United States: Trump Administration Issues New Sanctions on Persons Supporting Iran's Ballistic Missile Program and Terrorism; OFAC Enforcement Continues

On February 3rd, the Treasury Department's Office of Foreign Assets Control (OFAC) sanctioned 25 individuals and entities for their alleged support of Iran's ballistic missile program and role in supporting Iranian terrorism-related activities and terrorist groups, such as the Islamic Revolutionary Guard Corps (IRGC). In describing the sanctions, the new Administration noted that the designations do not breach US obligations under the 2015 nuclear accord with Iran, titled the Joint Comprehensive Plan of Action (JCPOA). Moreover, OFAC also announced a new enforcement matter concluding that a Taiwanese company violated US sanctions by allowing one of its ships to receive oil from a sanctioned Iranian entity.  

Future of Iran Sanctions and the JCPOA

Although one of the bedrocks of President Trump's campaign was to "renegotiate" the JCPOA,1the Administration stressed that the most recent sanctions were "fully consistent with the United States' commitments under the JCPOA"2 and that the steps taken "are outside of the JCPOA [, which] is limited to Iran's nuclear program."3 None of the newly sanctioned individuals or entities are re-designations following removal from the SDN List during JCPOA negotiations or otherwise. While the continued viability of the JCPOA under President Trump is an open question, the new sanctions demonstrate the Administration's willingness to respond strongly to what it deems to be provocative acts by Iran without committing to any change in the JCPOA at this time.

New Sanctions

The Administration noted that the new sanctions constitute an effort to keep Iran "in check"4 and were in response to Iran's ballistic missile test on January 29, which the Administration stated was "inconsistent with U.N. Security Council Resolution 2231" and all international efforts to limit such testing.5 Moreover, the Administration noted increasing attacks on Emirate and Saudi vessels by Houthi forces "trained and armed by Iran" over the past six months "threatening U.S. friends and allies in the region."6  The sanctions and new additions to OFAC's Specially Designated Nationals List (SDN List) include 13 individuals and 12 companies.7 These sanctions specifically target three networks that support Iran's ballistic missile procurement, including (1) an Iranian procurement agent with a network comprised of nine individuals and companies in Iran and China; (2) an Iranian procurement company with a network based in the Gulf region; and (3) five individuals and companies affiliated with the procurement network of Iranian company Mabrooka Trading, previously added to the SDN List on January 17, 2016.8  In addition, the Administration sanctioned an IRGC procurement and service provider as well as a IRGC support network for Hizballah comprised of an IRGC official, his associates, and affiliated companies based in Lebanon.9

The primary effect of these sanctions is that all property of these individuals and companies, if subject to US jurisdiction, is "frozen" and may not be transferred without a license, and US persons are prohibited from engaging in transactions with the listed individuals and companies. "Secondary sanctions" also attach to all 25 sanctioned individuals and entities.10 Through secondary sanctions, non-US persons who knowingly engage in or facilitate transactions or procurement activities with these individuals and entities outside US jurisdiction run the risk of being directly sanctioned by the United States as well. Thus, for example, a non-US company that purchases from one of these sanctioned entities, even if the transaction take place outside of the United States, could be subject to US sanctions.

Other Recent OFAC Findings/ Determinations

In addition to the new designations, OFAC also announced its issuance of a Finding of Violation11 to B Whale Corporation (BWC), a Taiwanese company, for violating §§ 560.201 and 560.211 of the Iranian Transactions and Sanctions Regulations (ITSR).12 OFAC issued its finding of violation rather than imposing a civil monetary penalty on BWC perhaps partly due to the fact that all of BWC's assets appear to have been liquidated through bankruptcy.13 Although the issuance of the finding of a violation was made by the Trump Administration, OFAC notified BWC of its Finding of Violation during the last days of the Obama Administration, on January 18, 2017.14

