October 13, 2020

Treasury Sanctions Iranian Financial Sector

The Secretary of the Treasury, in consultation with the Secretary of State, authorized sanctions under Executive Order ("E.O.") 13902 ("Imposing Sanctions With Respect to Additional Sectors of Iran") against any persons - Iranian or otherwise - determined to "operate" in the Iranian financial sector. In accordance with this action, OFAC added 18 Iranian financial institutions to the Specially Designated Nationals and Blocked Persons List.

OFAC issued a General License ("GL") and other authorizations to limit the immediate impact of these restrictions on the Iranian financial sector. First, under GL L, OFAC authorized continued dealings with the 18 sanctioned Iranian financial institutions - so long as those transactions are not prohibited by the Iran Transactions and Sanctions Regulations ("ITSR"). As explained in OFAC's FAQ 842, U.S. persons may continue to engage in transactions involving the sanctioned Iranian financial institutions, if done pursuant to a valid general or specific license under the ITSR. Second, OFAC issued FAQ 845, which provides 45 days for non-U.S. persons to wind down dealings with the 18 sanctioned Iranian financial institutions - or the Iranian financial sector more generally - without risking exposure to sanctions under E.O. 13902. After the 45-day wind-down period, non-U.S. persons who continue to have "significant" dealings with the sanctioned Iranian banks, or who otherwise "operate" in the Iranian financial sector, may be targeted by U.S. sanctions.

In addition, OFAC issued four other FAQs clarifying:

  • the authorization of humanitarian-related activities involving the newly-sanctioned Iranian financial institutions (FAQ 843);

  • that non-U.S. persons do not risk exposure to U.S. secondary sanctions for certain humanitarian-related transactions authorized under the ITSR (FAQ 844);

  • the validity of waivers issued by the Department of State and exceptions set forth in the Iranian Freedom and Counter-Proliferation Act of 2012 during and after the 45-day wind-down period (FAQ 846); and

  • that the activities of non-U.S. persons will generally not be considered sanctionable if the activities are consistent with those permissible for U.S. persons (FAQ 847).

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