IRAN SANCTIONS

 

IRAN SANCTIONS

 

  1. BACKGROUND

 

Iran has been subject to multiple sanctions by the international community since the overthrow of the Shah in the 1979 Islamic revolution. The main player has been the United States, which since that year has oriented its foreign policy towards Iran in this sense, in the first place, in reaction to the Iranian hostage crisis (1979-1981) and, in the following years, to the support of Iran to international terrorism since the eighties and to the development of the Iranian nuclear program since 2002.

This is also the reason why both the European Union and the UN imposed sanctions on Iran.

Since 2010, the main international powers (United States, China, Russia, United Kingdom, France and Germany), as well as the European Union, have tried to negotiate with Iran to limit its atomic weapons development program.

In this context, the “Joint Comprehensive Plan of Action” (“JCPOA”) was signed in 2015 between the aforementioned countries and Iran. As a result of this agreement, both the EU and the US withdrew most of their sanctions on Iran (mainly trade and financial sanctions), in exchange for certain commitments by Iran to limit its nuclear program.

However, and contrary to the opinion of the other JCPOA signatory states and due to strong suspicions on the part of the United States of non-compliance with these commitments, on 8 May 2018 President Donald Trump announced the withdrawal of the United States from the aforementioned agreement and, consequently, the reintroduction of most of the US sanctions on Iran.

More recently, and after a growing escalation of tension in the Middle East between the United States and Iran, the latter announced, on 5 January, that it would no longer comply with its commitments as stipulated in the JCPOA. This has led to the activation of the Dispute Resolution Mechanism (a multi-stage procedure, as provided for in paragraphs 36 and 37 of the JCPOA, to settle possible conflicts over the implementation and enforcement of the agreement) foreseen in the JCPOA by the United Kingdom, France and Germany, a decision that has been criticized by Russia and China.

 

 

 

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EUROPEAN UNION

 

 

  1. DEVELOPMENTS DURING THE YEAR 2019

 

In view of the above, on 9 April 2019, the Council of the European Union has issued Council Implementing Regulation (EU) 2019/560 of 8 April 2019 Implementing Regulation (EU) 359/2011 concerning restrictive measures against certain persons, entities and bodies in view of the situation in Iran, and Council Decision (CFSP) 2019/562 of 8 April 2019 amending Decision 2011/235/CFSP concerning restrictive measures against certain persons and entities in view of the situation in Iran, both published in the Official Journal of the European Union on 9 April of the same year.

By the said Implementing Regulation and Decision, the restrictive measures imposed on certain natural and legal persons in connection with violations of human rights (freezing of funds and resources as well as travel restrictions), the export of goods or equipment which might be used for internal repression and telecommunications surveillance equipment are extended until 13 April 2020.

Currently, eighty-seven (87) natural persons of Iranian nationality and one (1) Iranian entity are sanctioned.

 

  1. CURRENT FRAMEWORK OF EU SANCTIONS RELATED TO IRAN

As we have already mentioned, after the signing of the JCPOA on July 14th 2015, the main sanctions imposed by the European Union were withdrawn. These included the following:

  • A ban on oil and gas imports from Iran.

 

  • Ban on the provision of insurance for the transport of oil or petrochemical products from Iran and the freezing of funds and resources of a number of Iranian entities involved in maritime transport.

 

  • Ban on trade in gold, precious metals, diamonds and petrochemicals with Iran.

 

  • The freezing of the assets of the Central Bank of Iran (except for some exceptional cases).

 

  • A ban on transactions between European Union banks and Iranian banks, as well as on short-term export credits, guarantees and insurance.

 

  • A ban on exports to Iran of graphite, semi-finished metals and industrial software, shipbuilding technology, oil storage capacities, oil storage services or services related to cargo ships or oil tankers.

 

 

 

Individual sanctions on a number of entities sanctioned under Council Regulations and Decisions were also lifted.

However, the European Union, by means of Council Regulation (EU) No 359/2011 of 12 April 2011 concerning restrictive measures directed against certain persons, entities and bodies in view of the situation in Iran (“Regulation 359/2011”) and Council Decision 2011/235/CFSP of 12 April 2011 concerning restrictive measures directed against certain persons and entities in view of the situation in Iran, continues to maintain certain sanctions related to the protection of human rights and the export of goods which might be used for internal repression.

Thus, travel restrictions and an asset freeze were introduced against persons deemed to be complicit in or responsible for directing or implementing serious human rights violations in connection with the repression of peaceful demonstrators, journalists, human rights defenders, students or others demonstrating in defense of their legitimate rights (Articles 2 and 3 of Regulation 359/2011).

The measures may also be imposed on those who are complicit in or responsible for serious violations of due process and other procedural safeguards, for torture, cruel, inhuman and degrading treatment, or the death penalty.

On 23 March 2012, in view of the seriousness of the human rights situation in Iran, additional restrictive measures were introduced, namely an embargo on equipment which might be used for internal repression and on goods or equipment which might be used for monitoring or intercepting Internet and telephone communications over mobile or fixed networks (Articles 1a, 1b and 1c of Regulation 359/2011).

 

 

 

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UNITED STATES

 

 

  1. DEVELOPMENTS DURING THE YEAR 2019

 

  • In view of the above, it should be mentioned that during 2019 and on January 10, 2020, three (3) new Executive Orders related to Iran have been issued:

 

  • Executive Order 13871 of 8 May 2019 (O. 13871) imposing additional sanctions on Iran’s iron, steel, aluminum and copper sectors, immobilizing the assets of certain Iranian persons or entities linked to these sectors (Section 1 of E.O. 13871) and establishing restrictions on entry into U.S. territory for these persons (Section 5 of E.O. 13871). In addition, O.E. 13871 authorizes the Secretary of the Treasury to exclude from the U.S. financial system any foreign financial institution that conducts or facilitates transactions related to the above sectors (section 2).

 

  • Executive Order 13876 of June 24, 2019, which imposes individual sanctions (see, freezing of their funds and resources in section 1 and prohibition of entry into U.S. territory in section 5) on the Supreme Leader of the Islamic Republic of Iran, the Office of the Supreme Leader, any official of the Iranian Government, or person appointed by the Supreme Leader of the Islamic Republic of Iran to an official position. It also provides for the exclusion from the U.S. financial system of any financial entity that facilitates transactions in the interest of persons sanctioned under this Executive Order (section 2 of Executive Order 13876).

 

  • Finally, Executive Order 13902, of January 10, 2020, has been imposed following the escalation of tension between the two countries due to the assassination by the United States of Iranian General Qasem Soleimani. Section 1 of Executive Order 13902 freezes funds and resources, as well as limits the entry into the United States of any Iranian individual or entity operating in the construction, mining, manufacturing or textile sectors in Iran. As in other Executive Orders already mentioned, Section 2 of this Executive Order 13902 also provides for the exclusion from the US financial system of any financial institution that facilitates transactions in the interest of persons sanctioned under this Executive Order.

 

  • Furthermore, on 11 December 2019, two Iranian entities linked to the smuggling and transport of weapons from Iran to Yemen in support of the Shiite insurgency in that country were included in the List of Specially Designated Nationals and Blocked Persons (“SDN List”).

 

  • Two judges of the Revolutionary Court of Tehran were also included in the above-mentioned list on 19 December 2019 for human rights violations (in this case, freedom of expression and assembly).

