Source: http://farsivfair.com/faq-us-iran-sanctions/
Timestamp: 2019-04-19 13:22:45+00:00

Document:
149. What activities by foreign financial institutions can subject them to CISADA sanctions?
Facilitating a significant transaction or transactions or providing significant financial services for: (i) the Islamic Revolutionary Guard Corps or any of its agents or affiliates whose property and interests in property are blocked pursuant to the International Emergency Economic Powers Act (IEEPA), or (ii) a financial institution whose property and interests in property are blocked pursuant to IEEPA in connection with Iran’s proliferation of WMD, Iran’s proliferation of delivery systems for WMD, or Iran’s support for international terrorism.
150. Where can I find a list of Islamic Revolutionary Guard Corps (IRGC) affiliates and Iran-linked financial institutions “blocked pursuant to IEEPA”?
The list of blocked IRGC affiliates and blocked Iran-linked financial institutions is dynamic and is based on the identity of “designated” persons, which refers both to natural persons (i.e., individuals) and legal persons (such as corporations and other entities). The most recent list of designated persons – which includes most, but not all, blocked entities* – can be found at www.treasury.gov/resource-center/sanctions/SDN-List/Pages/default.aspx. The listings of designated IRGC entities will be followed by the tag [IRGC]; those of designated Iran-linked financial institutions will have the tag [IFSR].
*Under Department of the Treasury regulations, designated persons are those that are named on the list. All interests in property of such persons are blocked, and such persons are considered to have an interest in all property and entities in which they own, directly or indirectly, a 50 percent or greater interest. As a result, such property and entities are also blocked, even if they do not themselves appear on the list.
151. How do the IFSR define “U.S. financial institutions”?
The Iranian Financial Sanctions Regulations define “U.S. financial institutions” to include: depository institutions, banks, savings banks, money service businesses, trust companies, insurance companies, securities brokers and dealers, commodities exchanges, clearing corporations, investment companies, employee benefit plans, and U.S. holding companies, U.S. affiliates, or U.S. subsidiaries of any of these entities. Covered institutions include those branches, offices, and agencies of foreign financial institutions that are located in the United States.
152. How do the Iranian Financial Sanctions Regulations define “foreign financial institutions”?
The Iranian Financial Sanctions Regulations define “foreign financial institutions” to include foreign depository institutions, banks, savings banks, money service businesses, trust companies, securities brokers and dealers, commodities exchanges, clearing corporations, investment companies, employee benefit plans, and holding companies, affiliates, or subsidiaries of any of these entities.
153. How do the Iranian Financial Sanctions Regulations (IFSR) define the term “knowingly”?
The term “knowingly” as used in the IFSR means that a person has actual knowledge or should have known of specific conduct, a circumstance, or a result. In other words, the IFSR could be implicated if the Treasury Department finds that a foreign financial institution knew or should have known that it engaged in one or more of the sanctionable activities.
154. How does the Treasury Department determine whether a transaction or financial service is “significant” for purposes of the Iranian Financial Sanctions Regulations?
As set out in the Iranian Financial Sanctions Regulations, in determining whether a transaction or financial service is “significant,” the Treasury Department may consider: (1) the size, number, frequency, and nature of the transaction(s); (2) the level of awareness of management of the transaction(s) and whether or not the transaction(s) are a part of a pattern of conduct; (3) the nexus between the foreign financial institution involved in the transaction(s) and a blocked Islamic Revolutionary Guard Corps individual or entity or blocked Iran-linked financial institution; (4) the impact of the transaction(s) on the goals of CISADA; (5) whether the transaction(s) involved any deceptive practices; and (6) other factors the Treasury Department deems relevant on a case-by-case basis.
155. When are the prohibitions and strict conditions on foreign financial institutions’ correspondent accounts or payable-through accounts in the United States effective?
A finding by the Treasury Department that a foreign financial institution knowingly engages in one or more of the sanctionable activities is necessary before the Treasury Department can prohibit or impose strict conditions on the opening or maintaining in the United States of correspondent accounts or payable-through accounts for that foreign financial institution.
156. How will U.S. and foreign financial institutions know that the Treasury Department has made such a finding?
As a general matter, the Treasury Department will reach out to foreign financial institutions to inquire about their conduct before making a finding. If the Treasury Department decides to impose strict condition(s), the Treasury Department will issue an order or a regulation that sets out the strict condition(s) to be imposed on the U.S. correspondent accounts or U.S. payable-through accounts of the relevant foreign financial institution and publish the order or regulation in the Federal Register. The Federal Register is available at www.gpo.gov/fdsys/. If the Treasury Department decides to prohibit the opening or maintaining of U.S. correspondent accounts or U.S. payable-through accounts for a foreign financial institution, the Treasury Department will add the name of the foreign financial institution to the Appendix to the Iranian Financial Sanctions Regulations and publish it in the Federal Register.
157. How will the Treasury Department enforce the Iranian Financial Sanctions Regulations (IFSR) with respect to U.S. entities?
