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OFAC Continues to Expand the Scope of Iranian Sanctions




by:
J. Scott Maberry
Matthew L. Riemer
Sheppard, Mullin, Richter & Hampton LLP - Washington Office

 
June 14, 2013

Previously published on June 6, 2013

In the final weeks of May, the U.S. Government engaged in a flurry of Iran sanctions activity, showing a continuing commitment to identifying and penalizing persons who do business with Iran.

Oil, Petrochemical, and Aircraft Industries.

On May 31, the U.S. Department of Treasury, Office of Foreign Assets Control (OFAC) imposed sanctions on entities and individuals that are part of, or have done business with, Iran’s international procurement and proliferation operations.  The targeted entities include branches of the Iranian government (e.g., the Islamic Revolutionary Guard Corps and the Ministry of Defense for Armed Forces Logistics), several Iranian petrochemical companies, and a group of corporations and individuals in Kyrgyzstan, Ukraine, and the United Arab Emirates that lease or sell aircraft to Iranian companies.  The sanctions were imposed pursuant to Executive Orders 13,382 (targeting proliferators and supporters of Iran’s weapons of mass destruction) and 13,599 (targeting the government of Iran).

As we reported, these industry-based sanctions are further evidence of the U.S. Government’s continued commitment to hindering Iran’s attempts at advancing its military and nuclear programs.

Sanctions Evaders.

Beyond the continued expansion of its economic sanctions against Iran, the United States is also cracking down on would-be evaders of the sanctions regime.  To that end, OFAC recently added to the SDN list six individuals holding leadership positions in Iran’s energy sector who have been involved in various schemes to help the Iranian government evade international sanctions.  Among the sanctioned individuals is Seifollah Jashsnaz, CEO of Naftiran Intertrade Company, who is allegedly responsible for the creation of an entire network of front companies acting on behalf of the Iranian government.  Along with the announcement of these new sanctions, Treasury also released a brief summary of Jashnaz’s sanctionable activities.

The increased scrutiny on sanctions evaders is not limited to entities and individuals within Iran, as is illustrated by the imposition of new sanctions on the Cyprus and Ukraine-based Ferland Company Limited for allegedly facilitating deceptive transactions on behalf of the National Iranian Tanker Company.  Notably, the imposition of sanctions on Ferland is the first such action pursuant to Executive Order 13,608 (specifically targeting evaders).  As a result, any transaction with Ferland that is subject to U.S. jurisdiction is generally prohibited.

Iranian Officials.

In an effort to punish human rights abuses within Iran, OFAC imposed sanctions on over 50 Iranian officials, including Ashgar Mir-Hejazi, the Deputy Chief of Staff to the Ayatollah.  According to the U.S. Department of State, Mir-Hejazi and the other officials were culpable in violent crackdowns on Iranian citizens who sought to challenge Iran’s censorship laws.  Beyond the individuals added to the SDN list, the OFAC also added the Iranian organization known as the Committee to Determine Instances of Criminal Content.  These human rights-based sanctions are part of a broader effort by the Obama administration to support the freedom of expression within Iran.

General License D.

Beyond imposing sanctions on Iranian officials who have sought to curtail the freedom of expression within Iran, the U.S. Treasury Department also took the interesting step of easing export restrictions on personal communications hardware and software to Iranian citizens.  Specifically, General License D, authorizes the exportation or reexportation, directly or indirectly, from the United States or by U.S. persons, wherever located, to persons in Iran of certain services, software, and hardware incident to personal communications (i.e., telecommunications and internet exchanges).

While the impact of General License D could be significant for the communications industry, it should be noted that the license specifically enumerates a number of transactions that are not authorized.  Most notably, transactions involving personal communication software, hardware, or services undertaken with knowledge or reason to know that such software, hardware, or services are intended for the Government of Iran are prohibited.  As is evident from the host of new sanctions described in this and prior posts, individuals and companies should be very cautious in undertaking transactions with Iran, lest they open themselves up to severe liability.

Conclusion.

The pace of Iran sanctions shows no sign of slowing and, as always, we will continue to provide our analysis as new developments unfold.



 

The views expressed in this document are solely the views of the author and not Martindale-Hubbell. This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance.
 

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