President Obama has issued an Executive Order (E.O. 13608, May 1, 2012) aimed at foreign
individuals and entities that have evaded US economic sanctions on
Iran and Syria. This marks a further expansion of recent efforts by
the Administration to target non-US persons and entities that
undermine US sanctions law.
The order authorizes the US Department of the Treasury
(Treasury) to publicly identify foreign individuals and entities
that have violated, attempted to violate, conspired to violate, or
caused a violation of US sanctions against Iran or Syria, or that
have facilitated deceptive transactions for or on behalf of any
person subject to these sanctions. In addition, foreign persons and
entities owned or controlled by, or acting on behalf of, another
party that has engaged in these activities may also be identified.
In a Fact Sheet dated May 1, Treasury notes that
this authority gives it "the capability to publicly identify
foreign individuals and entities that have engaged in these evasive
and deceptive practices, and generally bar access to the US
financial and commercial systems."
The order operates by prohibiting US persons (including citizens
and residents of the United States, individuals and entities
located in the United States, and entities organized under US law)
from dealing with foreign persons and entities identified as
evaders of sanctions against Iran and Syria. US persons will be
unable to provide to or procure from a named foreign sanctions
evader (FSE) any goods or services, including financial services,
without a license from Treasury's Office of Foreign Assets
Control, unless the transaction is otherwise exempt under the
existing sanctions regulations. This prohibition against dealings
with an FSE is not limited to transactions involving Iran and
Syria, but extends to all transactions with the FSE.
US financial institutions must reject any wire transfer
involving an FSE and restrict accounts belonging to an FSE.
Treasury has not yet identified or listed any FSEs, but notably no
prior notice or civil enforcement action is required before
Treasury designates a person as an FSE. Foreign businesses and
financial institutions will need to be transparent in dealing with
US persons if transactions involve Iran or Syria so as not to be
found to be facilitating deceptive practices.
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