Any U.S. person who violates the correspondent account provisions of the IFSR may be subject to civil penalties of up to the greater of $250,000 or twice the transaction value, and criminal penalties for willful violations of up to $1 million and 20 years in prison. A U.S. financial institution may be subject to civil penalties of up to the greater of $250,000 or twice the transaction value, if any person that it owns or controls violates the IFSR prohibition on engaging in any transaction with or benefitting the Islamic Revolutionary Guard Corps or any of its agents or affiliates whose property and interests in property are blocked pursuant to IEEPA, and if the U.S. financial institution knew or should have known that the person violated the Iranian Financial Sanctions Regulations.
158. Can the application of any part(s) of the Iranian Financial Sanctions Regulations be waived by the Department of the Treasury?
CISADA provides for a waiver of the sanctions under the Iranian Financial Sanctions Regulations if the Secretary of the Treasury determines that a waiver is necessary to the national interest of the United States.
159. Where can I find the text of the Iranian Financial Sanctions Regulations?
The text of the Iranian Financial Sanctions Regulations can be found at: www.treasury.gov/resource-center/sanctions/Programs/Documents/ fr75_49836.pdf.
160. Section 1 of E.O. 13599 blocks all property and interests in property of the Government of Iran, including the Central Bank of Iran, and of all Iranian financial institutions, that are in the United States, that come within the United States, or that come within the possession or control of U.S. persons (including overseas branches). Can you provide further clarification about this provision of E.O. 13599?
E.O. 13599 requires U.S. persons to block (i.e., freeze) all property and interests in property of the Government of Iran, including the Central Bank of Iran, and of all Iranian financial institutions, which also includes the Central Bank of Iran. This means that all individuals and entities that meet the definition of “Government of Iran” (“GOI”) as defined by section 7(d) of the new E.O. as well as all Iranian financial institutions (whether or not they meet the definition of the GOI) are now blocked. Previously, under the Iranian Transactions Regulations, 31 C.F.R. part 560 (the “ITR”), financial institutions and other U.S. persons were prohibited from engaging in transactions with the GOI. Under those prior rules, U.S. financial institutions receiving instructions to execute transactions involving these entities were not required to block the transactions, but were instead required to reject those instructions rather than carry them out, unless the transactions were exempt, authorized, or not prohibited by OFAC. The Executive Order defines an “Iranian financial institution” as a financial institution organized under the laws of Iran or any jurisdiction within Iran (including foreign branches), any financial institution in Iran, any financial institution, wherever located, owned or controlled by the Government of Iran, and any financial institution, wherever located, owned or controlled by any of the aforementioned entities.
As a result, transactions involving entities bearing the [IRAN] tag on OFAC’s List of Specially Designated Nationals and Blocked Persons (“SDN List”) will now need to be blocked unless exempt or authorized by OFAC. Going forward, the [IRAN] tag will connote that a person or entity meets the definition of the term “GOI” or “Iranian Financial Institution”. OFAC will continue to update the SDN List and may add, delete, or edit entries as appropriate.
E.O. 13599 blocks the property and interests in property of any individual or entity that comes within its definition of the term “Government of Iran” regardless of whether it is listed on the SDN List, and similarly it blocks the property and interests in property of all Iranian financial institutions as defined in the order regardless of whether the Iranian financial institution is listed on the SDN List.
E.O. 13599 builds upon the prohibitions in the ITR, which remain in effect.
161. If all property and interests in property of the Government of Iran, including the Central Bank of Iran, and of all Iranian financial institutions are blocked, can I conduct transactions involving the Government of Iran that have been previously authorized by OFAC?
Generally yes. Under new General License A, almost all transactions that are authorized under existing general licenses issued pursuant to the ITR or under existing OFAC specific licenses will continue to be authorized under the authority of E.O. 13599. However, transactions previously authorized under one existing ITR general license are not authorized pursuant to E.O. 13599. Specifically, the closing of accounts of the Government of Iran or an Iranian financial institution and the lump sum transfer of the balances to an account outside of the United States, which is authorized by sections 560.517(a)(3) & (b)(2) of the ITR, is not authorized by General License A, and, therefore, those transactions are prohibited by E.O. 13599 and the accounts must be blocked. In addition, General License A does not authorize any payments from blocked funds or debits to blocked accounts, with a limited exception for payments from funds or debits to accounts blocked under the Iranian Assets Control Regulations (the hostage crisis blocking program that began in 1979) that are authorized by specific licenses issued by OFAC.
New General License B authorizes U.S. depository institutions and U.S. registered brokers or dealers in securities to process noncommercial, personal remittances, to or from Iran, or for or on behalf of individuals ordinarily resident in Iran who are not included in the term “Government of Iran”, provided that such funds transactions are not made by, to, or through a financial institution blocked pursuant to the Weapons of Mass Destruction Proliferators Sanctions Regulations, 31 C.F.R. part 544 (the “WMDPSR”), or the Global Terrorism Sanctions Regulations, 31 C.F.R. part 594 (the “GTSR”), or a person whose property and interests in property are blocked pursuant to any other part of 31 C.F.R. chapter V, or any Executive order, except an Iranian financial institution whose property and interests in property are blocked solely pursuant to E.O. 13599.
