US Imposes Additional Sanctions on Iran's Industry

/ Global Compliance Solutions Group LLC/

On January 10, 2020 the U.S. President issued an Executive Order(1) establishing additional sanctions on Iran. The new sanctions target the construction, mining, manufacturing, and textile sectors of the Iranian economy.

“We are also designating Iran’s largest metals manufacturers, and imposing sanctions on new sectors of the Iranian economy including construction, manufacturing, and mining”(2), said Secretary Steven T. Mnuchin.

The Executive Order blocks the 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 US person of the following:

  • The 13 largest steel and iron manufacturers and the top aluminum and copper companies in Iran including Mobarakeh Steel Company, Saba Steel, Hormozgan Steel Company, Esfahan Steel Company, Oxin Steel Company, Khorasan Steel Company, South Kaveh Steel Company, Iran Allow Steel Company, Golgohar Mining and Industrial Company, Chadormalu Mining and Industrial Company, Arfa Iron and Steel Company, Khouzestan Steel Company and Iranian Ghadir Iron & Steel Company, Iran Aluminum Company, Al-Mahdi Aluminum Corporation, Khalagh Tadbir Pars Co, and the National Iranian Copper Industries.

  • China entities Pamchel Trading Beijing Co Ltd, Hongyuan Marine Co Ltd and Seychelles-based (Power Anchor Limited a front company for Pamchel Trading Beijing Co, Ltd) entities; and a vessel (Hong Xun) involved with Iranian metals products.

  • Oman-based Reputable Trading Source LLC, which is owned or controlled by Khouzestan Steel Company.

  • Senior Iranian officials involved in recent ballistic missile strikes.

In addition, the Secretary of the Treasury is authorized to sanction foreign financial institutions that knowingly conduct or facilitate any significant financial transaction in contradiction to the Executive Order. See the Executive Order for additional restrictions and details.

Contact the professionals at GCSG for more information on this development.

References

  1. Executive Order on Imposing Sanctions with Respect to Additional Sectors of Iran - January 10, 2020

  2. US Department of the Treasury Press Release: “Treasury Targets Iran’s Billion Dollar Metals Industry and Senior Regime Officials” - January 10, 2020

New US Sanctions on Iran's Iron, Steel, Aluminum, and Copper Sectors

/ Global Compliance Solutions Group LLC/

On May 8, 2019, the Trump administration issued an Executive Order (EO)(1) establishing new sanctions on Iran’s iron, steel, aluminum, and copper sectors. A few key points from the EO include, but are not limited to, the following:

  • “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(2) 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;….

In addition to the above, there are additional prohibitions on financial institutions and financial transactions (occurring with the noted sectors). The prohibitions included in the EO include:

  • the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any person whose property and interests in property are blocked; and

  • the receipt of any contribution or provision of funds, goods, or services from any such person.

Contact your GCSG Trade Compliance professionals for assistance in understanding how to reduce your risk and how this EO may affect your business.

References

(1) Executive Order (EO) on “Imposing Sanctions with Respect to the Iron, Steel, Aluminum, and Copper Sectors of Iran” - May 8, 2019

(2) United States person - means any United States citizen, permanent resident alien, entity organized under the laws of the United States or any jurisdiction within the United States (including foreign branches), or any person in the United States.(1)

(3) Knowingly - with respect to conduct, a circumstance, or a result, means that a person has actual knowledge, or should have known, of the conduct, the circumstance, or the result.(1)

(4) Entity - means a partnership, association, trust, joint venture, corporation, group, subgroup, or other organization.(1)

Network of Iranian front companies disrupted by OFAC

/ Global Compliance Solutions Group LLC/

On March 26, 2019 the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced(1) it had taken action against a network of 25 individuals and entities that had transferred over a billion dollars to the Islamic Revolutionary Guard Corps (IRGC) and Iran’s Ministry of Defense and Armed Forces Logistics (MODAFL).

The evasion scheme included a layered network of front companies and agents based in Iran, UAE, and Turkey that were set up to evade international sanctions and to gain access to the international financial system. The network exchanged devalued Iranian rials for dollars and euros.

“We are targeting a vast network of front companies and individuals located in Iran, Turkey, and the UAE to disrupt a scheme the Iranian regime has used to illicitly move more than a billion dollars in funds…Central to this network and sanctioned today pursuant to our counter terrorism authority is Iran's IRGC-controlled Ansar Bank and its currency exchange arm, Ansar Exchange, both of which used layers of intermediary entities to exchange devalued Iranian rial ultimately for dollars and euros to line the pockets of the IRGC and MODAFL…” (1)

Five front companies- UAE-based Sakan General Trading, Lebra Moon General Trading, and Naria General Trading, and Turkey-based Atlas Doviz, and the Iran-based Hital Exchange provided $800 million in funds to Ansar exchange.

