Audit Report

OIG-18-047 

FOREIGN ASSETS CONTROL 

OFAC’s Iran Sanctions Program Processes 

Comply with Requirements

July 12, 2018

Office of Inspector General

Department of the Treasury
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Contents 

Audit Report

Background..................................................................................................2

OFAC’s Mission .....................................................................................2

Iran Sanctions Program...........................................................................4

Joint Comprehensive Plan of Action .........................................................6

Audit Results................................................................................................8

OFAC’s Iran Sanctions Program Processes Comply with Requirements .........9

OFAC Formalized Standard Operating Procedures ....................................11

Appendices

Appendix 1: Objectives, Scope, and Methodology...........................................13

Appendix 2: Summary of Iran-related Executive Orders ...................................17

Appendix 3: Management Response..............................................................21

Appendix 4: Major Contributors to This Report...............................................22

Appendix 5: Report Distribution....................................................................23

Abbreviations

CISADA Comprehensive Iran Sanctions, Accountability, and Divestment Act

EO Executive Order 

IEEPA International Emergency Economic Powers Act

JCPOA Joint Comprehensive Plan of Action

NSC National Security Council

OFAC Office of Foreign Assets Control

OIG Treasury Office of Inspector General

SDN Specially Designated Nationals and Blocked Persons

SOP standard operating procedure

Treasury U.S. Department of the Treasury

UNSCR United Nations Security Council Resolution

WMD weapons of mass destruction
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OFAC’s Iran Sanctions Program Processes Comply with Requirements 

(OIG-18-047) 1 

July 12, 2018

Andrea Gacki

Acting Director

Office of Foreign Assets Control

This interim report presents initial results from our ongoing audit of 

the Office of Foreign Assets Control (OFAC) administration of the 

Iran sanctions program. Our audit objectives are to determine 

whether (1) OFAC’s Iran sanctions program was consistent with 

U.S. commitments under the Joint Comprehensive Plan of Action 

(JCPOA) and complied with applicable laws and regulations; and 

(2) sanctions decisions and deliberations are properly documented 

and approved by OFAC officials. This report discusses results 

related to our review of the 25 designations and 4 general licenses 

issued and amended by OFAC from July 1, 2016, through 

February 28, 2017. We plan to issue an additional audit report that 

assesses whether other sanctions decisions and deliberations, 

including specific licenses, were properly documented and 

approved.

In brief, OFAC (1) complied with applicable laws and regulations 

and acted consistent with the JCPOA, and (2) properly 

documented and approved sanctions decisions and deliberations. 

OFAC’s processes for the designations and general licenses issued 

and amended were thorough. However, at the time of our review, 

OFAC lacked formalized and approved standard operating 

procedures (SOPs) recommended in a 2015 Department of the 

Treasury (Treasury) Office of Inspector General (OIG) audit.1

1

 Treasury OIG, OIG-16-001, Libyan Sanctions Case Study, (October 26, 2015).

In 

response to our previous audit, OFAC formalized SOPs as of 

December 28, 2017. We reviewed OFAC’s SOPs related to its 

designation and general license processes and determined that they 

provide sufficient information to enable staff members to complete 

the fundamental steps necessary for each process. Accordingly, 

 
OFAC’s Iran Sanctions Program Processes Comply with Requirements 

(OIG-18-047) 2 

we make no recommendations in this report. We plan to review 

SOPs related to the specific license process and include the results 

in a subsequent report.

We conducted fieldwork for this interim report from March 2017 

through January 2018. Appendix 1 provides a more detailed 

description of our audit objectives, scope, and methodology.

In a written response, OFAC management stated that it reviewed 

the report and did not have any substantive comments. 

Management’s response, in its entirety, is included as appendix 3. 

Background

OFAC’s Mission

As part of Treasury’s Office of Terrorism and Financial Intelligence, 

OFAC administers and enforces economic and trade sanctions 

based on U.S. foreign policy and national security goals. These 

sanctions target foreign countries and regimes, terrorists, 

international narcotics traffickers, proliferators of weapons of mass 

destruction (WMD), and other threats to the national security, 

foreign policy, or economy of the United States. OFAC acts under 

legislative authority and presidential wartime and national 

emergency powers to, among other things, impose controls on 

transactions and block assets2

2

 Blocking, or “freezing,” is a way of controlling targeted property. Title to the blocked property 

remains with the target, but the exercise of powers and privileges normally associated with 

ownership is prohibited without authorization from OFAC. Blocking immediately imposes an across 

the-board prohibition against transfers or dealings of any kind with regard to the property.

subject to U.S. jurisdiction from use 

by designated parties. OFAC maintains various sanctions lists, 

including the Specially Designated Nationals and Blocked Persons 

(SDN), Foreign Sanctions Evaders, and Non-SDN Iranian Sanctions 

Act lists. OFAC’s licensing process allows OFAC to authorize 

individuals and entities to engage in transactions that would 

otherwise be prohibited.