162. Are U.S. persons still required to comply with the Iranian Transactions Regulations?
163. What are the differences and similarities between E.O. 13599 and the Iranian Transactions Regulations?
The ITR prohibit virtually all direct or indirect transactions involving Iran or the Government of Iran by U.S. persons or with a nexus to the United States, unless otherwise authorized by OFAC or exempted by statute, but they do not contain blocking provisions. E.O. 13599 requires U.S. persons to block all property and interests in property of the Government of Iran, including the Central Bank of Iran, and of Iranian financial institutions, which also includes the Central Bank of Iran, unless it relates to a transaction that is exempted by statute or authorized by OFAC.
164. The Iranian Transactions Regulations authorize U.S. depository institutions and U.S. registered brokers or dealers in securities to process transfers of funds to or from Iran if the transfer is a non-commercial, personal remittance. Are U.S. depository institutions and U.S. registered brokers or dealers in securities still authorized to process such payments to or from a Government of Iran-owned bank that is not otherwise designated pursuant to another part of 31 C.F.R. Chapter V?
General License B under E.O. 13599 authorizes U.S. depository institutions and U.S. registered brokers or dealers in securities to process noncommercial, personal remittances to or from Iran provided that the payment is not made by, to, or through a financial institution designated by OFAC under the WMDPSR, or the GTSR, or a person whose property and interests in property are blocked pursuant to any other part of 31 C.F.R. chapter V, or any Executive order, except an Iranian financial institution whose property and interests in property are blocked solely pursuant to E.O. 13599. Exempt or authorized transactions to or from Iran may also be processed subject to the above conditions.
165. To what extent are U.S. persons expected to conduct enhanced due diligence to determine if transactions contain a Government of Iran interest?
E.O. 13599 requires U.S. persons to block all property and interests in property of the Government of Iran, unless otherwise exempt or authorized by OFAC.
Please contact the OFAC Hotline at 202-622-2490 or 1-800-540-6322, or by email at OFAC_Feedback@treasury.gov, for guidance regarding entities that you suspect are owned or controlled by the Government of Iran that do not appear on the SDN List. As a general matter, OFAC expects financial institutions to conduct due diligence on their own direct customers (including, for example, their ownership structure) to confirm that those customers are not persons whose property and interests in property are blocked.
166. OFAC’s SDN List contains a list of entities identified by OFAC as being the Government of Iran. Should U.S. persons now block the property and interests in property of those entities?
167. OFAC has granted my company a license under the Trade Sanctions Reform and Export Enhancement Act of 2000 (“TSRA”) and the ITR. Can I continue to conduct the licensed transaction?
168. OFAC has issued me a (non-TSRA) specific license related to Iran, or the Government of Iran. Can I continue to conduct the licensed transactions?
169. What is the NDAA?
170. What activities can trigger sanctions on a foreign financial institution under the NDAA?
For private financial institutions, the Act mandates that the President sanction those institutions that are found to knowingly conduct or facilitate any significant transactions with a U.S.-designated Iranian financial institution or with the CBI – whether for the purchase of petroleum or otherwise – unless the transaction is for the sale of food, medicine, or medical devices to Iran. For all transactions with the CBI other than petroleum purchases, this provision takes effect on February 29, 2012, i.e., 60 days after the enactment of the Act. The timing of the petroleum purchase sanctions is discussed immediately below.
Private financial institutions and all other foreign financial institutions – including central banks or foreign state-owned or -controlled banks – potentially face sanctions under the NDAA if they knowingly conduct or facilitate significant financial transactions for the purchase of Iranian petroleum or petroleum products with a U.S.-designated Iranian financial institution or with the CBI after the provision takes effect as early as June 28, 2012, i.e., 180 days after enactment.* This NDAA provision may be held in abeyance beyond June 28, 2012, depending on the President’s determination on the availability and price of alternative supplies. Foreign central and foreign state-owned or -controlled banks are also subject to these sanctions if the transactions are for the sale of petroleum or petroleum products to Iran and they occur after June 28, 2012.
*Irrespective of the timeframes set forth in the NDAA, any foreign financial institution that knowingly facilitates significant transactions with any U.S.-designated Iranian financial institution would still be subject to CISADA.
171. Does the NDAA repeal or amend Section 104(c) of CISADA?
172. How does Executive Order 13599, “Blocking Property of the Government of Iran and Iranian Financial Institutions,” and the blocking of all Iranian financial institutions affect the financial sanctions provisions in CISADA? Do CISADA sanctions now apply to financial transactions with any Iranian financial institution?
