OFAC Launches “Operation Economic Outcast,” Significantly Expands Iran-Related Sanctions Risk

Yesterday, the U.S. Department of the Treasury’s Office of Foreign Assets Control announced the launch of “Operation Economic Outcast,” an expansion of U.S. sanctions against Iran designed to “sever the economic lifelines that sustain the Iranian regime.” Described as the beginning of a sustained campaign, these new measures target key sectors of the Iranian economy and enhance secondary sanctions. As part of this effort, the Office of Foreign Assets Control (OFAC) also sanctioned nearly 60 entities, individuals, and vessels, suspended five general licenses, and issued additional guidance with respect to shipping in the Strait of Hormuz. A summary of these actions, and the potential implications for U.S. and other businesses, is provided below.

Expansion of Sectoral Sanctions

OFAC issued five new sectoral sanctions determinations pursuant to Executive Order 13902, significantly broadening its ability to sanction foreign persons that operate in or support designated sectors of the Iranian economy. Under these new determinations, OFAC is authorized to sanction any person, regardless of where they are located, that operates in the aviation, digital assets (including cryptocurrency), gold, shipping, and technology sectors of the Iranian economy. OFAC targeted these sectors because Iran increasingly relies on them to evade sanctions, procure sensitive technologies, transport weapons and military equipment, move funds, and generate revenue through oil exports and related commercial activities.

OFAC noted in its announcement that the United States expects other countries to cease identified Iran-related activities within a defined timeline. It further noted that money laundering or sanctions evasion on behalf of Iran could result in entities being cut off from the U.S. financial system, and that it intends to accelerate enforcement efforts against sanctions evasion networks. As such, non-U.S. companies may now face potential sanctions exposure for operating in or providing support to these sectors of the Iranian economy.

Additional Sanctions Designations

OFAC added nearly 60 entities, individuals, and vessels to its Specially Designated Nationals (SDN) List, spanning multiple jurisdictions and targeting three principal categories of activity. The first category consists of entities tied to a large procurement network operating through East Asia and the Middle East that supports the supply of proliferation-sensitive goods and technology to Iranian defense and research organizations, including entities associated with missile development and nuclear research. These actions highlight the U.S. government’s continued focus on Iranian efforts to obtain sensitive and dual-use technologies through third-country intermediaries and front companies.

The second category includes individuals associated with cyber operations linked to Iran’s Ministry of Intelligence and Security (MOIS). These designated individuals are connected to targeted attacks on U.S. critical infrastructure sectors, defense contractors, government entities, healthcare organizations, financial institutions, and technology companies.

The third category includes companies and vessels linked to Iran’s shadow fleet, which Iran uses to transport its petroleum and petroleum products to foreign countries while evading U.S. sanctions. The designations encompass vessel brokers, ship management firms, bunkering providers, commodity traders, logistics companies, and vessel-owning entities located in the United Arab Emirates, Singapore, Hong Kong, Switzerland, China, and elsewhere.

Suspension of General Licenses

OFAC suspended five general licenses that previously authorized certain remittance payments to Iran and authorized transactions relating to educational activities, academic exchanges, conferences, and amateur and professional sports activities. OFAC also issued new General License BB, which temporarily authorizes otherwise prohibited transactions that are necessary to wind down activities previously undertaken under the newly suspended general licenses until September 8, 2026, subject to certain conditions.

Additional Guidance on Sanctions Risks of Capitulating to Iranian Demands for Passage in the Strait of Hormuz

OFAC issued an update to its May 1, 2026, guidance, warning U.S. and non-U.S. persons of the sanctions risks of making “toll” payments to, or soliciting guarantees from, the Government of Iran or the Islamic Revolutionary Guard Corps (IRGC) in exchange for safe passage through the Strait of Hormuz. OFAC clarified that the sanctions risk exists regardless of the payment method or structure, and includes accepting insurance or other services or responding to information demands from the so-called Persian Gulf Strait Authority (PGSA), Persian Gulf Marine Insurance Company (PGMIC), or HormuzSafe Marine Services Authority (Hormuz Safe), all of which are OFAC-designated entities. OFAC made clear that engagement with such entities is prohibited, even if there is no associated payment or exchange of value for such services.

Implications for Businesses

Operation Economic Outcast represents a significant expansion of U.S. sanctions pressure on Iran, with an increased focus on the activities of non-U.S. entities. Companies with operations, customers, suppliers, financial relationships, or logistics activities touching Iran, wherever located, should review their compliance programs, particularly with respect to transactions involving the sectors described above.

The announcement indicates OFAC’s intent to pursue not only Iranian parties but also foreign intermediaries and commercial actors that facilitate Iran-related activity. Companies operating in high-risk sectors or jurisdictions should reassess sanctions screening, third-party due diligence, and supply-chain compliance measures in light of the expanded sanctions authorities and heightened secondary sanctions risk.