The SDN list includes individuals and entities designated in 

connection with activity involving sanctioned countries, such as 

Iran and North Korea. It also lists individuals, groups, and entities—

such as terrorists and narcotics traffickers—designated under 

 
OFAC’s Iran Sanctions Program Processes Comply with Requirements 

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sanctions programs that are not country-specific. Unless an 

exemption from regulation applies or OFAC authorizes a transaction 

under a license, all transactions by U.S. persons, including U.S. 

depository institutions, or transactions in or involving the United 

States, are prohibited if they involve an individual or entity on the 

SDN list. U.S. persons must also block designated persons’ 

property and interests in property within their possession or 

control.

OFAC also maintains the Foreign Sanctions Evaders list. Executive 

Order (EO) 13608 grants Treasury the authority to target foreign 

individuals and entities that have violated, attempted or conspired 

to violate, or caused a violation of U.S. sanctions against Iran or 

Syria.3

3

 EO 13608, "Prohibiting Certain Transactions with and Suspending Entry into the United States of 

Foreign Sanctions Evaders with Respect to Iran and Syria" (May 1, 2012).

This list allows Treasury to publicly identify foreign 

individuals and entities engaged in these activities and to impose 

prohibitions on transactions or dealings involving such persons in or 

related to goods, services, or technology in or intended for the 

United States or provided by or to U.S. persons, wherever 

located.4

4

 Although EO 13608 does not block the property of persons sanctioned under that authority, 

Treasury may bar their access to the U.S financial system by prohibiting U.S. persons from engaging 

in transactions involving an identified Foreign Sanctions Evader, which includes requiring U.S. 

financial institutions to reject transactions involving such persons. The funds are returned to the 

originator; therefore, property is not blocked.

Although the process for adding individuals to the Foreign 

Sanctions Evaders list is generally the same as that used to make 

SDN list designations, the property and interests in property of 

Foreign Sanctions Evaders are not blocked or frozen (these are also 

referred to as “non-blocking” sanctions).

OFAC also adds individuals and entities to the Non-SDN Iranian 

Sanctions Act list pursuant to the non-blocking provisions of the 

Iran Sanctions Act of 1996, as amended.5

5

 50 U.S.C. 1701 note. 

This act principally 

sought to limit Iran’s activities related to its petroleum industry. In 

January 2016, pursuant to the commitments made in the JCPOA, 

the U.S. Secretary of State determined that all individuals and 

entities on the Non SDN Iranian Sanctions Act list would be 

removed.

 
OFAC’s Iran Sanctions Program Processes Comply with Requirements 

(OIG-18-047) 4 

Occasionally, OFAC grants authorization through its licensing 

program for individuals and entities to engage in transactions that 

would otherwise be prohibited by various sanctions programs. 

OFAC issues (1) general licenses, for an entire class of persons, 

transactions, or products; or (2) specific licenses, in response to 

applications made by individuals or entities for specific 

transactions. General licenses publicly authorize broader classes of 

transactions without the need to apply for a specific license. 

Specific licenses authorize a particular individual or entity to 

engage in a particular transaction or set of transactions on a case 

by-case basis under certain limited situations and conditions. 

Although OFAC has the ability to issue licenses, it is generally 

under no obligation to do so.

Iran Sanctions Program

The Iran sanctions program is OFAC’s most complex program, with 

authorities derived from many overlapping laws and executive 

orders. Eleven statutes and 27 executive orders issued since 19796

6

 EO 12170, "Blocking Iranian Government Property" (November 14, 1979).

relate specifically to the Iran sanctions program, providing 

authorities to both Treasury and the Department of State, among 

other agencies. Ten statutes and ten executive orders in force 

provide Treasury the authority to impose sanctions on Iran and 

Iran-related activities.7

7

 See appendix 2 for a summary of the executive orders in force.

In addition to the orders relating specifically 

to Iran, other orders have broader authorities that apply to Iran’s 

activities, such as EO 13224,8

8

 EO 13224, "Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten To 

Commit, or Support Terrorism" (September 23, 2001).

which targets persons who commit, 

threaten to commit, or support terrorism, and EO 13382,9

9

 EO 13382, “Blocking Property of Weapons of Mass Destruction Proliferators and Their Supporters” 

(July 1, 2005).

which 

targets weapons of mass destruction proliferators and their 

supporters. To implement Iran-related statutes and executive 

orders, OFAC has issued regulations, rules, and guidance. In 

addition to the overlapping authorities, multiple agencies within the 

Federal Government are responsible for implementing different 

aspects of Iran sanctions, further adding to the complexity.

Based on its legal authorities, OFAC primarily administers its Iran 

sanctions program by (1) listing and delisting individuals and 

 
OFAC’s Iran Sanctions Program Processes Comply with Requirements 

(OIG-18-047) 5 

entities; (2) issuing regulations to implement relevant statutes and 

executive orders; (3) issuing, amending, and revoking general 

licenses; (4) approving or denying specific license applications; (5) 

conducting investigations of apparent sanctions violations and 

taking civil enforcement actions; and (6) maintaining a compliance 

and outreach program.