173. Are there any exceptions to the sanctions provisions in the NDAA?
174. What are definitions for the following NDAA terms: “significant financial transaction,” “knowingly,” “owned or controlled by the government of a foreign country,” “food, medicine, and medical devices,” “foreign financial institution,” “Iranian financial institution,” “significantly reduced,” and “whether the price and supply of petroleum and petroleum products produced in countries other than Iran is sufficient”?
The IFSR, which implement section 104(c) of CISADA, identify factors to be used in determining what is significant (as it relates to transactions) in 31 C.F.R § 561.404, which allows the Secretary of the Treasury to consider the “totality of the facts and circumstances” while providing a list of seven broad factors that can play a role in the determination, including: (1) the size, number, and frequency of transactions; (2) the nature of the transaction(s); (3) the level of awareness of management and whether the transaction(s) are part of a pattern of conduct; (4) the nexus between the transaction(s) and a blocked person; (5) the impact of the transaction(s) on statutory objectives; (6) whether the transaction(s) involve deceptive practices; and (7) such other factors that the Secretary deems relevant on a case-by-case basis. Treasury anticipates closely modeling the definition of “significant” for NDAA purposes on the IFSR.
Any other transactions for or on behalf of, directly or indirectly, Listed Parties and/or with Listed Parties serving as correspondents, respondents, or beneficiaries. That would include transactions where the Listed Parties do not appear on the face of the transaction but where the transaction is undertaken with knowledge of the involvement of a Listed Party based on a relationship that exists through a third party such as a money exchange or trading house.
The IFSR defines “knowingly” with respect to conduct, a circumstance, or a result, to mean that an entity or individual had actual knowledge, or should have known, about the conduct, the circumstance, or the result. 31 C.F.R. § 561.314. Treasury anticipates closely modeling the definition of this term on the IFSR.
The Iranian Transactions Regulations (“ITR”) define “an entity owned or controlled by the Government of Iran” in section 560.313. Borrowing from that definition, a financial institution “owned or controlled by the government of a foreign country” would be deemed to include a financial institution in which a foreign government owns a 50% or greater interest or which is otherwise controlled by a foreign government. Treasury anticipates closely modeling the definition of this term under the NDAA on the ITR definition.
“Food”: The October 2011 general license for the ITR and the Sudanese Sanctions Regulations (“SSR”) authorizing certain food exports to Iran and Sudan defines “food” as “items that are intended to be consumed by and provide nutrition to humans or animals in Iran – including vitamins and minerals, food additives and supplements, and bottled drinking water – and seeds that germinate into items that are intended to be consumed by and provide nutrition to humans or animals in Iran.” The regulations also specify that food does not include alcoholic beverages, cigarettes, gum, or fertilizer. Treasury anticipates closely modeling the definition of this term under the NDAA on this license definition.
“Medicine”: ITR section 560.530(e)(2) states that: “For the purposes of this part, the term medicine has the same meaning given the term ‘drug’ in section 201 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321) but does not include any item listed on the Commerce Control List in the Export Administration Regulations, 15 CFR part 774, supplement no. 1 (excluding items classified as EAR 99).” Similarly, under the Trade Sanctions Reform and Export Act (“TSRA”), 22 U.S.C. 7201(5), “[t]he term ‘medicine’ has the meaning given the term “drug” in section 321 of title 21.” Treasury anticipates closely modeling the definition of this term under the NDAA on the ITR and TSRA.
“Medical Devices”: ITR section 560.530(e)(3) states that: “For the purposes of this part, the term medical device has the meaning given the term ‘device’ in section 201 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. § 321) but does not include any item listed on the Commerce Control List in the Export Administration Regulations, 15 CFR part 774, supplement no. 1 (excluding items classified as EAR 99).” Similarly, under TSRA, 22 U.S.C. 7201(4), “[t]he term “medical device” has the meaning given the term ‘device’ in section 321 of title 21.” Treasury anticipates closely modeling the definition of this term under the NDAA on the ITR and TSRA.
“Foreign financial institution” is defined in section 1245 of the NDAA with reference to section 104(i) of CISADA (22 U.S.C. § 8513(i)). As further defined in the IFSR, a “foreign financial institution” is “any foreign entity that is engaged in the business of accepting deposits, making, granting, transferring, holding, or brokering loans or credits, or purchasing or selling foreign exchange, securities, commodity futures or options, or procuring purchasers and sellers thereof, as principal or agent. It includes but is not limited to depository institutions, banks, savings banks, money service businesses, trust companies, securities brokers and dealers, commodity futures and options brokers and dealers, forward contract and foreign exchange merchants, securities and commodities exchanges, clearing corporations, investment companies, employee benefit plans, and holding companies, affiliates, or subsidiaries of any of the foregoing.” 31 C.F.R. § 561.308. It does not include “the international financial institutions identified in 22 U.S.C. 262r(c)(2), the International Fund for Agricultural Development, or the North American Development Bank.” 31 C.F.R. § 561.308. Treasury anticipates closely modeling the definition of this term under the NDAA on the IFSR.