 

 

  1. CURRENT FRAMEWORK OF US SANCTIONS RELATED TO IRAN

 

  • RE-IMPOSITION OF UNITED STATES SANCTIONS

 

As we already mentioned, on May 8, 2018, President Trump announced the withdrawal of the United States from JCPOA. Thus, after two short transitional periods, sanctions on Iran were reintroduced (various sections of the Iranian Transactions and Sanctions Regulations were amended in order to implement President Trump´s decision, outlined in section 3 of the National Security Presidential Memorandum: Ceasing United States Participation in the Joint Comprehensive Plan of Action and Taking Additional Action to Counter Iran’s Malign Influence and Deny Iran All Paths to a Nuclear Weapon, of May 8th, 2018), whose main objectives were the following:

 

  1. To prevent the use of the US financial system in transactions with Iran.

 

  1. Prohibit the export to Iran of products or technologies incorporating U.S. components that exceed 10% of their total value.

 

  1. Exclude U.S. persons working in foreign companies from decision-making processes in Iran-related operations.

 

  1. Thus, 90 days after President Trump’s announcement on 6 August 2018, the following sanctions were reimposed:

 

  1. Ban on the procurement of dollars by the Government of Iran.

 

  1. Ban on trade in gold or precious metals with Iran.

 

  1. Prohibition on the direct or indirect supply or procurement from Iran of graphite, crude or semi-finished metals such as aluminium and steel, coal and software to integrate industrial processes.

 

  1. Prohibition on the significant transactions related to the purchase or sale of Iranian Rials or the maintenance of substantial funds or accounts outside the territory of Iran denominated in Iranian Rials.

 

  1. Prohibition on the purchase, underwriting or facilitation of the issuance of Iranian sovereign debt.

 

  1. On the Iranian automotive sector.

 

  1. Within 180 days of the announcement, on November 4, 2018, U.S. sanctions were also reintroduced in relation to:

 

  1. Ban on transactions with port operators, shipping companies and shipbuilders in Iran, including Islamic Republic of Iran Shipping Lines (IRISL), South Shipping Line Iran and its subsidiaries.

 

  1. Ban on oil related transactions carried out with, inter alia, the National Iranian Oil Company (“NIOC”), the Naftiran Intertrade Company (“NICO”) and the National Iranian Tanker Company (“NITC”), including the purchase of oil, petroleum products and petrochemicals from Iran.

 

  1. Prohibition on transactions by foreign financial institutions with the Central Bank of Iran and other financial institutions in Iran designated pursuant to Section 1245 of the “National Defense Authorization Act for Fiscal Year 2012” (“NDAA”).

 

  1. Prohibition on the provision of specialised financial messaging services for the Central Bank of Iran and other Iranian financial institutions described in Section 104(c)(2)(E)(ii) of the Comprehensive Iran Sanctions, Accountability and Divestment Act of 2010, of July 1st 2010 (“CISADA”).

 

  1. Prohibition on the provision of insurance and reinsurance services.

 

  1. On the Iranian energy sector.

 

  1. In addition, on 5 November 2018, over 700 natural and legal persons were added to the List of Specially Designated Nationals and Blocked Persons (“SDN List“), including persons who had been removed from this same list by the entry into force of the JCPOA. From the time of this reintroduction, the conduct of transactions with such individuals or entities may result in the imposition of U.S. sanctions, even for those who are not U.S. Persons[1].

These sanctions are set out in the following legislation.

 

 

  • CODE OF FEDERAL REGULATIONS: IRANIAN TRANSACTIONS AND SANCTIONS REGULATIONS

 

The Code of Federal Regulations, specifically in Title 31 Money and Finance: Treasury, Volume 3, Subtitle B: Regulations Relating to Money Finance, Chapter V Office of Foreign Assets Control, Part 560, Iranian Transactions and Sanctions Regulations (“ITSR”) establishes the general US framework for sanctions on Iran:

 

  • EXPORTS, IMPORTS AND TRANSSHIPMENTS RELATED TO IRAN

 

Section 560.201 prohibitsthe importation into the United States of any goods or services of Iranian origin or owned or controlled by the Government of Iran”.

 

Similarly, section 506.204 also prohibits “the exportation, reexportation, sale, or supply, directly or indirectly, from the United States, or by a United States person, wherever located, of any goods, technology, or services to Iran or the Government of Iran is prohibited, including the exportation, reexportation, sale, or supply of any goods, technology, or services to a person in a third country undertaken with knowledge or reason to know that:

 

  1. Such goods, technology, or services are intended specifically for supply, transshipment, or reexportation, directly or indirectly, to Iran or the Government of Iran; or

 

  1. Such goods, technology, or services are intended specifically for use in the production of, for commingling with or for incorporation into goods, technology, or services to be directly or indirectly supplied, transshipped, or reexported exclusively or predominantly to Iran or the Government of Iran”.

 

Even if an exported good does not have Iran as its final destination, a US Person can be sanctioned under section 560.403, which extends the scope of the above-mentioned sanctions to transhipments through Iran:

 

“The prohibitions in §§ 560.204, 560.206, and 560.208 apply to export, reexport or supply transactions which require a transshipment or transit of goods or technology through Iran to third countries”.

 

 

  • TRADE TRANSACTIONS RELATED TO IRAN

 

As stated in section 560.206, any transaction involving Iran or goods of Iranian origin is prohibited under the following terms:

 

“No United States person, wherever located, may engage in any transaction or dealing in or related to:

 

  1. Goods or services of Iranian origin or owned or controlled by the Government of Iran; or

 

  1. Goods, technology, or services for exportation, reexportation, sale or supply, directly or indirectly, to Iran or the Government of Iran”.

 

As to the meaning of the term “goods of Iranian origin“, section 560.407 delimits its interpretation as follows:

 

  1. “Importation into the United States from third countries of goods containing Iranian-origin raw materials or components and transactions relating to such goods are not prohibited by § 560.201 or § 560.206 if those raw materials or components have been incorporated into manufactured products or substantially transformed in a third country by a person other than a United States person.

 

  1. Transactions relating to Iranian-origin goods that have not been incorporated into manufactured products or substantially transformed in a third country are prohibited”.

 

 

  • THIRD-PARTY TRANSACTIONS RELATED TO IRAN

 

In addition, section 560.208 of the ITSR prohibits US Persons from facilitating transactions related to Iran that are conducted by parties other than US Persons.

 

“No United States person, wherever located, may approve, finance, facilitate, or guarantee any transaction by a foreign person where the transaction by that foreign person would be prohibited by this part if performed by a United States person or within the United States”.

 

In addition, section 560.417 provides a broad definition of the term “facilitation” that even prohibits recommending Iran-related transactions to parties outside the United States:

 

“With respect to § 560.208, a prohibited facilitation or approval of a transaction by a foreign person occurs, among other instances, when a United States person:

 

  1. Alters its operating policies or procedures, or those of a foreign affiliate, to permit a foreign affiliate to accept or perform a specific contract, engagement or transaction involving Iran or the Government of Iran without the approval of the United States person, where such transaction previously required approval by the United States person and such transaction by the foreign affiliate would be prohibited by this part if performed directly by a United States person or from the United States;

 

  1. Refers to a foreign person purchase orders, requests for bids, or similar business opportunities involving Iran or the Government of Iran to which the United States person could not directly respond as a result of the prohibitions contained in this part; or

 

  1. Changes the operating policies and procedures of a particular affiliate with the specific purpose of facilitating transactions that would be prohibited by this part if performed by a United States person or from the United States”.

