Sanctions compliance officers should be on alert following several new sanctions designated by the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) against Iran’s largest steel, aluminum, copper, and iron manufacturers, as well as eight senior Iranian regime officials who are directly responsible for the regime’s violent acts.
In a press briefing held Friday, Secretary of the Treasury Steven Mnuchin announced the imposition of new sanctions against “any individual owning, operating, trading with, or assisting sectors of the Iranian economy, including construction, manufacturing, textiles, and mining.”
“And let me be clear: These will be both primary and secondary sanctions,” Mnuchin warned.
The sanctions were authorized under a new Executive Order (E.O.) issued by President Trump on Friday. The E.O. also allows for the designation of other sectors in the future as deemed appropriate.
Furthermore, the E.O. sanctions individuals who knowingly engage “in a significant transaction for the sale, supply, or transfer to or from Iran of significant goods or services used in connection with” those sectors; and individuals who have “materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of” any person designated as an SDN under the E.O. or entities owned 50 percent or more by them.
With respect to any foreign financial institution, the Secretary of the Treasury may also “prohibit the opening, and prohibit or impose strict conditions on the maintaining, in the United States of a correspondent account or a payable-through account by such foreign financial institution” that has “knowingly conducted or facilitated any significant financial transaction” involving activities targeted by the E.O.
The Treasury Department also designated 17 specific sanctions against Iran’s largest steel, aluminum, copper, and iron manufacturers, who collectively generate billions of dollars annually; Beijing-based Pamchel Trading Beijing and its Seychelles-based affiliate; and a Chinese vessel and vessel operator involved in the purchase, sale, and transfer of Iranian metals products. “As a result of these actions, we will cut off billions of dollars of support to the Iranian regime, and we will continue our enforcement of other entities,” Mnuchin said.
These new sanctions were authorized under E.O. 13871, issued by President Trump on May 8, 2019. The E.O. also allows for the designation of other sectors in the future as deemed appropriate. Announcement of the new sanctions signals an increasingly aggressive stance against Iran’s steel and iron manufacturers and the foreign firms who engage with them.
Thirdly, sanctions have been designated against eight senior Iranian officials who are directly responsible for the regime’s violence, both at home and abroad. Treasury’s action includes the designations of Ali Shamkhani, the secretary of Iran’s Supreme National Security Council; Mohammad Reza Ashtiani, the deputy chief of staff of Iranian armed forces; and Gholamreza Soleimani, the head of the Basij militia of the Islamic Revolutionary Guards Corps (IRGC). “These sanctions will continue until the regime stops the funding of global terrorism and commits to never having nuclear weapons,” Mnuchin said.
Sanctions compliance implications
All property and interests in property of these persons that are in the United States or in the possession or control of U.S. persons must be blocked and reported to OFAC. OFAC’s regulations generally prohibit all dealings by U.S. persons or within (or transiting) the United States that involve any property or interests in property of blocked or designated persons.
In addition, persons that engage in certain transactions with these designated persons may themselves be exposed to sanctions. Furthermore, any foreign financial institution that knowingly conducts or facilitates a significant transaction for or on behalf of these designated persons could be subject to U.S. correspondent or payable-through account sanctions.
For further guidance, sanctions compliance professionals may turn to OFAC’s Website, which provides FAQs on sanctions compliance. This guidance addresses such questions as what due diligence steps to take in determining a valid OFAC match; how to start an OFAC compliance program; blocking and rejecting transactions; filing reports with OFAC; and more.