On July 12, 2012, the US Department of the Treasury, Office of Foreign Assets Control (OFAC), announced the designation of more than 50 foreign entities involved in the Iranian shipping, procurement, petroleum, and financial networks. OFAC added entities, vessels, and individuals (collectively, "persons") to its Specially Designated Nationals and Blocked Persons (SDN) List in furtherance of US policy goals to isolate Iran while multilateral negotiations continue regarding Iran's nuclear program and alleged proliferation activities. Executive Orders 13599 and 13382 already name some of the persons covered in OFAC's announcement, but this action also designates new shipping companies, vessels, and financial institutions, and updates the information on previously designated persons. The following is a high-level summary.
Entities Circumventing International Sanctions
OFAC's action targets persons aiding and abetting Iran's alleged nuclear proliferation activities. US persons are prohibited from engaging in any transactions, commercial dealings, or other business with such SDNs, and any SDN property or interests in property that come within the United States or the possession of US persons must be blocked.
- Identification of National Iranian Tanker Company (NITC) vessels: Notably, this round of designations targets Iran's shipping resources, including the National Iranian Tanker Company (NITC) and its affiliated companies and vessels. The focus on NITC-once largely treated as privately owned - is likely in response to Iran's attempts to sell its surplus oil directly from storage on ships docked in the Persian Gulf. The newly-blocked vessels, which OFAC asserts were renamed and repainted to hide their Iranian origin, contain substantial quantities of oil that cannot be sold easily to the international community due to expanded US and European sanctions. OFAC now identifies and blocks the National Iranian Tanker Company (NITC), 27 affiliated entities, and 58 NITC vessels as Government of Iran entities or property, pursuant to EO 13599.
- Front companies involved in Iran's oil trade: To prevent the circumvention of US sanctions targeting entities involved in the Iranian oil trade, OFAC's July 12 announcement identifies four companies as fronts for companies previously identified by OFAC as acting for or on behalf of the Government of Iran. These front companies, now blocked pursuant to EO 13599, are: Petro Suisse Intertrade Company SA of Switzerland; Hong Kong Intertrade Company of Hong Kong; Noor Energy (Malaysia) Ltd of Malaysia; and Petro Energy Intertrade Company of Dubai.
- Additional Iranian financial institutions: OFAC's July 12 announcement identifies 20 specific Iranian financial institutions on the SDN List. OFAC previously named three of them (Ansar Bank; all branches worldwide of Future Bank B.S.C.; and Post Bank of Iran) under EO 13599. The most recent announcement identifies 17 additional Iranian financial institutions: Bank-E Shahr; Credit Institution for Development; Dey Bank; Eghtesad Novin Bank; Hekmat Iranian Bank; Iran Zamin Bank; Islamic Regional Cooperation Bank; Joint Iran-Venezuela Bank; Karafarin Bank; Mehr Iran Credit Union Bank; Parsian Bank; Pasargad Bank; Saman Bank; Sarmayeh Bank; Tat Bank; Tosee Taavon Bank; and Tourism Bank. The announcement designates only these Iranian financial institutions, and does not mention any of their worldwide affiliates. (However, under OFAC's interpretive guidance, any entity that is 50 percent or more owned by an SDN is also off limits to US persons.) Absent further guidance from OFAC, the addition of the new financial institutions, some of which may be privately owned, to the SDN List could negatively affect US persons dealing in licensed trade under general or specific authorizations (e.g., sales of agricultural goods, medicine, or medical devices) and could make it even more difficult for US persons to engage in such activity in the future.
Entities Assisting in Nuclear and Missile Proliferations Activities
The US government also has targeted Iranian persons as proliferators of weapons of mass destruction pursuant to EO 13382. This EO blocks the property of any person or entity providing any type of support to persons or foreign countries relating to developing, financing, transporting, or transferring weapons of mass destruction. Unlike E.O. 13599, EO 13382 is not specifically directed against Iran or its government. However, the United States has used EO 13382 to block Iranian persons as SDNs. The new OFAC announcement identifies persons not previously named on the SDN List, but who reportedly are participating in the international procurement and nuclear proliferation operations of previously identified persons.
- MODAFL and AIO designations: The July 12, 2012 announcement includes the designation of seven additional entities and individuals involved in the missile proliferation activities of Iran's Ministry of Defense for Armed Forces Logistics (MODAFL) and Iran's Aerospace Industries Organization (AIO). The additional designations, pursuant to EO 13382, are found here.
- IRISL designations: Similar to its targeting of NITC, OFAC revised its list of shipping lines and vessels associated or affiliated with the Islamic Republic of Iran Shipping Lines (IRISL), which provides logistical services to MODAFL. The updated SDN List, found here, includes 57 vessels that have been renamed or reflagged. Also included are seven additional vessels identified by OFAC, and another 155 ships identified by Treasury as blocked property in which IRISL or an affiliate has interest.
- Other designations: Finally, OFAC identified an additional member of Iran's Islamic Revolutionary Guard Corps (IRGC) acting as an agent promoting the proliferation-related activities of the IRGC. OFAC also designated three additional nuclear procurement entities.
By targeting numerous Iranian and related entities, many of them new additions to the SDN List, the United States is signaling that it will continue to enhance its sanctions in response to Iran's alleged nuclear proliferation activities and circumvention of international sanctions. It also reinforces the notion that the US is actively monitoring international transactions so as to identify those that violate, or seek to evade, these sanctions. The additional sanctions are likely to increase economic pressure on Iran, particularly with respect to financial institutions and related financial transactions.
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