US tightens Iran sanctions

The US President has issued an Executive Order, further tightening sanctions against Iran. A link to a copy of the order appears below:   http://www.treasury.gov/resource-center/sanctions/Programs/Documents/iran_eo_06032013.pdf

The US Treasury has issued frequently asked questions (FAQs) in relation to this Act. The appropriate link appears below: http://www.treasury.gov/resource-center/faqs/Sanctions/Pages/ques_index.aspx#ifca

The FAQs set out the definition of several terms commonly used in US sanctions statutes and Executive Orders. The term “knowingly” includes actual or ostensible knowledge. A transaction may be sanctionable if it is “significant”; in determining significance the US authorities will look to a list of broad factors including size, number and type of transactions.

The Iran Freedom and Counter-Proliferation Act of 2012 (IFCA)  provides for sanctions involving activities or transactions related to Iran’s energy, shipping, and shipbuilding sectors.  Two entities previously identified or designated under Treasury authorities that are part of the shipping sector of Iran are the National Iranian Tanker Company and the Islamic Republic of Iran Shipping Lines.

Persons determined to be part of Iran’s energy, shipping, or shipbuilding sectors, or a port operator in Iran for purposes of the Act will be identified as such on the US OFAC’s SDN List. Knowingly providing certain significant support to such persons will have exposure to sanctions, unless the transaction is excepted.

It is important to note that the provision of goods or services could be sanctionable regardless of whether any person involved in the transaction has been determined to be part of Iran’s energy, shipping, or shipbuilding sectors.

The IFCA also provides for sanctions involving the sale, supply, or transfer of certain materials to or from Iran including graphite, raw or semi-finished metals. Regulations should follow which are likely to provide a definition of such metals and their alloys and  precious metals.  The E.O. authorizes new sanctions with respect to Iran including transactions related to the purchase or sale of Iranian rials and also broadens existing sanctions and allows the imposition of sanctions on persons that materially assist certain Iranian persons on the SDN List or blocked persons.

Summary

Members are recommended to maintain vigilance in their commercial dealings. The tightening of sanctions against Iran presents increasingly complex challenges. Such challenges are made more difficult when combined with published reports of deceptive measures taken by some parties to avoid compliance e.g. involving ship to ship transfer of cargoes or the issuance of bills of lading with incorrect information. Specific legal advice should be sought as necessary when dealing with new contractual partners or involving the carriage of sanctionable products or materials to or from Iran or for or by an Iranian person or entity.

Category: Sanctions