 

 

 

  • TRANSACTIONS OF NON-US ENTITIES CONTROLLED BY A US PERSON

 

These entities are also prohibited from conducting transactions with Iran (section 560.215):

 

An entity that is owned or controlled by a United States person and established or maintained outside the United States is prohibited from knowingly engaging in any transaction, directly or indirectly, with the Government of Iran or any person subject to the jurisdiction of the Government of Iran that would be prohibited pursuant to this part if engaged in by a United States person or in the United States”.

 

  • INVESTMENTS IN IRAN

 

Finally, section 560.207 prohibits US Persons from making investments in Iran:

 

“Any new investment by a United States person in Iran or in property (including entities) owned or controlled by the Government of Iran is prohibited”.

 

  • SANCTIONS ON THE IRANIAN ENERGY SECTOR

 

Sanctions on the Iranian energy sector are imposed through the ITSR and various laws, especially the Iran Sanctions Act, of December 15 1996 (“ISA”), and its subsequent modifications introduced by the Iran Freedom Support Act, of September 30 2006 (”IFSA”), the CISADA and the Iran Threat Reduction and Syria Human Rights Act of 2012, of November 1 2011 (“ITRSHRA”).

  • ITSR: SANCTIONS

The ITSR sanctions mainly transactions related to the development of Iran’s oil resources. In this regard, section 560.209 prohibits the following:

 

  1. “The entry into or performance by a United States person, or the approval by a United States person of the entry into or performance by an entity owned or controlled by a United States person, of:

 

  1. A contract that includes overall supervision and management responsibility for the development of petroleum resources located in Iran, or

 

  1. A guaranty of another person’s performance under such contract; or

 

  1. The entry into or performance by a United States person, or the approval by a United States person of the entry into or performance by an entity owned or controlled by a United States person, of:

 

  1. A contract for the financing of the development of petroleum resources located in Iran, or

 

  1. A guaranty of another person’s performance under such a contract”.

 

 

  • ACTIVITIES SANCTIONED BY THE ISA

 

In addition, the ISA imposes sanctions on the following operations listed in its Section 5(a) “Sanctions related to the energy sector in Iran”:

 

  1. Development of Iran’s oil resources

 

The aforementioned section 5(a) (1) (B) prohibits “investments which directly and significantly contribute to enhancing Iran’s capacity to develop oil resources”.

 

As set out in subparagraph (A) of the same paragraph (1), this prohibition only applies to the said investments in certain cases:

 

“Except as provided in subsection (f), the President shall impose five or more of the sanctions described in section 6(a) on an individual if the President determines that the individual will, on or after the date of enactment of the Iran Threat Reduction and Syria Human Rights Act of 2012.

  1. Makes an investment described in subsection (B) of $20,000,000 or more; or
  2. Makes a combination of investments described in subparagraph (B) within a 12-month period if each such investment is at least $5,000,000 and such investments are equal to or greater than $20,000,000 in total”.

 

  1. Production of refined oil products

 

Section 5 (a) (A) (2) provides for the following prohibition:

 

“Except as provided in subsection (f), the President shall impose five or more of the sanctions described in section 6(a) on a person if the President determines that the person, on or after the date of enactment of the Iran Threat Reduction and Syria Human Rights Act of 2012, sells, leases or otherwise provides to Iran goods, services, technology, information or support described in subparagraph (B) if

 

  1. Any of these has a market value of $1,000,000 or more; or

 

  1. Which, over a 12-month period, have a combined market value of $5,000,000 or more”.

 

The goods, services, technology, information or support referred to in this subparagraph are defined in subparagraph (B) as those which “can directly and significantly facilitate the maintenance or expansion of Iran’s domestic production of refined petroleum products, including any direct and significant assistance in connection with the construction, upgrading or repair of petroleum refineries or directly associated infrastructure, including the construction of port facilities, railways and roads, the primary use of which is to support the delivery of refined petroleum products”.

 

  1. Export of refined oil products to Iran

 

In addition, paragraph (3), subparagraph (A) provides that sanctions may be imposed on the export of petroleum products in the following cases:

 

“Except as provided in subsection (f), the President shall impose five or more of the sanctions described in section 6(a) on a person if the President determines that the person, on or after the date of enactment of the Iran Threat Reduction and Syria Human Rights Act of 2012, intentionally

 

  1. Sells or supplies refined petroleum products to Iran:

 

  1. Having a market value of $1,000,000 or more; or

 

  1. That, over a 12-month period, have a combined market value of $5,000,000 or more; or

 

  1. Sells, leases or provides to Iran goods, services, technology, information or support described in subparagraph (B) if

 

  1. Any of these has a market value of $1,000,000 or more; or

 

  1. That, over a 12-month period, have an aggregate market value of $5,000,000 or more”.

 

The goods, services, technology, information or support referred to in this section are defined in subparagraph (B) as those which “can directly and significantly facilitate the maintenance or expansion of Iran’s domestic production of refined petroleum products, including

 

  1. Except as provided in subparagraph (C), the execution or conclusion of a contract to provide insurance or reinsurance for the sale, lease or supply of such goods, services, technology, information or support;

 

  1. Financing or intermediation of such sale, lease or supply;

 

iii.    The provision of vessels or shipping services for the delivery of refined petroleum products to Iran;

 

  1. The barter or procurement by which goods are exchanged for goods, including insurance or reinsurance of such exchanges; or

 

  1. Purchasing, underwriting, or facilitating the issuance of sovereign debt of the Government of Iran, including government bonds, issued on or after the date of enactment of the Iran Threat Reduction and Syria Human Rights Act of 2012”.

 

  1. Joint Ventures in Iran related to oil resources development

 

The following prohibition is also established in relation to Joint Ventures involving the Government of Iran in paragraph (4):

 

“(A) Except as provided in subsection (f), the President shall impose 5 or more of the sanctions described in section 6(a) with respect to a person if the President determines that such person is willfully engaged, on or after the date of enactment of the Iran Threat Reduction and Syria Human Rights Act of 2012 in a Joint Venture with respect to the development of petroleum resources outside Iran if

 

  1. The Joint Venture is established as from 1 January 2002; and

 

  • The Government of Iran is a relevant partner or investor in the Joint Venture; or

 

  • Iran may, through a direct operational role in the Joint Venture or by other means, receive technological know-how or equipment not previously available to Iran which could directly and significantly contribute to enhancing Iran’s capability to develop oil resources.

 

(B) Subparagraph (A) shall not apply in respect of an interest in a Joint Venture established on or after 1 January 2002 and before the date of enactment of the Iran Threat Reduction and Syria Human Rights Act of 2012 if the person involved in the Joint Venture terminates that interest not later than the date which is 180 days after such date of enactment”.

 

  1. Support for the development of refined oil resources and products in Iran

 

Paragraph (5) also lays down other prohibitions related to the production of refined petroleum products. These sanctions are set out in section 201 of the ITRSHRA which codifies Executive Order 13590 of 21 November 2011 and amends the aforementioned section 5(a) (in the aforementioned paragraph (5) and paragraph (6)) of the ISA. Thus, the following is established:

 

“(A) Except as provided in subsection (f), the President shall impose five or more of the sanctions described in section 6(a) on a person if the President determines that the person knowingly, on or after the date of enactment of the Iran Threat Reduction and Syria Human Rights Act of 2012 sells, leases or provides to Iran goods, services, technology, information or support described in subparagraph (B) if

 

  1. Any of these has a market value of $1,000,000 or more; or

 

  1. Which, over a 12-month period, have a combined market value of $5,000,000 or more”.

 

The goods, services, technology, information or support referred to in this section are defined in subsection (B) as those that “can directly and significantly facilitate the maintenance or expansion of

 

  1. Iran’s ability to develop oil resources located in the same country; or

 

  1. The domestic production of refined petroleum products, including any direct and significant assistance in the construction, upgrading or repair of petroleum refineries or directly associated infrastructure, including the construction of port facilities, railways and roads, the primary use of which is to support the delivery of refined petroleum products”.