The current Iran sanctions program has evolved since 1987, when 

it began under EO 12613.10

10 EO 12613, "Prohibiting Imports from Iran" (October 29, 1987).

The order imposed an import embargo 

on Iranian goods and services as a result of Iran’s support for 

international terrorism and its aggressive actions toward shipping in 

the Persian Gulf. Pursuant to this order, OFAC issued the Iranian 

Transactions Regulations, which have been amended numerous 

times since then, including in 2012 when the regulations were 

updated and reissued as the Iranian Transactions and Sanctions 

Regulations11

11 31 C.F.R. Part 560 (October 22, 2012).

to, among other things, implement EO 1359912

12 EO 13599, "Blocking Property of the Government of Iran and Iranian Financial Institutions" 

(February 5, 2012).

and 

section 1245 of the National Defense Authorization Act for Fiscal 

Year 2012.13

13 Public Law 112-81 was enacted on December 31, 2011. The Iranian Sanctions Regulations were 

updated and reissued as the Iranian Transactions and Sanctions Regulations to, among other things, 

implement sections 1245(c) and (d)(1)(B) of this law.

These regulations implement the principal U.S. 

primary sanctions targeting Iran as of February 2017, including 

many of the general licenses and statements of licensing policy.

Under the Iran sanctions program, OFAC administers primary 

sanctions, and OFAC and the Department of State administer 

secondary sanctions. Primary sanctions generally prohibit U.S. 

persons from engaging in specified activities, as well as 

transactions in or involving the United States, with certain 

countries, entities, and individuals. The United States began 

imposing primary sanctions on Iran in 1987, when EO 12613 

prohibited imports of Iranian-origin goods and services into the 

United States. The primary sanctions were expanded in 1995, 

when EO 1295714

14 EO 12957, "Prohibiting Certain Transactions with Respect to the Development of Iranian Petroleum 

Resources" (March 15, 1995).

was issued pursuant to the International 

Emergency Economic Powers Act (IEEPA), declaring a national 

emergency with respect to Iran and prohibiting U.S. person 

 
OFAC’s Iran Sanctions Program Processes Comply with Requirements 

(OIG-18-047) 6 

involvement with certain petroleum development activities in Iran 

as a result of Iranian support of international terrorism and Iran’s 

active pursuit of WMD. In the same year, EO 1295915

15 EO 12959, "Prohibiting Certain Transactions With Respect to Iran" (May 6, 1995).

was signed, 

substantially tightening sanctions against Iran.16

16 Enacted in 1977, IEEPA (50 U.S.C. 1701–1708) authorizes the President to declare national 

emergencies and exercise certain authorities to deal with unusual and extraordinary threats to the 

national security, foreign policy, or economy of the United States, where the source of the threat in 

whole or substantial part is outside of the country.

Executive orders 

signed through 1997 placed further restrictions, ultimately 

prohibiting nearly all trade and investment activities involving Iran.

Secondary sanctions, which target non-U.S. persons for activities 

that occur outside of U.S. jurisdiction, escalated in 2010 pursuant 

to the Comprehensive Iran Sanctions, Accountability, and 

Divestment Act of 2010 (CISADA).17

17 Enacted on July 1, 2010, CISADA (22 U.S.C. 8501–8551) sought to impose new sanctions on Iran 

in response to the illicit nuclear activities of the Government of Iran, combined with its development 

of unconventional weapons and ballistic missiles, as well as its support for international terrorism.

Subsequent laws and 

executive orders imposed additional secondary sanctions on Iranian 

persons and certain Iran-related activities, such as human rights 

abuses, proliferation of WMD and their means of delivery, and 

destabilizing activities in the Middle East.

The majority of the existing Iran designations through February 

2017 were made pursuant to non-Iran-specific executive orders, 

such as EO 13224 relating to terrorism and EO 13382 relating to 

proliferation of WMD and their means of delivery.

Joint Comprehensive Plan of Action

In July 2015, the P5+118

18 The P5+1 is an international coalition comprised of China, France, Germany, Russia, the United 

Kingdom, and the United States.

and Iran reached the JCPOA to ensure 

that Iran’s nuclear program would be exclusively peaceful. In 

January 2016, the International Atomic Energy Agency verified, 

and the U.S. Secretary of State confirmed, that Iran had 

implemented its key nuclear-related measures described in the 

JCPOA. As a result, the United States implemented its 

commitments to lift nuclear-related secondary sanctions on Iran 

and to license three categories of activity that would otherwise be 

 
OFAC’s Iran Sanctions Program Processes Comply with Requirements 

(OIG-18-047) 7 

prohibited under primary sanctions. EO 1371619

19 EO 13716, "Revocation of EOs 13574, 13590, 13622, and 13645 with Respect to Iran, 

Amendment of EO 13628 with Respect to Iran, and Provision of Implementation Authorities for 

Aspects of Certain Statutory Sanctions Outside the Scope of U.S. Commitments Under the Joint 

Comprehensive Plan of Action of July 14, 2015" (January 16, 2016).

implemented 

certain U.S. commitments made under the JCPOA by revoking four 

previous executive orders and portions of a fifth executive order 

implementing nuclear-related secondary sanctions on Iran. In 

addition, OFAC removed more than 400 individuals and entities 

from the SDN, Foreign Sanctions Evaders, and Non SDN Iranian 

Sanctions Act lists as set forth in Annex II of the JCPOA, although 

it added 190 individuals and entities onto a new list, the EO 13599 

list.20

20 The EO 13599 list is a list of individuals and entities blocked solely pursuant to EO 13599. This list 

identifies Government of Iran entities and Iranian financial institutions with which U.S. persons 

continue to be broadly prohibited from engaging in transactions or dealings, with the exception of 

transactions that are exempt from regulation or authorized by OFAC. See appendix 2 for more detail 

regarding the Iran-related EO authorities.

