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On January 10, 2020, President Donald J. Trump issued a new executive order “imposing sanctions with respect to additional sectors of Iran” (the “E.O.”), whereby he authorized the Secretary of the Treasury, in consultation with the Secretary of State, to sanction any person (i) operating in any sector of the Iranian economy specified by the Secretary of the Treasury, including the construction, mining, manufacturing, or textiles sectors; (ii) knowingly engaging in certain transactions for the sale, supply, or transfer to or from Iran of goods or services used in connection with such sectors of the Iranian economy; (iii) materially assisting, sponsoring, or providing support for, or goods or services to, any person that is sanctioned under the E.O.; (iv) owned or controlled by, or acting or purported to act for or on behalf of, directly or indirectly, any person sanctioned under the E.O.
On the same date, the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) sanctioned 8 senior Iranian regime officials “who have advanced the regime’s destabilizing objectives,” 17 Iranian metals producers and mining companies; and 3 China- and Seychelles-based entities and a vessel involved in the purchase, sale, and transfer of Iranian metals products, as well as in the provision of material components to Iranian metal producers.
DRT Commentary
Consequences of These Additional Sanctions
Individuals and companies sanctioned under the E.O. are added by OFAC to its List of Specially Designated Nationals and Blocked Persons (“SDN List”). Accordingly, all of their property within or transiting U.S. jurisdiction is blocked. In addition, if they are not authorized by a general or specific license issued by OFAC, U.S. persons or foreigners that conduct business in or with the U.S., U.S. persons, or using U.S.-origin goods or services are prohibited from engaging in transactions with individuals and companies sanctioned under the E.O. or with entities in which they have, directly or indirectly, 50% or greater ownership interest.
U.S. and foreign persons violating the U.S. Government’s additional Sanctions on Iran may face significant civil and criminal penalties. OFAC may also add them to its SDN List (secondary sanctions).
Preventing Violations of OFAC Sanctions on Iran
Conduct an OFAC review of any transaction involving Iran to confirm whether you need OFAC’s authorization to proceed. If necessary, request OFAC’s specific license or interpretative guidance. In addition, organizations can prevent, detect, and react appropriately to violations of OFAC Sanctions by designing and implementing Sanctions Compliance Programs (“SCP”). Having an effective SCP in place is also a significant mitigating factor that OFAC will consider when deciding whether to impose sanctions based on an apparent violation of its regulations, or for calculating the appropriate penalty.
Legal Options for Sanctioned Individuals and Entities
Anyone placed on the SDN List by OFAC has the right to seek removal under an administrative process known as “De-Listing.” To be removed, listed individuals and entities can file a written request for reconsideration with OFAC. If OFAC denies this request for De-Listing, administrative remedies are deemed exhausted and listed individuals and entities can subsequently file a civil action with a U.S. District Court seeking judicial review of OFAC’s actions under the Administrative Procedure Act.
Individuals and entities penalized by OFAC for engaging in apparent violations of its sanctions, after exhausting administrative remedies, may also request a U.S. District Court to set these civil penalties aside as arbitrary or capricious.