 

  1. Development and procurement of petrochemicals in Iran

 

In addition, paragraph (6) of the ISA provides for prohibitions on certain goods, services, technology or support defined in its subparagraph (B) as follows “goods, services, technology or support which could contribute directly and significantly to the maintenance or expansion of the Iranian domestic market for the production of petrochemicals”.

 

Specifically, subparagraph (A) prohibits the sale, lease or supply of such goods, services, technology or support to Iran if:

 

  1. “Any of these has a market value of $250,000 or more; or

 

  1. Over a 12-month period, have a combined market value of $1,000,000 or more”.

 

  1. Crude oil transport from Iran

 

In relation to the transport of crude oil to Iran, following the amendments to the ISA introduced by the abovementioned Section 201 of the ITRSHRA, paragraph (7) provides for certain cases to be penalized:

 

“(A) Except as provided in subsection (f), the President shall impose five or more of the sanctions described in section 6(a) on a person if the President determines that:

 

  1. the person is the beneficial owner of a majority interest in, or otherwise owns, operates, controls, or secures a vessel that, on or after the date that is 90 days after the date of enactment of the Iran Threat Reduction and Syria Human Rights Act of 2012 was used to transport crude oil from Iran to another country; and

 

  1. In the case where that person is the beneficial owner of the vessel, if that person knew that the vessel was used for that purpose

 

(II) If that person otherwise owns, operates, controls or insures the vessel, if that person knew or ought to have known that the vessel was used for such purpose”.

 

  1. Hiding the Iranian origin of refined oil products and crude oil

 

In relation to the above scenario, subparagraph (A) of paragraph (8) also provides for the possibility of imposing the same sanctions on a person who is “the beneficial owner of, or otherwise owns, operates, controls or secures a vessel which, on or after the date which is 90 days after the date of enactment of the Iran Threat Reduction and Syria Human Rights Act of 2012, is used in a manner that would conceal the Iranian origin of the crude oil or refined petroleum products it transports, including:

 

  1. Allowing the operator of the vessel to suspend the operation of the vessel’s satellite tracking device; or

 

  1. Obscuring or concealing the ownership, operation or control of the vessel by:

 

(I) The Government of Iran;

 

(II) The “National Iranian Tanker Company” or the “Islamic Republic of Iran Shipping Lines”; or

 

(III) Any other entity owned or controlled, in the President’s discretion, by the Government of Iran or an entity specified in subparagraph (II)”.

 

 

  • TYPES OF SANCTIONS FORESEEN IN THE ISA

 

As provided by section 6 (a) of the ISA, the sanctions that can be imposed on the activities listed in section 5 (a) above are as follows:

 

  1. Refusal of loans, credits or credit guarantees from the Export-Import Bank of the United States (Eximbank) for U.S. exports to the sanctioned person or entity

 

  1. Refusal of licenses by a US Person to export to the sanctioned person or entity military technology or military goods listed in the Export Administration Act of 1979, the Arms Export Control Act, the Atomic Energy Act of 1954 or any other Act which requires the authorisation of the US Government for the export or re-export of goods or services.

 

  1. Refusal of loans by any U.S. financial institution to the person or entity being sanctioned that together exceed ten million dollars ($10,000,000) over a twelve (12) month period, unless the loans are made to finance activities designed to reduce human suffering.

 

  1. If the sanctioned entity is a financial institution, it may be prohibited from acting as a “primary dealer” in U.S. government bonds; and/or prohibited from serving as a depository for U.S. government funds.

 

  1. Prohibition on the U.S. Government from acquiring or entering into any contract for the acquisition of goods or services from the sanctioned person or entity.

 

  1. Prohibition on foreign currency transactions, subject to the jurisdiction of the United States, in which the sanctioned person or entity has any interest.

 

  1. Prohibition on any transfer of credit or payment between financial institutions or to any financial institution, to the extent that such transfer or payment is subject to the jurisdiction of the United States and involves an interest of the sanctioned person or entity.

 

  1. Prohibition on any person from acquiring, possessing, using, or marketing any property subject to the jurisdiction of the United States in which the sanctioned person or entity has an interest.

 

  1. Prohibit a US Person from investing in or purchasing significant amounts of equity or debt instruments of a sanctioned entity.

 

  1. Prohibition of entry into the United States of directors or controlling shareholders of a sanctioned entity.

 

 

  • NATIONAL DEFENSE AUTHORIZATION ACT FOR FISCAL YEAR 2012

 

In addition, the NDAA, in its section 1245 “Imposition of Sanctions with Respect to the Financial Sector of Iran”, lays down further prohibitions on certain financial institutions as well as the Central Bank of Iran in relation to transactions related to the procurement of oil. Thus, paragraph (d) subsection (1) (A) provides that:

 

“The President shall prohibit the opening, and shall prohibit or impose strict conditions on the maintenance, in the United States of a correspondent account or payment account by a foreign financial institution that the President determines has knowingly conducted or facilitated any material financial transaction with the Central Bank of Iran or another Iranian financial institution designated by the Secretary of the Treasury for the imposition of sanctions under the International Emergency Economic Powers Act”.

 

Furthermore, subsection (3) of the same subparagraph (d) sets out the target scope of the said sanctions:

 

“Sanctions imposed under subsection (1) (A) shall apply in respect of a foreign financial institution owned or controlled by the government of a foreign country, including a central bank of a foreign country, only to the extent that it engages in a transaction for the purchase or sale of oil or oil products to or from Iran made or provided on or after that date which is 180 days after the date of enactment of this Act”.

 

Finally, section 1245(c) blocks the assets of certain Iranian financial institutions:

 

“(C) The President shall, in accordance with the International Emergency Economic Powers Act, block and prohibit all transactions of all property and interests in property of an Iranian financial institution if such property and interests are in the United States, are within the United States, or are owned or controlled by a person in the United States.”

 

 

  • ITRSHRA: SANCTIONS

 

In addition, other provisions of the ITRSHRA, which do not amend the ISA, impose the application of the measures listed in the aforementioned section 6(a) of the ISA on the following entities:

 

  1. As set out in section 212 thereof, if the entity provides insurance or reinsurance for NIOC and NITC.

 

  1. If, pursuant to section 213 thereof, the entity purchases or facilitates the issuance of sovereign debt of the Government of Iran, including Iranian government bonds.

 

  1. As required by section 302, if the entity assists or participates in a significant transaction with the Islamic Revolutionary Guard Corps or any of its sanctioned entities or subsidiaries.

 

 

  • EXECUTIVE ORDER 13846: IRANIAN OIL SECTOR

 

Executive Order 13622 of 30 July 2012 imposed certain penalties under section 6(a) of the ISA on the Iranian oil sector, although this Executive Order did not amend the ISA. The application of these sanctions was suspended after the entry into force of the JCPOA, but they were resumed after the promulgation of Executive Order 13846 (“EO 13846”), of 6 August 2018, and have remained in force since 7 November 2018.