The United States continues to administer and enforce its 

primary sanctions, which bar U.S. individuals and entities from 

most forms of investment or trade with Iran, as well as Iran-related 

transactions in or involving the United States. While the United 

States participated in the JCPOA, the United States maintained its 

right to impose sanctions not related to Iran’s nuclear program, 

including in relation to Iran's human rights abuses, support for 

terrorism, including through designated entities such as the Islamic 

Revolutionary Guard Corps, interference in specified countries in 

the region, or missile and advanced conventional weapons 

programs.

OFAC officials told us they were involved with the JCPOA 

negotiations and drafting technical sections of the JCPOA, and 

worked with U.S. Department of State representatives to negotiate 

the terms in Annex II, which outlines the sanctions-related 

commitments. OFAC also participated in the technical drafting of 

the main text of the JCPOA, as well as Annex V, the JCPOA 

implementation plan. The United States endorsed the JCPOA by 

ratifying United Nations Security Council Resolution (UNSCR) 

2231, but retained the option of sanctions "snapback"21

21 OFAC officials used this term to describe provisions included in the JCPOA and UNSCR 2231 to 

allow for the re-imposition of sanctions lifted under the JCPOA. These provisions are included in 

paragraph 12 of UNSCR 2231 and paragraphs 36 and 37 of the JCPOA main text.

should 

Iran engage in activity constituting significant non-performance of 

its commitments under the JCPOA. The JCPOA is an 

 
OFAC’s Iran Sanctions Program Processes Comply with Requirements 

(OIG-18-047) 8 

understanding and not an agreement or treaty. The distinction is 

important because the commitments made in the JCPOA are not 

legally binding on any of the parties. OFAC took steps in January 

2016 to implement certain sanctions-related commitments the 

United States made under the JCPOA.

In May 2018, President Trump announced his decision to cease the 

United States’ participation in the JCPOA and to begin re-imposing 

U.S. nuclear-related sanctions on Iran, following two wind-down 

periods. Along with this announcement, the President issued a 

National Security Presidential Memorandum,22

22 On May 8, 2018, the President issued National Security Presidential Memorandum-11 (NSPM-11), 

Ceasing United States Participation in the Joint Comprehensive Plan of Action and Taking Additional 

Action to Counter Iran’s Malign Influence and Deny Iran All Paths to a Nuclear Weapon. 

which directed the 

Secretaries of State and of the Treasury to immediately begin 

taking steps to re-impose all U.S. sanctions lifted or waived in 

connection with the JCPOA as expeditiously as possible, and in no 

case later than 180 days from the date of the memorandum. 

Consistent with the President’s guidance, OFAC began the process 

of implementing 90- and 180-day wind-down periods for activities 

involving Iran that were consistent with the U.S. sanctions relief 

specified in the JCPOA. At the conclusion of those wind-down 

periods, the applicable sanctions will come back into full effect.

As part of this re-imposition of sanctions lifted under the JCPOA, 

OFAC revoked four general licenses issued in connection with the 

JCPOA and issued corresponding general licenses authorizing the

wind-down of transactions and activities that were previously 

authorized.

Audit Results

In February 2017, OFAC designated 25 Iran-related individuals and 

entities and added them to the SDN List. Seventeen (17) of the 25 

designations relate to WMD and the remaining eight relate to 

counterterrorism. From July 1, 2016, through February 28, 2017, 

OFAC issued one new general license and amended three general 

licenses authorizing transactions otherwise prohibited by the 

regulations. The general licenses relate to commercial sales and 

exportation of agricultural commodities, medicine, medical devices, 
OFAC’s Iran Sanctions Program Processes Comply with Requirements 

(OIG-18-047) 9 

and certain software and related services, as well as the 

re-exportation to Iran of certain civilian aircraft on temporary 

sojourn.23

23 With regard to General License J-1, temporary sojourn refers to an aircraft passing through and 

remaining in Iran for no more than 72 hours, provided that all of the criteria set forth in the general 

license are satisfied.

OFAC’s Iran Sanctions Program Processes Comply with 

Requirements

OFAC actions related to these recent designations and general 

licenses (1) complied with applicable laws and regulations, and 

were consistent with U.S. commitments under the JCPOA and (2) 

were properly documented and approved. In addition, OFAC’s 

processes for designating individuals and entities under its 

authorities and adding them to the SDN list and issuing and 

amending general licenses are thorough.

The process used to make the February 2017 designations has 

multiple layers of review and coordination, shown in Figure 1.

Figure 1. Designation Process 

Source: OIG Summary

OFAC representatives told us that the designations process is 

driven by U.S. policy and that frequent meetings are held with 

OFAC and Treasury senior leadership to prioritize targets and plan 

 
OFAC’s Iran Sanctions Program Processes Comply with Requirements 

(OIG-18-047) 10

actions. Discussions include consultation by OFAC to inform the 

Under Secretary for Terrorism and Financial Intelligence of 

designation targets and to request policy guidance. Thorough legal 

reviews of each designation were conducted, including reviews by 

OFAC counsel.