Now more than ever, it is vitally important that global companies implement third-party due diligence and engagement policies. These policies are often risk-based but should be comprehensive and include at a minimum background investigation diligence and ongoing monitoring of distribution networks and contract agents.

Contact our Due Diligence compliance professionals at GCSG today to learn how we can help you mitigate your third-party risk with our due diligence reports, risk-ranking tool, policy development and implementation support, and international boots-on-the-ground third-party Audits.

References

(1) U.S. Department of the Treasury Press Releases - “United States Disrupts Large Scale Front Company Network Transferring Hundreds of Millions of Dollars and Euros to the IRGC and Iran’s Ministry of Defense.” - March 26, 2019

Freight forwarding and logistics firms to withdraw from business with Iran

/ Global Compliance Solutions Group LLC/

According to Lloyd's Loading List, some logistics service providers have decided to halt business in Iran as a result of the re-imposition of US sanctions.  Others are taking a wait and see approach.  In addition, several major container lines such as CMA, CGM, Maersk, and MSC have withdrawn from Iran.(2)  

"Thomas Cullen, a senior analyst at logistics consulting firm Transport Intelligence, said the re-imposition of US sanctions “seems likely to be at least as brutal as the sanctions pursued for the decade prior to the JCPOA, with the US now pressing for Iran to be excluded from the SWIFT banking transaction system”."(1)

Cullen noted: “With the announcement last week that Renault was ceasing operations, something that Peugeot-Citroen decided last month, the CKD related container traffic will fall heavily. Possibly the Chinese VMs may increase inputs to compensate, but they are much weaker in this market.”(1)

Cullen added: “The leading western container lines have effectively withdrawn from services into Iran, presumably leaving shippers to arrange their own feeder services from Dubai. Once again, the Chinese carriers may be the only option.”(1)

References:

OFAC Amends the Iranian Transactions and Sanctions Regulations

/ Global Compliance Solutions Group LLC/

On Thursday, June 28 the U.S. Department of the Treasury, Office of Foreign Assets Control (OFAC) amended (1) the Iranian Transactions and Sanctions Regulations (2) in order to implement the President's May 8, 2018 decision (3) to end U.S. participation in the Joint Comprehensive Plan of Action (JCPOA).  The changes include, but are not limited to:

  • Amending the general licenses authorizing the importation into the US (4) of and dealings in, Iranian-origin carpets and foodstuffs, as well as related letters of credit and brokering services, to narrow the scope of the licenses and to allow for the wind down of these activities through August 6, 2018;
  • Adding a new general license to authorize the wind down, through August 6, 2018, of transactions related to the negotiation of contingent contracts for activities, previously approved under General License I (5), related to the export or re-export to Iran of commercial passenger aircraft and related parts and services; and 
  • Adding a new general license (6) to authorize the wind down, through November 4, 2018 of certain transactions, previously approved under General License H (7), related to foreign entities owned or controlled by a US Person (8).
    • Non-US entities that are owned or controlled by a US Person are still subject to the restrictions on US Person involvement during the wind down period (9).  

For more information contact your GCSG experts.

E  info@globalcompliancesg.com

References:

EU Updates Restrictive Measures Concerning Iran, North Korea & Central African Republic

/ Global Compliance Solutions Group LLC/

Council Implementing Regulation (EU) 2016/603 of 18 April 2016 implementing Regulation (EU) No 267/2012 concerning restrictive measures against Iran

Council Decision (CFSP) 2016/609 of 18 April 2016 amending Decision 2010/413/CFSP concerning restrictive measures against Iran

Council Regulation (EU) 2016/555 of 11 April 2016 amending Regulation (EU) No 224/2014 concerning restrictive measures in view of the situation in the Central African Republic

Council Implementing Regulation (EU) 2016/556 of 11 April 2016 implementing Regulation (EU) No 359/2011 concerning restrictive measures directed against certain persons, entities and bodies in view of the situation in Iran

Commission Implementing Regulation (EU) 2016/569 of 12 April 2016 amending Council Regulation (EC) No 329/2007 concerning restrictive measures against the Democratic People's Republic of Korea

Council Decision (CFSP) 2016/564 of 11 April 2016 amending Decision 2013/798/CFSP concerning restrictive measures against the Central African Republic

Council Decision (CFSP) 2016/565 of 11 April 2016 amending Decision 2011/235/CFSP concerning restrictive measures directed against certain persons and entities in view of the situation in Iran

Council Implementing Decision (CFSP) 2016/573 of 12 April 2016 implementing Decision 2013/183/CFSP concerning restrictive measures against the Democratic People's Republic of Korea