 

Specifically, section 3 of the aforementioned EO 13846 states that:

 

“The Secretary of State in consultation with the Secretary of the Treasury, the Secretary of Commerce, the Secretary of Homeland Security, and the United States Trade Representative, and with the President of the Export-Import Bank, the Chairman of the Board of Governors of the Federal Reserve System, and other agencies and officials as appropriate, is hereby authorized to impose on a person any of the sanctions described in section 4 or 5 of this order upon determining that the person: on or after November 5, 2018, knowingly engaged in a significant (…)

 

  • transaction for the purchase, acquisition, sale, transport, or marketing of petroleum or petroleum products from Iran”

 

In addition, all funds and economic resources owned, controlled or held by a person who carries out (as set out in section 1 (b): “all property and interests in property that are in the United States, that hereafter come within the United States, or that are or hereafter come within the possession or control of any United States person of such person are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in”) transactions with NIOC or NICO in section 1(a):

 

“The Secretary of the Treasury, in consultation with the Secretary of State, is hereby authorized to impose on a person the measures described in subsection (b) of this section upon determining that

 

  • on or after November 5, 2018, the person has materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services in support of, the National Iranian Oil Company (NIOC), Naftiran Intertrade Company (NICO), or the Central Bank of Iran”

 

  • SANCTIONS ON CERTAIN STRATEGIC SECTORS: AUTOMOBILE, METALLURGY, MINERALS, PRECIOUS STONES AND IRANIAN RIAL

 

  • EXECUTIVE ORDER 13846: AUTOMOTIVE, PRECIOUS STONES AND OPERATIONS IN IRANIAN RIALS

 

The mentioned Executive Order 13846 provides for the imposition of the following restrictive measures:

  1. It provides for the imposition of the sanctions provided for by section 6(a) of the ISA on companies supplying goods or services to the Iranian automotive sector (cars, trucks, buses, motorcycles and related parts) and excludes foreign banks financing transactions with the said automotive sector from the US market.hh

 

  1. It blocks ownership in the United States and prohibits the opening of bank accounts in the United States for foreign banks that conduct transactions in Iran’s currency, the rial, or have accounts in rials. This provision also applies to “a derivative contract, swap, future, forward or other similar contract whose value is based on the exchange rate of the Iranian rial”. If Iran implements plans to develop a digital currency, or crypto-currency, backed by or tied to rials, the order also applies to that digital currency.

 

  • EXECUTIVE ORDER 13871: METAL AND MINERALS SECTOR

 

Moreover, Executive Order 13871 imposes additional sanctions on Iran’s iron, steel, aluminum and copper sectors.

 

  1. Thus, the funds and resources of certain persons linked to these sectors are frozen in its section 1 (a):

 

All property and interests in property that are in the United States, that hereafter come within the United States, or that are or hereafter come within the possession or control of any United States person of the following persons are blocked and may not be transferred, paid, exported, withdrawn or otherwise dealt in: any person determined by the Secretary of the Treasury in consultation with the Secretary of State:

 

  • To be operating in the iron, steel, aluminum, or copper sector of Iran, or to be a person that owns, controls, or operates an entity that is part of the iron, steel, aluminum, or copper sector of Iran;

 

  • To have knowingly engaged, on or after the date of this order, in a significant transaction for the sale, supply, or transfer to Iran of significant goods or services used in connection with the iron, steel, aluminum, or copper sectors of Iran;

 

  • To have knowingly engaged, on or after the date of this order, in a significant transaction for the purchase, acquisition, sale, transport, or marketing of iron, iron products, aluminum, aluminum products, steel, steel products, copper, or copper products from Iran;

 

  • To have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services in support of any person whose property and interests in property are blocked pursuant to this section; or

 

  • To be owned or controlled by, or to have acted or purported to act for or on behalf of, directly or indirectly, any person whose property and interests in property are blocked pursuant to this section”.

 

  1. Section 2 also authorizes the Secretary of the Treasury to exclude from the U.S. financial system any foreign financial institution that conducts or facilitates transactions related to the above sectors.

 

  1. Any person sanctioned under this Executive Order is also prohibited from entering the United States (Section 5).

 

 

  • FINANCIAL OR BANKING SANCTIONS

 

  • ITSR: BAN ON IRAN’S ACCESS TO THE UNITED STATES FINANCIAL SYSTEM / USE OF DOLLARS

 

The ITSR sets out the US sanctioning framework in relation to Iran’s access to its financial system. Section 560.516 allows U.S. financial institutions to send funds (including U.S. dollars) to Iran in connection with transactions authorized by a specific or general license but transfers of U.S. dollars are not permitted directly to an Iranian bank, but must be made through an intermediary financial institution:

 

“United States depository institutions are authorized to process transfers of funds to or from Iran, or for the direct or indirect benefit of persons in Iran or the Government of Iran, if the transfer arises from, and is ordinarily incident and necessary to give effect to, an underlying transaction that has been authorized by a specific or general license issued pursuant to, or set forth in, this part and does not involve debiting or crediting an Iranian account”.

 

In this regard, it should be recalled that on 10 November 2008 OFAC amended the ITSR to prohibit US financial institutions from participating in so-called “U-Turn Transactions” (US dollar transactions related to Iran that are authorized through a US bank).

 

Prior to this amendment, Section 560.516 of the ITSR authorized U.S. financial institutions to arrange transfers of funds to or from Iran, or for the direct or indirect benefit of persons in Iran, Iranian financial institutions, or the Government of Iran, if:

 

  1. The transaction did not involve the debiting or crediting of an Iranian account (i.e., an account of a person in Iran or of the Government of Iran maintained on the books of a U.S. financial institution)

 

  1. The transaction did not involve the participation of a person or entity included by OFAC in the SDN List; and

 

  1. Each of the home and beneficiary banks were third-country banks.

 

 

 

 

  • FREEZING OF FUNDS AND RESOURCES OF THE GOVERNMENT OF IRAN, THE CENTRAL BANK OF IRAN AND OTHER IRANIAN FINANCIAL INSTITUTIONS

 

  1. The aforementioned ITSR, in its section 211, immobilizes funds and resources that are in the United States, or that are in the possession or control of any US Person and whose ownership corresponds to the:

 

  • Central Bank of Iran

 

  • Government of Iran

 

  • Any Iranian financial institution

 

  • Any person who is controlled by, has acted or purports to act for or on behalf of, directly or indirectly, any of the former.

 

  • Any person who has materially assisted, sponsored or provided financial, material or technological support, or goods or services:

 

  1. In support of the Government of Iran’s purchase or procurement of US banknotes or precious metals;

 

  1. In support of the Central Bank of Iran, NIOC or NICO.

 

  1. It is also prohibited to make or receive any contribution or provision of funds, goods or services by, to or for the benefit of any person whose property and interest in the property is frozen under this section.

 

 

  • CISADA: SANCTIONS ON THIRD-COUNTRY BANKS FOR CARRYING OUT TRANSACTIONS WITH SANCTIONED IRANIAN ENTITIES

 

The already mentioned CISADA sanctions non-US financial institutions with the aim of excluding them from the international financial system. Thus, its section 104 (c) states that:

 

The Secretary of the Treasury shall prescribe regulations to prohibit or impose strict conditions on the opening or maintenance in the United States of a correspondent or prepayment account by a foreign financial institution that the Secretary finds to be knowingly engaged in an activity described in paragraph (2).