OFAC also coordinates with other Federal agencies, most 

frequently with the Department of State, the Department of 

Justice, and the National Security Council (NSC). OFAC is required 

to consult with the Department of State for most designations.24

24 Under EO 13382, the Secretary of State, in consultation with the Secretary of the Treasury and the 

Attorney General, has the authority to designate individuals for activity directly related to WMD 

proliferation (so-called “primary designation authority”). Separately, the Secretary of the Treasury, in 

consultation with the Attorney General and the Secretary of State, has the authority under EO 

13382 to designate persons that have provided material support to, or are owned or controlled by, or 

are acting for or on behalf of, a person blocked under State’s primary designation authority (so-called 

“derivative designation authority”). EO 13224 follows a similar model where the Secretary of State, 

in consultation with the Attorney General and the Secretary of the Treasury, exercises primary 

designation authority for persons that have committed, or pose a significant risk of committing, acts 

of terrorism and the Secretary of the Treasury, in consultation with the Attorney General and the 

Secretary of State, exercises derivative designation authority for persons supporting individuals and 

entities blocked under State’s primary designation authority.

The U.S. Department of Justice also provides legal review of the 

designations. OFAC coordinates with intelligence agencies, through 

Treasury’s Office of Intelligence and Analysis, to receive 

intelligence and to ensure information included with the evidentiary 

documents does not reveal sources and methods for gathering 

intelligence. Once all legal and external reviews and coordination 

are satisfied, the OFAC Director, acting under delegated authority, 

provides final review and clearance of the evidentiary record and 

signs a blocking memorandum. Public notice of the action is given 

in a press release and through the addition of the designated 

individuals and entities to the SDN list. A Federal Register notice of 

the designation action is then issued.

At the time of our testing, OFAC officials provided us with an 

understanding of their process for issuing and amending general 

licenses. The approval process was thorough, with multiple layers 

of review for both issuances and amendments. In addition to 

required reviews by OFAC senior management, OFAC sought 

insight from external agencies that handle related authorities. For 

example, in drafting an amendment to General License J for the 

re-exportation of civilian aircraft on temporary sojourn, OFAC 

 
OFAC’s Iran Sanctions Program Processes Comply with Requirements 

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officials told us that they modeled the license on Department of 

Commerce policies. Once General License J was drafted, OFAC 

officials obtained feedback from the Departments of Commerce 

and State and the NSC prior to its issuance. OFAC also sought 

input from the Departments of State, Commerce, Justice, and the 

NSC when amending 31 C.F.R. 560.53025

25 31 C.F.R. 560.530 is the general license for commercial sales, exportation, and re-exportation of 

agricultural commodities, medicine, medical devices, and certain related software and services.

and 560.53226

26 31 C.F.R. 560.532 is the general license for the payment for and financing of exported and 

re-exported items related to 31 C.F.R. 560.530.

to 

provide clarity on certain provisions of general licenses, respond to 

public feedback, and improve the efficiency of the licensing 

program.

Further audit work is planned for the specific license applications 

within our audit scope. The results will be included in another 

report to be issued at a later date. 

OFAC Formalized Standard Operating Procedures

During our initial fieldwork, OFAC did not have formalized and 

approved SOPs documenting the actions required to add 

designations to its SDN list or issue and amend licenses. We noted 

this previously in our 2015 report, Libyan Sanctions Case Study,

27

27 Treasury OIG, OIG-16-001, Libyan Sanctions Case Study (October 26, 2015).

recommending that SOPs provide sufficient information to enable 

staff members to complete the fundamental steps for implementing 

and administering sanctions programs. In response to that report, 

OFAC formalized SOPs as of December 28, 2017. We extended 

our fieldwork to review OFAC’s SOPs related to its designation and 

general license processes. The SOPs related to these two 

processes provide sufficient information to enable staff members to 

complete the fundamental steps necessary for each process. We 

plan to review additional SOPs related to the specific license 

process and include the results in a subsequent report.

We plan to monitor the implementation of the SOPs as part of our 

ongoing work and report on the results in a subsequent report.

* * * * * *
OFAC’s Iran Sanctions Program Processes Comply with Requirements 

(OIG-18-047) 12

We appreciate the cooperation and courtesies extended to our staff 

during our continuing work. For the major contributors to this 

report, see appendix 4, and for report distribution, see appendix 5. 

If you wish to discuss the report, please contact me at 

(202) 927-5369 or Eileen Kao, Audit Manager, at (202) 927-8759. 

/s/

Gregory J. Sullivan

Audit Director

Appendices
OFAC’s Iran Sanctions Program Processes Comply with Requirements 

(OIG-18-047) 13

Appendix 1: Objectives, Scope, and Methodology

The objectives for this audit are to determine whether (1) the 

Iran sanctions program administered by the Office of Foreign 

Assets Control (OFAC) is consistent with U.S. commitments 

under the Joint Comprehensive Plan of Action (JCPOA) and 

complies with applicable laws and regulations; and (2) sanctions 

decisions and deliberations are properly documented and 

approved by OFAC officials.