This term is defined in E.O. 13599 as: “a financial institution organized under the laws of Iran or any jurisdiction within Iran (including foreign branches), any financial institution in Iran, any financial institution, wherever located, owned or controlled by the Government of Iran, and any financial institution, wherever located, owned or controlled by any of the foregoing.” Such financial institutions include, but are not limited to, any foreign entity that is engaged in the business of accepting deposits, making, granting, transferring, holding, or brokering loans or credits, or purchasing or selling foreign exchange, securities, or commodity futures or options, or procuring purchasers and sellers thereof, as principal or agent. It includes but is not limited to depository institutions, banks, savings banks, money service businesses, trust companies, insurance companies, securities brokers and dealers, commodity futures and options brokers and dealers, forward contract and foreign exchange merchants, securities and commodities exchanges, clearing corporations, investment companies, employee benefit plans, and holding companies, affiliates, or subsidiaries of any of the foregoing.
The Secretary of State, in consultation with the Secretary of the Treasury, the Secretary of Energy, and the Director of National Intelligence, will make determinations as to whether any country has significantly reduced the volume of Iranian crude oil purchases. Any determinations will be preceded by a process of rigorous due diligence. The Secretary of State intends to consider relevant evidence in assessing each country’s efforts to reduce the volume of crude oil imported from Iran, including the quantity and percentage of the reduction in purchases of Iranian crude oil over the relevant period, termination of contracts for future delivery of Iranian crude oil, and other actions that demonstrate a commitment to substantially decrease such purchases.
175. What is the scope of “petroleum products” under the law?
176. If oil is being provided as payment for an outstanding debt, is such a transfer considered a “financial transaction”?
177. If the CBI is involved in providing settlement services for a transaction, or is otherwise acting solely as an intermediary in a transaction between a non-designated Iranian bank and a foreign financial institution, is the foreign financial institution deemed to be engaging in a transaction with the CBI?
178. Are barter trades involving the CBI considered “financial transactions” under Section 1245?
179. Does the definition of “significant financial transaction” exclude the passive holding of CBI reserves? Is the U.S. willing to give assurances that this will not be a basis for sanctions?
180. Are payments made under contracts existing prior to the date of enactment of the NDAA statute (December 31, 2011) exempted from the definition of “significant transactions”?
181. Will the U.S. refrain from sanctioning foreign financial institutions that receive funds from the CBI to repay loans? What if these loans were granted for projects that might be subject to the food, medicine, and medical device exemptions under the NDAA?
182. Is there a difference between entities that have been designated by the United States Government for illicit conduct, such as proliferation of weapons of mass destruction or support for terrorism, and those that are being blocked under E.O. 13599? How can I tell which entities appear on the SDN List for which reasons?
Both blocked and designated entities appear on the SDN List.
“Blocked” persons, in the context of E.O. 13599, appear on the SDN List due to the United States Government’s identification of these entities as the Government of Iran and/or as an Iranian financial institution. Such entities are identified on the SDN List with the tag [IRAN]. For example, Bank Keshavarzi is a Government of Iran owned Iranian financial institution and is identified with the [IRAN] tag. Additionally, the National Iranian Oil Company (NIOC) is a non-financial institution that has been identified as the Government of Iran and bears the [IRAN] tag.
183. Why did the President issue the GHRAVITY E.O.?
184. What does the GHRAVITY E.O. do?
The GHRAVITY E.O. blocks (i.e., freezes) the property and interests in property of, among others, any person determined by the Secretary of the Treasury, in consultation with or at the recommendation of the Secretary of State, (1) to have operated, or to have directed the operation of, information and communications technology that facilitates computer or network disruption, monitoring, or tracking that could assist in or enable serious human rights abuses by or on behalf of the Government of Iran or the Government of Syria; or (2) to have sold, leased, or otherwise provided, directly or indirectly, goods, services, or technology to Iran or Syria likely to be used to facilitate such activities.
185. What type of activities does the GHRAVITY E.O. target?
The GHRAVITY E.O. targets the provision and use of information and communications technology to facilitate computer or network disruption, monitoring, or tracking that could assist in or enable serious human rights abuses by or on behalf of the Government of Iran or the Government of Syria. It is not intended to block exports of technology that enable the Syrian and Iranian people to freely communicate among themselves and with the outside world.
186. How do I know that a person has been designated under the GHRAVITY E.O.?
187. Does the GHRAVITY E.O. prohibit me from exporting technology to companies that do business with Iran or Syria?
188. If I am a non-U.S. company that exports information and communications technology to Iran or Syria, will I be designated under the GHRAVITY E.O.?
189. Would I need authorization from OFAC or BIS if I wanted to export goods or technology to persons blocked under the GHRAVITY E.O.?
190. Are existing licenses issued by the U.S. Government involving persons designated under the GHRAVITY E.O. still valid?
191. What does Executive Order 13608 “Prohibiting Certain Transactions with and Suspending Entry into the United States of Foreign Sanctions Evaders with Respect to Iran and Syria” do?
