On February 18, 2021, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) entered into a settlement of $507,375 with BitPay Inc. for violations of multiple U.S. sanctions programs. According to the settlement, BitPay allowed its platform to be used by persons in Cuba, North Korea, Iran, Sudan, Syria and the Crimea region to transact with merchants in the United States. The latest settlement is noteworthy for the involvement of a digital currency service provider and its discussion of OFAC’s expectations regarding compliance for companies in this growing financial and commercial sector.
Continuing its “maximum pressure” campaign against Iran, the United States has (a) ratcheted up sanctions under Executive Orders that provide for the imposition of secondary sanctions on non-U.S. companies that engage in transactions with Iranian financial institutions, and (b) authorized the imposition of secondary sanctions on non-U.S. companies that engage in arms-related transactions with Iran pursuant to a new Executive Order, notwithstanding the expiration of the United Nations arms embargo under Security Council Resolution 2231 implementing the Joint Comprehensive Plan of Action (JCPOA).
On January 10, 2020, the United States imposed additional sanctions on Iran in the wake of recent tensions between the countries and the continuing broader “maximum pressure” campaign on Iran. Specifically, President Trump signed Executive Order 13902 (E.O. 13902) authorizing the imposition of secondary sanctions on certain transactions involving Iran’s construction, mining, manufacturing, and textiles industries. This follows Executive Order 13871 from May 2019, which authorized secondary sanctions on Iran’s iron, steel, aluminum and copper sectors. Concurrently with the issuance of E.O. 13902, the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) added to the Specially Designated Nationals and Blocked Persons List (SDN List) several major Iran-related metal and mining companies, Chinese and Seychelles entities plus a related vessel involved in the Iranian metals trade, and Iranian regime officials.
Announced last week, “INSTEX had been made operational and available to all EU Member States.” INSTEX is the special purpose financing channel designed by the EU to permit the processing of payments for trade between the EU and Iran. INSTEX was deemed necessary by the EU in light of the refusal by many private banks to process payments for trade between the EU and Iran that continues to be authorized by the EU despite the U.S. withdrawal from the Joint Comprehensive Plan of Action (JCPOA) resulting in the re-imposition of U.S. sanctions.
On November 2, 2018, the Department of Treasury’s Office of Foreign Assets Control (“OFAC”) issued a final rule effective Monday, November 5, 2018 that amends the Iranian Transactions and Sanctions Regulations and reinstates sanctions on Iran that had been suspended during implementation of the Joint Comprehensive Plan of Action (“JCPOA”). On May 8 of this year, the Trump Administration had announced that the United States would withdraw from the JCPOA, but provided for 90-day and 180-day wind-down periods for specified activities involving Iran.
The 90-day wind down period ended effective August 6, 2018, and the U.S. government took steps to re-implement sanctions via Executive Order 13846. This included the application of secondary sanctions to the purchase or acquisition of U.S. dollar banknotes by the Government of Iran, certain trade in gold or precious metals, certain trade in graphite, raw or semi-finished metals such as aluminum, steel, coal and software for integrating industrial processes, transactions relating to Iranian rials, transactions relating to issuance of Iranian sovereign debt, and sanctions relating to Iran’s automotive sector. (See our previous post here).
The latest announcement addresses the end of the 180-day wind down period and implements certain additional aspects of Executive Order 13846.
- The amendments include deleting the “EO 13599 List” of individuals and entities who were removed from the SDN List pursuant to the JCPOA, but still were considered “Government of Iran” parties or Iranian financial institutions subject to blocking by U.S. persons pursuant to EO 13599. The Federal Register notice states that OFAC will relist “as appropriate” certain individuals and entities who were on the EO 13599 List. It is therefore unclear at this time whether all persons who were on the EO 13599 List will be re-added to the SDN List.
- The Iranian Transactions and Sanctions Regulations will authorize sanctions against a person upon a determination that:
- On or after August 7, 2018, the person has materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services in support of, the purchase or acquisition of U.S. bank notes or precious metals by the Government of Iran; or
- 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.
- OFAC amended a pre-existing general license allowing U.S. persons to sell real property in Iran provided it was acquired before the individual became a US person or was inherited from persons in Iran. The general license has been expanded to include personal property subject to the same conditions.
During a telecom briefing on Friday, Secretary of State Michael Pompeo mentioned that the administration decided to grant “temporary allotments” to eight jurisdictions to continue purchasing Iranian oil. Some reports indicate that South Korea, Japan, India, and Turkey are among the countries receiving such waiver. Although Mr. Pompeo did not say how long the waivers will be in place, he mentioned that the purpose of the waivers is to give countries a few “weeks longer to wind down.”
We expect that the actual re-designations of persons and entities to the SDN List will be published on Monday along with guidance and FAQs. We will follow up next week with further details.
On August 6, 2018, the Treasury Department’s Office of Foreign Assets Control (OFAC) released a new Executive Order to implement the previously announced re-imposition of U.S. sanctions for Iran. There were no major surprises, with the Executive Order paralleling the guidance released on May 8, 2018 when the President announced his decision to cease the United States’ participation in the Joint Comprehensive Plan of Action (JCPOA) and to begin re-imposing the U.S. nuclear-related sanctions that had been lifted, following a wind-down period.
Today, President Trump announced his intention to withdraw the United States from the Joint Comprehensive Plan of Action (JCPOA) and to impose the “highest level of economic sanctions” on Iran. The Office of Foreign Assets Control quickly thereafter published FAQs that discuss how the sanctions will be implemented.
Today, President Trump issued a statement on the status of the Joint Comprehensive Plan of Action (“Iran nuclear deal”) and the Office of Foreign Assets Control designated 14 individuals and entities in connection with serious human rights abuses and censorship in Iran, and support to designated Iranian weapons proliferators. Below, we provide notable highlights from the President’s statement.
On October 25, 2017, the U.S. House of Representatives passed three bills and a resolution in response to Iran’s ballistic missile program and threats posed by Hizballah. Notably, neither the bills nor the resolution would directly affect U.S. obligations in relation to the Iran Nuclear Agreement (Joint Comprehensive Plan of Action, or JCPOA). Further, because Hizballah is already sanctioned on the U.S. List of Specially Designated Nationals and the President already has authority to impose sanctions based on Iran’s ballistic missile program, it does not appear that the bills would result in substantive changes to existing law if enacted.
On August 2, 2017, President Trump signed into law the Countering America’s Adversaries Through Sanctions Act (CAATSA), which strengthened U.S. sanctions on Russia, North Korea and Iran. CAATSA had been passed by overwhelming “veto-proof” majorities of Congress and President Trump signed the bill while expressing reservations concerning the limitations it placed on the President’s authority.