 

In this sense, paragraph (2) of section 104 (c) lists these activities carried out by foreign financial institutions:

 

 

 

A foreign financial institution performs an activity described in this paragraph if the foreign financial institution:

 

  1. Facilitates the efforts of the Government of Iran (including those of the Islamic Revolutionary Guard Corps or any of its sanctioned entities or affiliates) to:

 

  1. acquire or develop weapons of mass destruction or weapons of mass destruction delivery systems; or

 

  • provides support to organizations designated as foreign terrorist organizations under section 219(a) of the Immigration and Nationality Act or to acts of international terrorism (as defined in section 14 of the Iran Sanctions Act of 1996)

 

  1. It facilitates the activities of:

 

  1. a person subject to financial sanctions under United Nations Security Council Resolution 1737 (2006), 1747 (2007), 1803 (2008), or 1929 (2010), or such other resolution as may be agreed by the Security Council and imposing sanctions with respect to Iran; or

 

  • a person acting on behalf of, at the direction of, or owned or controlled by a person described in subparagraph (i)

 

  1. Engages in money laundering to carry out an activity described in subparagraph (A) or (B);

 

  1. Facilitates the efforts of the Central Bank of Iran or any other Iranian financial institution to carry out an activity described in subparagraphs A or B; or

 

  1. Facilitates one or more significant transactions or provides important financial services for

 

  1. The Islamic Revolutionary Guard Corps or any of its entities or affiliates whose ownership or ownership interests are blocked under the International Emergency Economic Powers Act

 

  • A person whose property or interest in property is frozen under that Act in relation to:

 

  • The proliferation of weapons of mass destruction or weapons of mass destruction delivery systems in Iran; or

 

  • Iran’s support for international terrorism.”

 

 

 

  • IRAN FREEDOM AND COUNTERPROFILERATION ACT

 

  1. In addition, Section 1244(d) of the Iran Freedom and Counterprofileration Act (“IFCA”) imposes the sanctions under Section 104(c) of the CISADA (“the opening or maintaining in the United States of a correspondent account or an advance payment account by a foreign financial institution“) on any foreign financial institution that:

“Conducts or facilitates a major financial transaction for the sale, supply or transfer to or from Iran of goods or services used in connection with Iran’s energy, shipping or shipbuilding sectors, including NIOC, NITC and IRISL”.

  1. In addition, Section 1247 of the IFCA also imposes the aforementioned Section 104 (c) CISADA sanctions on any foreign financial institution that:

Knowingly facilitates a significant financial transaction on behalf of any Iranian national included on the Specially Designated Nationals and Blocked Persons List maintained by the Office of Foreign Assets Control of the Department of the Treasury”.

  1. In addition, several sections of the IFCA impose the sanctions provided for by section 6 (a) of the ISA, thus:

 

  • Section 1244 imposes sanctions on the following persons operating in the energy, transport and shipbuilding sectors:

 

  1. “Persons described

 

A person is described in this paragraph if the President determines that the person, on or after the date that is 180 days after January 2, 2013—

 

  1. is part of the energy, shipping, or shipbuilding sectors of Iran;

 

  1. operates a port in Iran; or

 

  1. knowingly provides significant financial, material, technological, or other support to, or goods or services in support of any activity or transaction on behalf of or for the benefit of—

 

  • a person determined under subparagraph (A) to be a part of the energy, shipping, or shipbuilding sectors of Iran;

 

  • a person determined under subparagraph (B) to operate a port in Iran; or

 

  • an Iranian person included on the list of specially designated nationals and blocked persons maintained by the Office of Foreign Assets Control of the Department of the Treasury (other than an Iranian financial institution described in paragraph (3))”.

 

  1. With regards the sanctions imposed, the same section 1244 provides for the freezing of funds and resources, as well as the aforementioned ISA sanctions:

 

  1. Blocking of property of entities in energy, shipping, and shipbuilding sectors

 

  1. “Blocking of property

 

  1. In general

 

On and after the date that is 180 days after January 2, 2013, the President shall block and prohibit all transactions in all property and interests in property of any person described in paragraph (2) if such property and interests in property are in the United States, come within the United States, or are or come within the possession or control of a United States person. (…)

 

  1. Additional sanctions with respect to the energy, shipping, and shipbuilding sectors of Iran

 

  1. Sale, supply, or transfer of certain goods and services

 

  1. In general

 

Except as provided in this section, the President shall impose 5 or more of the sanctions described in section 6(a) of the Iran Sanctions Act of 1996 with respect to a person if the President determines that the person knowingly, on or after the date that is 180 days after January 2, 2013, sells, supplies, or transfers to or from Iran goods or services described in paragraph (3)”.

 

  1. Facilitation of certain transactions

 

Except as provided in this section, the President shall prohibit the opening, and prohibit or impose strict conditions on the maintaining, in the United States of a correspondent account or a payable-through account by a foreign financial institution that the President determines knowingly, on or after the date that is 180 days after January 2, 2013, conducts or facilitates a significant financial transaction for the sale, supply, or transfer to or from Iran of goods or services described in paragraph (3).

 

  1. Goods and services described

 

Goods or services described in this paragraph are significant goods or services used in connection with the energy, shipping, or shipbuilding sectors of Iran, including the National Iranian Oil Company, the National Iranian Tanker Company, and the Islamic Republic of Iran Shipping Lines”.

 

  1. In addition, section 1245 imposes these sanctions on the following persons operating in the precious metals sector:

 

“The President shall impose 5 or more of the sanctions described in section 6(a) of the Iran Sanctions Act of 1996 with respect to a person if the President determines that the person knowingly, on or after the date that is 180 days after January 2, 2013, sells, supplies, or transfers, directly or indirectly, to or from Iran—

 

  1. a precious metal;

 

  1. a material described in subsection (d) determined pursuant to subsection (e)(1) to be used by Iran as described in that subsection;

 

  1. any other material described in subsection (d) if—

 

  • the material is—

 

  1. to be used in connection with the energy, shipping, or shipbuilding sectors of Iran or any sector of the economy of Iran determined pursuant to subsection (e)(2) to be controlled directly or indirectly by Iran’s Revolutionary Guard Corps;

 

  1. sold, supplied, or transferred to or from an Iranian person included on the list of specially designated nationals and blocked persons maintained by the Office of Foreign Assets Control of the Department of the Treasury (other than an Iranian financial institution described in subsection (b)); or

 

  • determined pursuant to subsection (e)(3) to be used in connection with the nuclear, military, or ballistic missile programs of Iran; or

 

  • the material is resold, retransferred, or otherwise supplied—

 

  1. to an end-user in a sector described in subclause (I) of clause (i);

 

  1. to a person described in subclause (II) of that clause; or

 

  • for a program described in subclause (III) of that clause (…)

 

  1. Materials described

 

Materials described in this subsection are graphite, raw or semi-finished metals such as aluminum and steel, coal, and software for integrating industrial processes”.

 

  1. Sanctions are also imposed on financial institutions that carry out or facilitate transactions related to the abovementioned operations:

 

“The President shall prohibit the opening, and prohibit or impose strict conditions on the maintaining, in the United States of a correspondent account or a payable-through account by a foreign financial institution that the President determines knowingly, on or after the date that is 180 days after January 2, 2013, conducts or facilitates a significant financial transaction for the sale, supply, or transfer to or from Iran of materials the sale, supply, or transfer of which would subject a person to sanctions under subsection (a)”.

 

  1. Finally, persons providing insurance or reinsurance services (“underwriting services, insurance or reinsurance“) in connection with any transaction subject to sanctions under sections 1244 and 1245 or any Executive Order or act (ISA, CISADA, etc …) imposing sanctions related to Iran are also sanctioned under section 1246.