This Executive Order gives Treasury new authorities. First, it strengthens Treasury’s ability to address behavior by foreign individuals and entities determined to have violated, attempted to violate, conspired to violate, or caused a violation of U.S. sanctions on Syria or Iran. This E.O. also gives Treasury the authority to impose sanctions on foreign persons who have facilitated deceptive transactions for or on behalf of persons subject to U.S. sanctions.
192. Why was this authority needed?
Executive Order 13608 expands Treasury’s ability to address the behavior of foreign persons determined to have violated or attempted to violate U.S. sanctions on Syria or Iran, or to have facilitated deceptive transactions on behalf of persons subject to those sanctions, where the foreign person had no physical, financial, or other presence in the United States and did not submit to U.S. administrative proceedings. Treasury may use this authority where it appears that a foreign person violated U.S. sanctions on Iran or Syria but may not meet criteria for designation under existing Executive Orders. Executive Order 13608 will provide a means through which Treasury can limit the risk to U.S. commercial and financial systems posed by foreign persons determined to have violated U.S. sanctions on Iran or Syria, or to have engaged in deceptive transactions for or on behalf of persons subject to U.S. sanctions on Iran or Syria.
193. What are the repercussions of an individual or entity being identified under Executive Order 13608?
194. Are U.S. persons required to block the property of individuals and entities identified under Executive Order 13608?
336. How do I know whether a person is identified under E.O. 13608?
195. I am a financial institution. What do I do if I receive a wire transfer involving a listed party?
196. I am a financial institution and I hold an account for a listed person. What do I do with the funds?
197. What are U.S. persons obligated to do with property of a person listed under Executive Order 13608?
198. May a U.S. person deal with an Executive Order 13608-listed person so long as the dealing does not involve Iran or Syria?
199. How is an identification or listing under Executive Order 13608 different from a designation?
200. How is this different from lists maintained by the Department of Commerce?
201. May a U.S. person deal with a person listed under Executive Order 13608 in a transaction that was previously licensed by OFAC?
202. What if the transaction is already underway?
If a transaction is underway at the time of a listing, a U.S. person must cease dealing with the listed person and the U.S. person is prohibited from engaging in transactions or dealings in or related to any goods, services, or technology to or from the listed person, unless the transaction is exempt under the International Emergency Economic Powers Act, or until such time that OFAC authorizes the transactions pursuant to the Executive Order 13608. Additionally, if the transaction underway involves a wire transfer, a U.S. financial institution must reject it and file a report with OFAC within 10 days.
203. Can a U.S. person use a listed person to facilitate personal remittances to or from Iran or Syria?
204. Will Treasury pursue an enforcement action before identifying or listing a person pursuant to Executive Order 13608?
207. What were the criteria for this finding? How many other institutions were you looking at and why did you decide to take action against Bank of Kunlun?
Based on information made available to the Treasury Department, the Department has found that China’s Bank of Kunlun has knowingly facilitated significant transactions for various Iranian-linked banks designated by the United States under our WMD or terrorism authorities.
Upon finding that Bank of Kunlun was knowingly engaged in these activities that are sanctionable under CISADA, the Secretary of the Treasury has prohibited U.S. banks from opening or maintaining correspondent accounts or payable-through accounts in the United States for Bank of Kunlun – effectively cutting off Bank of Kunlun’s direct access to the U.S. financial system.
Since CISADA was signed into law in July 2010, Treasury has engaged with over 120 financial institutions and bank regulators in more than 60 countries all over the world to brief them on the financial provisions of CISADA, and, in cases where we had specific concerns, has shared information about those concerns.
This global engagement campaign has proven highly successful, as we have seen the overwhelming majority of financial institutions with which we have engaged change their business practices – even close any correspondent accounts with U.S. designated Iranian banks – to ensure that their access to the U.S. financial system is not put at risk.
The July 31, 2012 action against Bank of Kunlun was in response to its ongoing relationships with U.S.-designated Iranian banks.
208. How are you defining “significant” transactions and financial services?
In determining whether transactions or financial services are significant, the Secretary of the Treasury may consider a number of factors related to the transactions or services, including, but not limited to: size, number, and frequency; type, complexity and commercial purpose; the level of awareness or involvement by the bank’s management; whether the activity or payment illustrates a pattern of practice or is an isolated event; the ultimate economic benefit conferred upon the designated person(s); and whether the transactions involved the use of deceptive financial practices to obscure the identities of the parties involved.
Bank of Kunlun has provided hundreds of millions of dollars’ worth of services to U.S. designated Iranian banks. These financial services include maintaining accounts, transferring payments, and serving as the paying bank for letters of credit opened by U.S. designated Iranian banks. The facilitation of hundreds of millions of U.S. dollars worth of transactions with U.S. designated Iranian banks over the past year is significant.
209. What happens to the correspondent and payable-through accounts held by Bank of Kunlun in the United States?
To our knowledge, Bank of Kunlun does not currently hold correspondent accounts with U.S. financial institutions.