We conducted fieldwork from March 2017 through January 

2018 at OFAC’s office in Washington, DC. As part of our audit, 

which is the basis for this interim report, we (1) reviewed the 

components of the Iran sanctions program, (2) reviewed 

applicable Federal and Department of the Treasury (Treasury) 

guidance, (3) interviewed OFAC officials and personnel who 

were involved in implementing and administering the Iran 

sanctions program and drafting the JCPOA, and (4) reviewed 

documents related to OFAC’s decisions and deliberations in 

connection with its Iran sanctions program.

We plan to issue an additional audit report assessing whether 

other sanction decisions and deliberations, including specific 

licenses, were properly documented and approved. We 

reviewed the following general and Iran-specific laws, 

regulations, and guidance associated with the implementation 

and administration of the Iran sanctions program:

• Countering America’s Adversaries Through Sanctions Act, 

Public Law 115-44 (August 2, 2017)

• Iran Nuclear Agreement Review Act of 2015, 42 U.S.C. 

2160e (May 22, 2015)

• Iran Threat Reduction and Syria Human Rights Act of 2012, 

22 U.S.C. 8701–8795 (August 10, 2012)

• Iran Freedom and Counter-Proliferation Act of 2012, 22 

U.S.C. 8801–8811 (January 2, 2013)

• National Defense Authorization Act for Fiscal Year 2012, 

Public Law 112-81, Section 1245, "Imposition of Sanctions 

with Respect to the Financial Sector of Iran" 

(December 31, 2011)
OFAC’s Iran Sanctions Program Processes Comply with Requirements 

(OIG-18-047) 14

• Comprehensive Iran Sanctions, Accountability, and 

Divestment Act of 2010, 22 U.S.C. 8501–8551 

(July 1, 2010)

• Trade Sanctions Reform and Export Enhancement Act of 

2000, 22 U.S.C. 7201–7211 (October 28, 2000)

• Iran Sanctions Act, as amended, 50 U.S.C. 1701 note 

(September 30, 2006)

• International Security and Development Cooperation Act of 

1985 (ISDCA), 22 U.S.C. 2301–2349bb-6 (August 8, 1985)

• International Emergency Economic Powers Act of 1977 

(IEEPA), 50 U.S.C. 1701–1708 (December 28, 1977)

• 31 C.F.R. Part 535, Iranian Assets Control Regulations 

• 31 C.F.R. Part 560, The Iranian Transactions and Sanctions 

Regulations 

• 31 C.F.R. Part 561, Iranian Financial Sanctions Regulations 

• 31 C.F.R. Part 562, Iranian Human Rights Abuses Sanctions 

Regulations 

• Joint Comprehensive Plan of Action (July 14, 2015)

• GAO-14-704G, Standards for Internal Control in the Federal 

Government (September 2014)

• Treasury Directive 80-05, Records and Information

Management Program (June 26, 2002)

• Treasury Directive TDP 15-71, Treasury Security Manual

(June 17, 2011 update)

We also reviewed Iran-related executive orders. For a summary 

of each, see appendix 2.

In interviews with OFAC officials and personnel responsible for 

implementing and administering the Iran sanctions program and 

drafting the JCPOA, we gained an understanding of the 

following:

• OFAC’s organizational structure

• background on the Iran sanctions program and associated 

authorities 

• implementation and administration of the Iran sanctions 

program, including the processes for designating individuals 
OFAC’s Iran Sanctions Program Processes Comply with Requirements 

(OIG-18-047) 15

and adding them to the Specially Designated Nationals and 

Blocked Persons (SDN) list and for issuing and amending 

general licenses and reviewing specific license applications

• OFAC’s involvement in drafting the JCPOA and its 

subsequent implementation

To determine whether OFAC’s administration of the Iran 

sanctions program was consistent with U.S. commitments 

under the JCPOA, we reviewed Annex V of the plan, which 

outlines the commitments, time frames, and terms of 

implementation. We then compared OFAC actions taken 

pursuant to the JCPOA to determine whether actions had been 

completed by the prescribed implementation date.

To determine which sanctions decisions and deliberations are 

related to the Iran sanctions program, we reviewed the OFAC 

organizational structure and interviewed OFAC officials on the 

background of the Iran sanctions program. The significant 

activities related to the Iran sanctions program include: (1) 

listing and delisting individuals and entities on the SDN, Foreign 

Sanctions Evaders, Persons Identified as Blocked Solely 

Pursuant to E.O. 13599, and non-SDN Iran Sanctions Act lists; 

(2) issuing regulations to implement relevant statutes and 

executive orders; (3) issuing, amending, and revoking general 

licenses; (4) approving or denying specific license applications; 

(5) conducting investigations of apparent sanctions violations 

and taking civil enforcement actions; and (6) maintaining a 

compliance and outreach program. From July 1, 2016, through 

February 28, 2017, no individuals or entities were listed or 

delisted from the Foreign Sanctions Evaders and non-SDN Iran 

Sanctions Act lists. To determine whether OFAC complies with 

applicable laws and regulations related to sanctions decisions 

and deliberations, we reviewed the sanction lists and general 

licenses issued and amended from July 1, 2016 through 

February 28, 2017.