 

  • SANCTIONS FOR SUPPORT OF ARMED FACTIONS AND TERRORIST GROUPS

 

Since January 19, 1984, the United States has considered Iran a “state sponsor of terrorism. The designation of a country as a “state sponsor of terrorism” entails the application of various sanctions against it, including a ban on arms exports and sales, restrictions on the export of dual-use items, a ban on financial support and various additional financial sanctions. In the case of Iran, the sanctions are configured as follows:

 

  • BAN ON EXPORTS OF DUAL-USE ITEMS TO IRAN: EXPORT ADMINISTRATION REGULATIONS

 

  1. As mentioned above, the Treasury Department, through OFAC, maintains a broad trade and investment embargo against Iran. This embargo includes export bans and certain re-export operations involving Iran, including operations involving “goods subject” to the Export Administration Regulations (“EAR”), contained in the Code of Federal Regulations, Title 15: Commerce and Foreign Trade, Subtitle B: Regulations Relating to Commerce and Foreign Trade, Chapter V: Bureau of Industry and Security, Department of Commerce, Subchapter C: Export Administration Regulations.

 

As provided in section 734.3 of the EAR, this embargo on exports and re-exports to Iran of “subject goods” includes:

 

  • Any good of American origin;

 

  • Any goods exported from the United States;

 

  • Any good not produced in the United States but incorporating a U.S.-origin minimum content (i.e., foreign-produced goods incorporating U.S.-origin goods valued at 10% or less of the total value of the foreign-produced good as set forth in section 734.4(c)) and certain foreign-origin technology goods for which there is no U.S.-minimum content requirement (set forth in section 734.4(a)) or;

 

  • Certain foreign-produced goods incorporating U.S.-origin technology or software.

 

  1. In addition, section 746.7 of the EAR provides for the obligation to obtain a license to carry out exports or re-exports of goods subject to the EAR.

 

This requirement therefore determines the need to obtain such a license for the export of dual-use items (items, including software and technology, which can be used for both civil and military purposes, as well as nuclear purposes) to Iran, in accordance with the provisions of the abovementioned Section 746.7(a).

 

 

 

  • ARMS SALES AND FINANCIAL SUPPORT TO IRAN: ARMS EXPORT CONTROL ACT

 

On the one hand, the Arms Export Control Act (“AECA“), in its section 38, authorizes the President of the United States to control the import and export of defense materials and services that constitute the “United States Munitions List”.

 

  1. In this regard, section 40 of the AECA prohibits both the U.S. Government (which includes any department, agency, official, or any person acting on behalf of or at the direction of the Government) and any subject that has the status of US Persons from engaging in transactions with “countries that support acts of international terrorism”:

 

  1. The following transactions by the United States Government are prohibited:

 

  1. Exporting or otherwise providing (by sale, lease or loan, grant, or other means), directly or indirectly, any munitions item to a country described in subsection (d) under the authority of this Act, the Foreign Assistance Act of 1961, or any other law;

 

  1. Providing credits, guarantees, or other financial assistance under the authority of this Act, the Foreign Assistance Act of 1961, or any other law (except as provided in subsection (h)), with respect to the acquisition of any munitions item by a country described in subsection (d);

 

  1. Consenting under section 3(a) of this Act, under section 505(a) of the Foreign Assistance Act of 1961, under the regulations issued to carry out section 38 of this Act, or under any other law (except as provided in subsection (h)), to any transfer of any munitions item to a country described in subsection (d);

 

  1. Providing any license or other approval under section 38 of this Act for any export or other transfer (including by means of a technical assistance agreement, manufacturing licensing agreement, or coproduction agreement) of any munitions item to a country described in subsection (d) or;

 

  1. Otherwise facilitating the acquisition of any munitions item by a country described in subsection (d) (…)

 

  1. A United States Person may not take any of the following actions:

 

  1. Exporting any munitions item to any country described in subsection (d).

 

  1. Selling, leasing, loaning, granting, or otherwise providing any munitions item to any country described in subsection (d).

 

  1. Selling, leasing, loaning, granting, or otherwise providing any munitions item to any recipient which is not the government of or a person in a country described in subsection (d) if the United States person has reason to know that the munitions item with be made available to any country described in subsection (d).

 

  1. Taking any other action which would facilitate the acquisition, directly or indirectly, of any munitions item by the government of any country described in subsection (d), or any person acting on behalf of that government, if the United States person has reason to know that that action will facilitate the acquisition of that item by such a government or person”.

 

  1. Section 40A also prohibits the sale or licensing of defense materials and services to countries deemed to be “non-cooperative with U.S. anti-terrorism efforts”.

 

  1. In addition, the Foreign Assistance Act (“FAA“), section 620A(a) also prohibits any loans, credits, and credit guarantees of the U.S. government or loan guarantees of the Export-Import Bank of the United States to the government of a country that supports acts of international terrorism.

 

 

  • SUSPENSION OF US FOREIGN AID

 

As stated in FAA, sections 620G and 620H, any foreign aid to third countries assisting or selling arms to countries that support acts of international terrorism is prohibited.

 

In addition, Section 307 of the FAA expressly prohibits Iran from benefiting from U.S. contributions to international organizations assisting Iran. This provides for proportional cuts in these contributions based on what percentage of their budget each international organization spends on Iran-related programs.

 

 

  • SANCTIONS AGAINST IRAN’S INTERNATIONAL ACTIVITIES IN THE MIDDLE EAST

 

  1. Executive Order 13324, of 23 September 2001, provides for the freezing of funds and resources in the United States of, and the prohibition of United States transactions with, any entity deemed to support acts of international terrorism. Under this E.O., several organizations have been listed as Foreign Terrorist Organization because of their ties to Iran:

 

  • The Islamic Revolutionary Guard Corps

 

  • Hezbollah

 

  • Kataeb Hezbollah

 

  • Hamas

 

  • The Popular Front for the Liberation of Palestine

 

  1. In addition, the recent Hizballah International Financing Prevention Amendments Act, of 23 October 2018, immobilizes funds and resources and prohibits transactions with any agency or entity of a State that assists or finances Hizballah.

 

  1. Finally, additional sanctions are also imposed on the Islamic Revolutionary Guard Corps, under Executive Orders 13438, of 7 July 2007, and 13572, of 29 April 2011, for its activities in Iraq and Syria, respectively.

 

  • SANCTIONS RELATED TO WEAPONS OF MASS DESTRUCTION AND MISSILES

 

  • IRAN – IRAQ ARMS NONPROFILERATION ACT OF 1992

 

The Iran – Iraq Arms Nonproliferation Act of 1992 states that it is the policy of the United States to oppose any transfer of goods or technology to Iraq or Iran whenever there is reason to believe that such a transfer would contribute to the acquisition by those countries of chemical, biological, nuclear or advanced conventional weapons (section 2 (a)).

 

Thus, the following sanctions are provided for entities that carry out the above-mentioned transactions:

 

  • Section 4 (b) (1): Two (2) year prohibition on U.S. government procurement from the entity in question.

 

  • Section 4(b) (2): Two (2) year prohibition on the issuance of U.S. export licenses to that entity.

 

  • Section 4(b) (3): Prohibition on imports into the United States of any goods from the sanctioned entity.

 

In addition, sanctions are also provided for in the event that the violating subjects are States:

 

  • Section 5 (b) (1) (A): Prohibition of one (1) year of United States assistance to that country.

 

  • Section 5 (b) (1) (B): Denial for one (1) year of international loans to that country through a negative vote or opposition by the United States representative within any international financial institution.

 

  • Section 5 (b) (1) (D): One (1) year suspension on technical exchanges with the sanctioned country regarding military or dual-use technology.

 

  • Section 5(b) (1) (E): A one (1) year ban on the sale of arms by the United States to the sanctioned country.

 

  • Section 5 (c) (1): The suspension of “most-favored-nation treatment” or non-discriminatory treatment with respect to goods from that country in its trade relations with the United States.