210. What are the consequences for a U.S. financial institution that maintains or opens a new correspondent or payable-through account for Bank of Kunlun?
A U.S. financial institution that maintains or opens a correspondent or payable-through account for Bank of Kunlun is subject to civil penalties in the amount of up to $250,000 or twice the value of the transaction, whichever is greater.
211. If a foreign financial institution continues to do business with Bank of Kunlun, could that lead to a CISADA finding against the other institution?
212. Does this finding affect Bank of Kunlun’s branches or subsidiaries around the world? Does this finding affect any holding companies?
213. Are United States financial institutions that do not hold correspondent or payable-through accounts for Bank of Kunlun required to block or reject transactions that otherwise involve Bank of Kunlun?
No. U.S. financial institutions are not required to block or reject financial or trade transactions that involve Bank of Kunlun.
214. What is the licensing process for U.S. financial institutions that need to conduct transactions in order to close correspondent or payable-through accounts with a foreign financial institution sanctioned pursuant to CISADA?
215. What is the difference, in practical effect, between this and a designation under one of your other authorities, like E.O. 13382?
216. What does E.O. 13622 “Authorizing Additional Sanctions With Respect to Iran” do?
Executive Order 13622 imposes new sanctions against the Iranian energy and petrochemical sectors.
E.O. 13622 authorizes the Secretary of the Treasury, in consultation with the Secretary of State, to impose financial sanctions on foreign financial institutions found to have knowingly conducted or facilitated any significant financial transaction with the National Iranian Oil Company (“NIOC”) or Naftiran Intertade Company (“NICO”) (except for sales of refined petroleum products to NIOC or NICO that are below the dollar threshold that could trigger sanctions under ISA). It also provides new authority to impose sanctions on foreign financial institutions found to have knowingly conducted or facilitated significant transactions for the purchase or acquisition of petroleum or petroleum products from Iran through any channel, with the aim of deterring Iran or any other country or institution from establishing workaround payment mechanisms for the purchase of Iranian oil to circumvent the NDAA oil sanctions. The existing exception rules under the NDAA apply to these new sanctions. Thus, countries that are determined by the Secretary of State to have significantly reduced their purchases of Iranian crude oil will be excepted from this new measure as well.
In addition, E.O. 13622 provides new authority to impose sanctions on foreign financial institutions found to have knowingly conducted or facilitated significant transactions for the purchase or acquisition of petrochemical products from Iran.
the purchase or acquisition of U.S. bank notes or precious metals by the Government of Iran.
217. Why was this authority needed?
218. What constitutes a “significant” financial transaction under the new E.O. 13622? Is there a certain dollar threshold?
219. Does E.O. 13622 mean that Iranian trade partners should no longer buy petroleum products from Iran? How will this affect exports of Iranian oil?
220. Does E.O. 13622 mean you are designating NIOC and NICO? Can countries that have been excepted from NDAA sanctions still purchase oil through these companies without facing sanctions?
221. E.O. 13622 targets transactions between foreign financial institutions and NIOC or NICO. What about a NIOC or NICO subsidiary? Are transactions with those entities also sanctionable under this E.O.?
222. Does E.O. 13622 make sanctionable activities related to the pipeline project to supply natural gas from the Shah Deniz gas field in Azerbaijan to Europe and Turkey, given that NICO reportedly has a 10 percent stake in the project?
223. Are barter arrangements or other non-cash trade transactions involving petroleum, petroleum products, or petrochemical products originating from Iran sanctionable under the terms of the new E.O. 13622?
224. What are the definitions of “petroleum products” and “petrochemical products”?
The term “petroleum products” includes unfinished oils, liquefied petroleum gases, pentanes plus, aviation gasoline, motor gasoline, naphtha-type jet fuel, kerosene-type jet fuel, kerosene, distillate fuel oil, residual fuel oil, petrochemical feedstocks, special naphthas, lubricants, waxes, petroleum coke, asphalt, road oil, still gas, and miscellaneous products obtained from the processing of: crude oil (including lease condensate), natural gas, and other hydrocarbon compounds. The term does not include natural gas, liquefied natural gas, biofuels, methanol, and other non-petroleum fuels.
Section 312 of the Iran Threat Reduction and Syria Human Rights Act of 2012 (ITRSHRA) requires the Secretary of the Treasury, no later than 45 days after the date of the enactment of ITRSHRA, to determine whether the National Iranian Oil Company (NIOC) or the National Iranian Tanker Company (NITC) is an agent or affiliate of Iran’s Islamic Revolutionary Guard Corps (IRGC), and to report to Congress on these determinations and the reasons for them. On September 24, 2012, the Department of the Treasury made a determination that NIOC is an agent or affiliate of the IRGC. Based on the information currently available, Treasury is not able to determine at this time whether NITC is an agent or affiliate of the IRGC.