We identified 25 designations—13 individuals and 12 entities—

added to the SDN list on February 3, 2017. We reviewed the 

designation process for the 25 entries to determine whether 

deliberations and decisions were properly documented and 

approved, including whether OFAC followed statutes, executive 

orders, and internal procedures.
OFAC’s Iran Sanctions Program Processes Comply with Requirements 

(OIG-18-047) 16

We identified one general license issued and three existing 

general licenses amended from July 1, 2016 through 

February 28, 2017. We obtained an understanding of the 

process of issuing and amending general licenses and reviewed 

documentation related to the general licenses issued and 

amended to determine whether these decisions and 

deliberations were properly documented and approved.

Further work is planned for this audit following the release of 

this interim report. We plan to review a sample of Iran-related 

specific license applications OFAC received from July 1, 2016 

through February 28, 2017. The results of this testing will be 

included in a final report to be issued at a later date.

We conducted this performance audit in accordance with 

generally accepted government auditing standards. Those 

standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis 

for our findings and conclusions based on our audit objectives. 

We believe that the evidence obtained provides a reasonable 

basis for our findings and conclusions in this interim report 

based on our audit objectives.
OFAC’s Iran Sanctions Program Processes Comply with Requirements 

(OIG-18-047) 17

Appendix 2: Summary of Iran-related Executive Orders

This appendix provides a summary of the ten executive orders 

still in effect in the Iran sanctions program, plus two additional 

orders relevant to the active authorities. The additional orders 

include EO 13382, which is the basis for recent designations 

related to weapons of mass destruction (WMD), and EO 13224, 

which is the basis for recent designations related to terrorism. 

Table 1. Summary of Iran-related Executive Orders

Executive 

Order (EO) Title and Date Summary of Authority

13716 “Revocation of 

Executive Orders 

13574, 13590, 

13622, and 13645 

with Respect to Iran, 

Amendment of 

Executive Order 

13628 with Respect 

to Iran, and Provision 

of Implementation 

Authorities for 

Aspects of Certain 

Statutory Sanctions 

Outside the Scope of 

U.S. Commitments 

Under the Joint 

Comprehensive Plan 

of Action of 

July 14, 2015” 

(January 16, 2016)

Revoked EO 13574, 13590, 13622, and 

13645 with respect to Iran, and amended 

EO 13628 with respect to Iran per U.S. 

commitments under the JCPOA. As a 

result of EO 13716 and JCPOA-related 

sanctions waivers, foreign persons 

(including companies in Europe, Asia, and 

elsewhere) were not subject to secondary 

sanctions for engaging in certain activities 

involving Iran, including facilitating 

transactions for the purchase of 

petroleum from Iran and making certain 

investments in Iran’s petroleum sector, 

provided the transactions occurred 

outside of U.S. jurisdiction and certain 

other conditions were met. EO 13716 

also provides implementation authority for 

certain sanctions outside the scope of the 

JCPOA (e.g., blocking of persons who 

knowingly provide significant support to 

Iranian persons on the SDN List or 

engaged in other activities, such as 

diversion or misappropriation of 

agricultural or medical sales). In 

connection with the President’s May 8, 

2018 announcement that the United 

States would cease its participation in the 

JCPOA, OFAC provided guidance 

indicating that it expects the U.S. 

government to re-impose relevant 

provisions of EOs 13574, 13590, 13622, 

13628 and 13645 by the end of the 90- 

or 180-day wind-down period, as 

appropriate.
OFAC’s Iran Sanctions Program Processes Comply with Requirements 

(OIG-18-047) 18

Executive 

Order (EO) Title and Date Summary of Authority

13628 "Authorizing the 

Implementation of 

Certain Sanctions Set 

Forth in the Iran 

Threat Reduction and 

Syria Human Rights 

Act of 2012 and 

Additional Sanctions 

with Respect to Iran" 

(October 9, 2012)

Expanded sanctions on Iran, including 

authorizing Treasury and State to 

implement certain additional sanctions 

outlined in the Iran Threat Reduction Act 

of 2012. EO 13628 also authorized 

Treasury, in consultation with or at the 

recommendation of State, to block certain 

persons involved in human rights abuses 

or censorship in Iran.

13608 "Prohibiting Certain 

Transactions with and 

Suspending Entry into 

the United States of 

Foreign Sanctions 

Evaders with Respect 

to Iran and Syria" 

(May 1, 2012)

Authorized Treasury, in consultation with 

State, to target foreign persons who, 

among other things, have facilitated 

deceptive transactions for any person

subject to U.S. sanctions concerning Iran 

or Syria. The Foreign Sanctions Evaders 

list was created to identify persons 

sanctioned under this order.

13606 "Blocking the Property 

and Suspending Entry 

into the United States 

of Certain Persons 

with Respect to Grave 

Human Rights Abuses 

by the Governments 

of Iran and Syria via 

Information 

Technology" 

(April 22, 2012)

Authorized Treasury, in consultation with 

or at the recommendation of State, to 

block persons who have enabled the 

Government of Iran or the Government of 

Syria to commit serious human rights 

abuses through the use of information 

technology, including network monitoring, 

tracking, or disruption.

13599 "Blocking Property of 

the Government of 

Iran and Iranian 

Financial Institutions" 

(February 5, 2012)

Blocked all property and interests in 

property of the Government of Iran and 

Iranian financial institutions, in response 

to deceptive practices of Iranian banks to 

conceal transactions of sanctioned 

parties. Authorized Treasury and State to 

implement certain statutory sanctions on 

the financial sector of Iran. Persons 

identified as Government of Iran entities 

or Iranian Financial Institutions pursuant 

to this order are listed on the EO 13599 

List.

