad’s remarks in which he called for the destruction of Israel and denied the Holocaust. 

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