 

  • Section 5(c) (2): The suspension of any trade relationship with the sanctioned country under the International Emergency Economic Powers Act.

 

  • ISA: SANCTIONS

 

The ISA also provides for the imposition of the sanctions set out in its aforementioned section 6 (a) on entities or natural persons carrying out the following transactions:

 

  • Section 5(b)(1): the export, transfer, transhipment or other provision of goods, services, technology or other items to any person if that person knew or should have known that it would contribute materially to Iran’s ability to acquire or develop chemical, biological, nuclear or related technologies or advanced conventional weapons.

 

  • Section 5(b)(2): participation in a joint venture which involves any activity related to the mining, production or transport of uranium with:

 

– The Government of Iran;

 

– An entity incorporated in Iran or subject to the jurisdiction of the Government of Iran;

 

– Or a person acting on behalf or in representation of the Government of Iran, of an entity incorporated in Iran or subject to the jurisdiction of the Government of Iran.

 

  • IRAN – NORTH KOREA – SYRIA NONPROFILERATION ACT

 

Another law, the Iran – North Korea Syria Nonprofileration Act (“INKSNA“), imposes sanctions on non-U.S. individuals and entities who have engaged in the following transactions involving Iran, Syria, North Korea or any person or entity controlled by, or acting on behalf of, those countries:

 

  • Transferred or acquired certain goods, services or nuclear, dual-use, chemical, biological or toxic technology (section 3 (a) (1)).

 

  • Acquired or extracted in the territory of or under the control of such countries for purposes related to nuclear, biological, chemical weapons or the missile development programmes of that country (Section 3 (a) (3)).

 

  • Transferred goods, services or technology that could assist those countries’ uranium ore mining and processing efforts (section 3(a) (4)).

 

  • Providing conventional weapons or technical assistance to such countries or subjects (section 3 (a) (5)).

 

  • Providing a ship, insurance or other shipping service to transport goods to or from such countries for use in connection with nuclear, biological or chemical weapons or with such countries’ missile development programmes (Section 3 (a) (6)).

 

  • Participant in a Joint Venture with such countries or sanctioned subjects involving any activity related to the mining, production or transport of uranium (Section 3 (b))

 

The sanctions provided for in the INKSNA include:

 

  • Export of arms or dual-use goods to an entity sanctioned under this Act is prohibited (section 3 (c) (2) and (3)).

 

  • Imports into the United States of the sanctioned entity and U.S. government procurement with that entity are prohibited (section 3(c) (1)).

 

  • Any investment related to property of a sanctioned entity is prohibited (section 3(c) (4)).

 

  • Providing any form of financing or guarantee related to a transaction of a sanctioned entity is prohibited (section 3(c) (5)).

 

  • Denial by the United States Government of any credit, credit guarantee, grant, or other financial assistance by any agency of the United States Government to a sanctioned entity (section 3(c) (6)).

 

  • Investment or purchase of significant amounts of equity or debt instruments of a sanctioned entity is prohibited (section 3(c) (7)).

 

  • Any executive of a sanctioned entity is prohibited from entering the United States (Section 3(c) (8) and (9)).

 

 

  • EXECUTIVE ORDER 13382: PROFILERATION OF WEAPONS OF MASS DESTRUCTION

 

Executive Order 13382, of 28 June 2005, freezes the funds and resources of persons who have participated, or attempted to participate, in activities, transactions or provide financial, material or technological support that have contributed materially or pose a risk of contributing to the proliferation of weapons of mass destruction or their delivery systems (Section 1).

 

 

  • SANCTIONS RELATED TO CYBERNETIC OR CRIMINAL ACTIVITIES

 

The U.S. Government, through Executive Orders, has also sought to undermine Iran’s cyber capabilities by sanctioning entities that are deemed to have conducted such activities or been involved in international criminal activities.

 

 

  • EXECUTIVE ORDER 13694: CYBERNETIC ACTIVITIES

 

Executive Order 13694, of April 1, 2015, immobilizes the funds and resources located in the United States of any foreign entity that has engaged in any form of cyber activity deemed to be a threat to the national security, foreign policy or financial or economic stability of the United States. Specifically:

 

  • Damage or compromise the provision of services by computers or computer networks supporting one or more entities in a critical infrastructure sector.

 

  • Significantly compromising the provision of services by one or more entities in a critical infrastructure sector.

 

  • Committing computers or computer networks.

 

  • Misappropriation of funds, trade secrets, personal identifiers or financial information.

 

 

  • EXECUTIVE ORDER 13581: INTERNATIONAL CRIME

 

Executive Order 13581, of 25 July 2011, also provides for the freezing of funds and resources of any foreign entity if it is deemed to be a major international criminal organization, is controlled by or acts on behalf of such an entity, or if it provides support of any kind to an entity sanctioned under this Executive Order.

 

  • SANCTIONS IN SUPPORT OF DEMOCRACY AND HUMAN RIGHTS

 

  • SANCTIONS AGAINST INTERNET CENSORSHIP AND IN SUPPORT OF FREEDOM OF EXPRESSION IN IRAN

Several of the above-mentioned laws provide for measures to combat Internet censorship in Iran or to prevent the Iranian government from using the Internet to identify political opponents.

  1. In this regard, Section 106 of CISADA prohibits any transaction by U.S. companies with foreign entities that provide technology that the Iranian government could use to control Internet access in its country.

 

  1. Section 403 of the ITRSHRA also imposes various sanctions (freezing of funds and resources as well as prohibition of entry into US territory) on individuals or entities that have contributed to censorship or limitation of access to media in Iran.

 

  1. To the same end, Executive Order 13606, of 23 April 2012, provides for the freezing of funds and resources of any natural person or entity that operates technology that enables it to be used by the Iranian Government to control, disrupt, monitor or track the use of computers by Iranian citizens, as well as the sale of such technology to Iran.

 

  1. Finally, in addition to the foreseen sanctions, a number of licenses and exemptions to the multiple sanctions related to Iran are also established with the objective of promoting communications and internet access for Iranian citizens:

 

  • Section 103(b) (2) of CISADA provides an exception to the general ban on exports to Iran for exports of equipment or information technology which, as mentioned above, facilitates communications and access to the Internet in Iran.

 

  • Section 560.540(a) (1) of the ITSR also permits the export to Iran of services “related to the exchange of personal communications over the Internet, such as instant messaging, chat and e-mail, social networking, photo and film sharing, web browsing and blogging, provided that such services are publicly available without cost to the user”, as well as the export of software necessary to provide such services (Section 560.540(a) (2)).

 

 

 

  • SANCTIONS AGAINST HUMAN RIGHTS ABUSES AND IN DEFENSE OF CIVIL SOCIETY

Following the disturbances related to the 12 June 2009 elections in Iran, several laws have been amended to sanction individuals linked to the efforts of the Iranian Government to combat political opposition within the country, most importantly CISADA.

Section 105 of CISADA provides for the freezing of funds and resources, as well as restrictions on entry into U.S. territory, of persons deemed to be “responsible for, complicit in, or otherwise responsible for ordering, controlling, or directing the commission of serious abuses of the human rights of citizens of Iran or their families after June 12, 2009, whether or not such abuses occurred in Iran.

 

 

 

In Madrid, 11th of February 2020

Department of International Trade and Sanctions

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[1] In this sense, the following are considered US Persons: (1) Any natural person with US nationality; (2) foreigners with residence in the United States; (3) any person who is in the United States; (4) legal entities constituted under the laws of any State of the United States; (5) legal entities incorporated outside the United States in which certain conditions are met.