By Meg Utterback, Aaron Wolfson
Multinational companies need to know about new sanctions on Iran that may affect their business. On June 24, 2019, U.S. President Donald Trump issued an Executive Order (“EO”) imposing sanctions on senior members of the Iranian government. The Executive Order requires that all property and interests in property, of several categories of persons, that are in the United States or come into the possession or control of U.S. persons must be blocked and reported to the Office of Foreign Assets Control (“OFAC”) of the U.S. Department of the Treasury.
The persons subject to this “blocking” sanction are as follows:
- the Supreme Leader of the Islamic Republic of Iran and the Iranian Supreme Leader’s Office (“SLO”);
- any person determined by the U.S. government to be appointed by the Supreme Leader of Iran or the SLO to a position as a state official of Iran, or as the head of any entity located in Iran or any entity located outside of Iran that is owned or controlled by one or more entities in Iran;
- any person determined by the U.S. government to be appointed to a position as a state official of Iran, or as the head of any entity located in Iran or any entity located outside of Iran that is owned or controlled by one or more entities in Iran, by any person appointed by the Supreme Leader of Iran or the SLO;
- any person to have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of any person whose property and interests in property are blocked pursuant to this Executive Order;
- any person to be owned or controlled by, or to have acted or purported to act for or on behalf of, directly or indirectly, any person whose property and interests in property are blocked pursuant to this Executive Order; or
- any person to be a member of the board of directors or a senior executive officer of any person whose property and interests in property are blocked pursuant to this Executive Order.
The above prohibitions include both the provision and receipt of funds, goods, or services by, to, or for the benefit of anyone whose property or interests in property are blocked under the Executive Order.
The remaining sections of the Executive Order include additional restrictions and prohibitions, including:
Section 2 allows the Secretary of the Treasury to restrict the ability of foreign financial institutions to open or maintain accounts in the United States if they knowingly conduct or facilitate any significant financial transaction on behalf of any person whose property and interests in property are blocked pursuant to Section 1 of the Order;
Section 3 prohibits the donation of food, clothing, and medicine “by, to, or for the benefit of any person whose property or interests in property are blocked” pursuant to section 1 of the Order”; and
Section 5 suspends immigrant and non-immigrant entry into the U.S. of aliens who meet one or more criteria under Section 1(a) of the Order.
At the same time OFAC announced sanctions on eight senior commanders of the Islamic Revolutionary Guards Corps (“IRGC”). The IRGC is overseen by the Supreme Leader and, according to a press release issued by the U.S. Treasury Department on the matter, these designations are intended to reinforce the President’s Executive Order imposing sanctions on the Supreme Leader and his Office. OFAC previously designated the IRGC under E.O. 13224 on October 13, 2017, and the IRGC was named a Foreign Terrorist Organization by the U.S. on April 15, 2019.
The new OFAC designations target commanders of the IRGC Navy, Aerospace, and Ground Forces, in addition to the commanders of the IRGC Navy’s five naval districts who are responsible for activities off the southern coast of Iran adjacent to the Persian Gulf and the Strait of Hormuz.
As a result of this designation by OFAC, all property and interests in property of these individuals that are in the United States or in the possession or control of U.S. persons must be blocked and reported to OFAC. OFAC also warns that anyone conducting transactions with these sanctioned individuals may be exposed to sanctions themselves. If you are currently involved in a transaction or contemplating a transaction that may involve anyone from the Iranian government or any Iranian government entity or state-owned actor, you should vet the transaction with legal counsel to avoid the potential risk of US sanction on your business.
If you have any questions related to these or other sanctions, do not hesitate to contact Aaron Wolfson at firstname.lastname@example.org or Meg Utterback at Meg.Utterback@us.kwm.com at King & Wood Mallesons.