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Global Trade & Sanctions LawPublished on:
OFAC Issues Expansive Sanctions Targeting Iran’s Civil Aviation Sector
On September 8, 2026, the U.S. Department of the Treasury announced a series of Iran sanctions actions under “Operation Economic Outcast” that target Iran’s aviation sector to date and are unusual due to their breadth and targeting of civilian airlines. The actions were taken pursuant to Executive Order 13224 (counterterrorism authority), and Executive Order 13902 (targeting sectors of the Iranian economy)
1. Indefinite Suspension of General Licenses
The U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) announced the indefinite suspension of the following three general licenses previously available under the Iranian Transactions and Sanctions Regulations, 31 CFR Part 560 (ITSR). The suspensions have implications for both U.S. sanctions (administered by OFAC) and export controls under the Export Administration Regulations (EAR) for controlled U.S. items:
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- Iran General License J-1: “Authorizing the Reexportation of Certain Civil Aircraft to Iran on Temporary Sojourn and Related Transactions.” GL J-1 authorized non-U.S. airlines to operate scheduled flights to and from Iran using aircraft subject to U.S. jurisdiction, subject to certain conditions (e.g., control over the aircraft could not be shared with Iranian persons or entities). GL J-1 also authorized the reexportation of usual and reasonable quantities of onboard U.S. origin spare parts and emergency maintenance technology, subject to similar controls. With J-1 suspended, the operation of flights to Iran using aircraft subject to U.S. jurisdiction will be prohibited. (Items subject to U.S. jurisdiction with regard to Iran include aircraft and parts manufactured in other countries with over 10 percent U.S. content.)
- 31 CFR § 560.522: “Allowable payments for overflights of Iranian airspace.” This general license authorized payments to Iran of charges for services rendered by the Government of Iran in connection with the overflight of Iran, or emergency landing in Iran, of aircraft owned by a United States person or registered in the United States. It was the primary ITSR provision that permitted U.S.-person-owned or U.S.-registered aircraft to lawfully transit Iranian airspace and make overflight payments to Iranian air navigation service providers.
- 31 CFR § 560.529: “Bunkering and emergency repairs.” This general license broadly authorized the provision of goods or services in the United States to a non-Iranian carrier transporting passengers or goods to or from Iran, where those goods or services constituted bunkers or bunkering services, were supplied in the course of emergency repairs, or were supplied under circumstances that could not have been anticipated prior to the carrier’s departure for the United States.
After September 23, 2026, any activity that was previously authorized under these general licenses and is otherwise prohibited by the ITSR will require a specific license from OFAC.
In addition, OFAC revoked 31 CFR § 560.528 (“Aircraft safety”). This provision established a licensing policy under which specific licenses could be issued on a case-by-case basis for the exportation or reexportation of goods, services, and technology to ensure the safety of civil aviation and the safe operation of U.S.-origin commercial passenger aircraft.
Concurrently with the suspension, OFAC issued Iran General License DD, titled “Authorizing the Wind Down of Certain Civil Aviation-Related and Other Transactions Previously Authorized Under the Iranian Transactions and Sanctions Regulations.” GL DD authorizes, through 12:01 a.m. EDT on September 23, 2026, all transactions prohibited by the ITSR that are ordinarily incident and necessary to the wind-down of any transaction previously authorized under the above authorities.
With respect to Iran, the EAR and the ITSR overlap to some extent. Transactions with Iran authorized by the ITSR—either under general or specific licenses—are generally deemed consistent with the EAR, while transactions authorized by neither can violate both sets of regulations. The suspension of general licenses used for re-export of items to Iran (like GL J-1) means, for example, that foreign carriers and affiliated parties that permitaircraft subject to U.S. jurisdiction to enter Iranian airspace face the risk of U.S. civil monetary penalties and U.S. criminal prosecution for violations of the EAR as well as the ITSR.
Taken together with the August 24, 2026, suspension of five other GLs (covering educational activities, personal remittances, conferences, sports exchanges, and academic programs), OFAC has now suspended nine ITSR general licenses and licensing policies in the space of two weeks. Notably, these are suspensions, rather than revocations. However, the distinction has little impact unless and until the authorities are restated.
2. Additional Sanctions Designations
The action also included the designation of a total of 36 targets for supporting Iran’s aviation sector. This included
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- Iranian Airlines (27 designations under E.O. 13902): OFAC has designated 27 Iranian airlines for operating in the aviation sector of the Iranian economy.
- Aircraft Procurement Network: OFAC designated several entities and individuals allegedly involved in facilitating aircraft procurement and transfer activities for Mahan Air, including companies based in the UAE, Türkiye and the United Kingdom. The designations also covered an individual associated with the network and an aircraft-management company alleged to have operated aircraft linked to it.
- Cargo Service Providers and General Sales Agents: OFAC designated several logistics and cargo companies in Türkiye, Malaysia and Kazakhstan for allegedly providing shipment coordination, sales-agent and related logistical support to Mahan Air, including in connection with goods destined for Iran. These designations follow the July 30, 2026, action targeting general sales agents for Mahan Air in China, India and Russia.
3. FinCEN Alert to Commercial Aviation Industry
Concurrently with OFAC’s action, Treasury’s Financial Crimes Enforcement Network (FinCEN) has issued Alert FIN-2026-Alert006, titled “FinCEN Alert to Counter Iranian Procurement Efforts for its Commercial Aviation Industry”. The Alert is issued in support of “Operation Economic Outcast” and is directed at U.S. financial institutions, urging them to identify and report procurement networks supporting Iran’s aviation industry.
The Alert describes Iran’s use of deceptive schemes to illicitly procure U.S.- and Western-origin aircraft and aircraft parts through front companies in Europe, the Middle East, Africa and Asia. It highlights that aircraft purchased by Iran’s front company networks are often re-registered multiple times across jurisdictions, undergo layered ownership transfers, and move physically between several jurisdictions before arriving in Iran. Purchases may involve falsified or fabricated documentation relating to OFAC or the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) compliance, including aircraft registration information, insurance data, and overflight records.
Looking Forward
The September 8 measures significantly increase sanctions and export controls risk for airlines, aircraft owners and lessors, financial institutions, and other companies with direct or indirect exposure to Iran’s civil aviation sector. Companies with potential Iran-related aviation touchpoints should assess whether existing operations, commercial relationships, payment flows or aircraft movements rely on the suspended authorizations and, where appropriate, take steps to wind down those activities before the September 23 deadline.
The new designations and FinCEN alert also reinforce the broader enforcement risks associated with intermediaries and procurement networks operating outside Iran. Treasury previously characterized Operation Economic Outcast as the beginning of a sustained campaign and has stated that it intends to accelerate U.S. sanctions enforcement. Further sanctions measures may be forthcoming, and additional OFAC guidance may clarify the scope and practical implications of these measures.
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