As noted in the Finding, OFAC determined that BWC's vessel, the M/V B Whale, received roughly two million barrels of condensate crude oil in a ship-to-ship transfer with an Iranian vessel, the M/T Nainital, roughly between August 30, 2013 and September 2, 2014.15 At that time, the M/T Nainital was owned by the National Iranian Tanker Company, which was included on OFAC's SDN List.16 OFAC determined US jurisdiction was applicable to the August/September 2013 transfer between the Iranian and Taiwanese vessels off the Iranian coast because BWC had entered into bankruptcy proceedings in the US Bankruptcy Court for the Southern District of Texas on June 20, 2013.17 OFAC reasoned (1) that BWC qualified as a US person under the regulations because it was present in the United States for the proceedings at the time of the transaction, and (2) that the M/V B Whale was property under the jurisdiction of a US bankruptcy court and subject to US sanctions when it received the oil transfer from the Iranian vessel.18 OFAC's determination considered several aggravating factors, including BWC's "reckless disregard for U.S. sanctions requirements" and BWC's concealment of the ship-to-ship transfer with an Iranian entity listed on the SDN List, as well as mitigating factors like the liquidation of all of BWC's assets.19

The announcement of the Finding of Violation against BWC and the new sanctions designations continue the prior Administration's efforts to use economic sanctions as part of a "carrot and stick" approach to US foreign policy. The Administration's announcement of sanctions in response to select individuals' and companies' support for Iranian ballistic missile procurement and terrorism-related groups echoes the prior Administration's commitment to enforce those US sanctions that remained in place following the negotiation of the JCPOA and that were extended for an additional ten years in December 2016.20 At the same time, the new Administration may be taking these steps in part due to pressure to live up to its JCPOA renegotiation promises.

Conclusion

The Executive Branch can issue sanctions at any time without warning. While the United States' commitments under the JCPOA remain in place, it is possible that the Administration will act upon its campaign rhetoric and fundamentally change or revoke major components of the JCPOA in the coming months and years.


  1. Suzanne Maloney, Whither the Iran Deal Under Trump, The Atlantic (Nov. 20, 2016).
  2. See  US Dep't of the Treasury, Treasury Sanctions Supporters of Iran's Ballistic Missile Program and Iran's Islamic Revolutionary Guard Corps – Qods Force.
  3. See  US Dep't of State, Special Briefing: Senior Administration Officials on an Announcement from the Treasury Department on Iran (Feb. 3, 2017) (last visited Feb. 4, 2017).
  4. The White House, Press Briefing by Press Secretary Sean Spicer, 2/3/2017, #8, (Feb. 3, 2017) (last visited Feb. 4, 2017).
  5. US Dep't of State, Special Briefing.
  6. Id.
  7. US Dep't of the Treasury, Iran-related Designations; Non-proliferation Designations; Counter Terrorism Designations; Balkans Designation (Feb. 3, 2017), (SDN List Update) (last visited Feb. 4, 2017). The SDN List Update included a modification for an unrelated fourteenth individual designated under the Balkans-related sanctions.
  8. US Dep't of the Treasury, Treasury Sanctions Supporters of Iran's Ballistic Missile Program and Iran's Islamic Revolutionary Guard Corps – Qods Force (Feb. 3, 2017), (also noting authorization for these sanctions under Executive Order 13382).
  9. Id.  (noting authorization for these sanctions under Executive Order 13224).
  10. See  SDN List Update.
  11. US Dep't of the Treasury, OFAC, Enforcement Information for February 3, 2017.
  12. 31 C.F.R. part 560.
  13. Letter of the US Dep't of the Treasury to the Owner of B Whale Corporation (Jan. 18, 2017).
  14. Id.
  15. US Dep't of the Treasury, OFAC, Enforcement Information for February 3, 2017.
  16. M/T Nainital was removed from the SND List on January 16, 2016 (Implementation Day of the JCPOA) and placed on the List of Persons Identified as Blocked Solely Pursuant to E.O. 13599. Id.
  17. Id.
  18. Id.
  19. The other aggravating factors that OFAC considered were: the fact that BWC either knew or should have known the transaction involved Iranian oil and an Iranian vessel on the SDN List, and the tremendous benefit the transaction provided to Iran. Id.
  20. See  Iran Sanctions Extension Act of 2016, Pub. L. 114-277.

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