13553 “Blocking Property of 

Certain Persons with 

Respect to Serious 

Human Rights Abuses 

by the Government of 

Iran and Taking 

Certain Other Actions" 

(September 28, 2010)

Authorized Treasury, in consultation with 

or at the recommendation of State, to 

block persons involved in serious human 

rights abuses by the Government of Iran 

on or after June 12, 2009, among others.
OFAC’s Iran Sanctions Program Processes Comply with Requirements 

(OIG-18-047) 19

Executive 

Order (EO) Title and Date Summary of Authority

13382 "Blocking Property of 

Weapons of Mass 

Destruction 

Proliferators and Their 

Supporters" 

(June 28, 2005)

Authorized State, in consultation with 

Treasury and other agencies, to block 

proliferators of WMD and their means of 

delivery. Authorized Treasury, in 

consultation with State and other 

agencies, to block persons that have 

provided material support, are owned or 

controlled by, or acting for or on behalf of 

persons blocked under the order in 

connection with proliferation of WMD and 

their means of delivery. OFAC 

implements the prohibitions of this order 

through the Weapons of Mass 

Destruction Proliferators Sanctions 

Regulations, 31 C.F.R. Part 544. This 

authority has been used to target Iran's 

nuclear weapons program. This order 

implemented additional steps pursuant to 

the national emergency declared in EO 

12938, as expanded by EO 13094, to 

target a broader range of activities in 

connection with WMD proliferation. 

OFAC uses this authority to designate 

persons on the SDN List for WMD-related 

reasons. 

13224 "Blocking Property 

and Prohibiting 

Transactions with 

Persons Who Commit, 

Threaten To Commit, 

or Support Terrorism" 

(September 23, 2001)

Authorized State, in consultation with 

Treasury and Justice, to block persons 

that have committed, or pose a 

significant risk of committing, acts of 

terrorism. Authorized Treasury, in 

consultation with State and Justice, to 

block persons that have provided material 

support, are owned or controlled by, or 

acting for or on behalf of persons blocked 

under the order in connection with 

terrorism. It designated entities and 

individuals identified in an Annex and, as 

with all blocking programs, prohibited 

U.S. persons from engaging in all 

transactions with such designated 

persons. OFAC uses this authority to 

designate persons on the SDN List for 

terrorism-related reasons. 
OFAC’s Iran Sanctions Program Processes Comply with Requirements 

(OIG-18-047) 20

Executive 

Order (EO) Title and Date Summary of Authority

13059

12959 

12957 

12613

"Prohibiting Certain 

Transactions with 

Respect to Iran" 

(August 19, 1997)

“Prohibiting Certain 

Transactions With 

Respect to Iran” 

(May 7, 1995)

“Prohibiting Certain 

Transactions With 

Respect to the 

Development of 

Iranian Petroleum 

Resources” 

(March 16, 1995)

“Prohibiting Imports 

From Iran” 

(October 29, 1987)

These orders imposed the U.S. trade 

embargo on Iran through an increasingly 

restrictive series of prohibitions on 

transactions involving the United States 

or U.S. persons. These EOs prohibit the 

importation into the United States of any 

goods or services of Iranian origin or 

owned or controlled by the Government 

of Iran, as well as the exportation, 

re-exportation, sale, or supply, from the 

United States or by a U.S. person, of any 

goods, technology, or services to Iran or 

the Government of Iran, among other 

things. Under certain orders, Treasury, in 

consultation with State and other 

agencies, is authorized to promulgate 

regulations and exercise all authorities 

under IEEPA to implement the order 

(including licensing). Certain orders also 

allow Treasury to authorize transactions 

subject to export license application 

requirements of another agency of the 

United States Government, provided that 

authorization from the other agency 

would be permitted by law. 
OFAC’s Iran Sanctions Program Processes Comply with Requirements 

(OIG-18-047) 21

Appendix 3: Management Response
OFAC’s Iran Sanctions Program Processes Comply with Requirements 

(OIG-18-047) 22

Appendix 4: Major Contributors to This Report

Eileen Kao, Audit Manager

Justin Walker, Auditor

Kevin Guishard, Referencer
OFAC’s Iran Sanctions Program Processes Comply with Requirements 

(OIG-18-047) 23

Appendix 5: Report Distribution

Department of the Treasury

Counselor to the Secretary 

Under Secretary for Terrorism and Financial Intelligence

Office of Strategic Planning and Performance Improvement

Office of the Deputy Chief Financial Officer, Risk and Control 

Group

Office of the Foreign Assets Control

Senior Advisor for Legislative Affairs

Office of Management and Budget

OIG Budget Examiner

United States Senate

Committee on Appropriations

Committee on Banking, Housing, and Urban Affairs

Committee on Foreign Relations

Committee on Homeland Security and Governmental Affairs

U.S. House of Representatives

Committee on Appropriations

Committee on Financial Services

Committee on Foreign Affairs

Committee on Homeland Security

Committee on Oversight and Government Reform
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