233. Isn’t NIOC already subject to sanctions?
Yes. Executive Order 13622 provides for sanctions on foreign financial institutions found to have knowingly conducted or facilitated significant financial transactions with NIOC (except for sales of refined petroleum products to NIOC that fall below the dollar threshold that could trigger sanctions under the Iran Sanctions Act). Executive Order 13622 also provides authority for the Secretary of the Treasury to block the property and interests in property of persons determined to have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services in support of, NIOC (as well as other specified entities). Note, however, that these sanctions are not applicable to certain transactions related to the Shah Deniz pipeline project, in which NIOC has a minority stake, under Executive Order 13622. In addition, NIOC was already blocked as an entity of the Government of Iran under Executive Order 13599, which was issued pursuant to the International Emergency Economic Powers Act (IEEPA), as amended, among other authorities. Nevertheless, as described below, the determination that NIOC is an agent or affiliate of the IRGC carries consequences.
234. What is the effect of the NIOC determination? Are there CISADA implications?
As a result of this ITRSHRA section 312 determination, NIOC now is also a person described under section 104(c)(2)(E)(i) of the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (CISADA) as an agent or affiliate of the IRGC whose property or interests in property are blocked pursuant to IEEPA. This means that foreign financial institutions determined to knowingly facilitate significant transactions or provide significant financial services for NIOC are exposed to CISADA sanctions, including prohibitions or the imposition of strict conditions on the opening or maintaining of correspondent or payable-through accounts in the United States.
In addition, section 302 of ITRSHRA requires sanctions on foreign persons determined to have knowingly provided certain material support to, or engaged in significant transactions with, the IRGC or its officials, agents, or affiliates whose property or interest in property are blocked. Consequently, foreign persons that knowingly engage in significant transactions with NIOC after the September 24, 2012 determination could be exposed to sanctions.
An “IRGC” identifier will be added to NIOC’s entry on the Specially Designated Nationals and Blocked Persons List available on OFAC’s website.
As noted below, the potential application of sanctions under section 104(c)(2)(E)(i) of CISADA and section 302 of ITRSHRA is affected by whether the country with primary jurisdiction has received a significant reduction exception from the Secretary of State.
235. What are the implications for petroleum purchase transactions involving NIOC by financial institutions and entities in countries that have received a significant reduction exception from the Secretary of State?
Significant transactions, financial services, or material support involving NIOC for the purchase of Iranian petroleum or petroleum products by a foreign financial institution or entity based in a country that has received a significant reduction exception from the Secretary of State do not carry potential sanctions consequences – under CISADA, sections 302 and 312 of ITRSHRA, section 1245 of the National Defense Authorization Act for Fiscal Year 2012 (NDAA), or sections 1 and 2 of Executive Order 13622. Sections 302 and 312 of ITRSHRA authorize the President not to impose sanctions for the purchase of petroleum or petroleum products from Iran if an exception under subsection 1245(d)(4)(D) of the NDAA applies to the country with primary jurisdiction over the foreign financial institution at the time of the transactions or the provision of services. Notwithstanding the foregoing, any significant transaction for other sanctioned entities (such as Iranian designated banks or other persons described in section 104(c)(2)(E) of CISADA) may result in sanctions, regardless of whether the transaction is for the purchase of petroleum or petroleum products and involves NIOC.
236. Does the determination regarding NITC mean that there is no affiliation between NITC and the IRGC?
This statement means only that, based on the currently available information, Treasury is not able to determine at this time that NITC is an agent or affiliate of the IRGC.
237. How does the effect of this determination compare to the effect of section 1(a) of Executive Order 13622 as to transactions with NIOC?
The effect of the determination is similar to the effect of Executive Order 13622 section 1(a), which provides for prohibitions on the opening of and prohibitions or strict conditions on maintaining correspondent accounts or payable-through accounts in the United States for foreign financial institutions determined by the Secretary of the Treasury, in consultation with the Secretary of State, to have knowingly conducted or facilitated significant financial transactions with NIOC. Executive Order 13622 likewise contains an exception that covers transactions with NIOC conducted or facilitated by foreign financial institutions based in NDAA-excepted jurisdictions. A significant difference between these authorities is that the NDAA exception in ITRSHRA section 312 is limited to transactions or financial services for the purchase of petroleum or petroleum products from Iran.
Executive Order 13628 of October 9, 2012, “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,” (“E.O. 13628”) implements certain statutory requirements of the Iran Threat Reduction and Syria Human Rights Act of 2012 (the “TRA”), including amendments to the Iran Sanctions Act and the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010. Specifically, E.O. 13628 implements the requirements of Sections 204, 402, and 403 of the TRA. In addition, consistent with Section 218 of the TRA, Section 4 of E.O. 13628 prohibits foreign subsidiaries (defined below) of United States persons from knowingly violating the Iranian Transactions Regulations, E.O. 13599, section 5 of E.O. 13622, or Section 12 of E.O. 13628, and provides for civil penalties on the U.S. parent company for any such violations.
238. What is the new prohibition on foreign subsidiaries of U.S. persons, and how does it work?
239. Are foreign subsidiaries of U.S. companies covered under OFAC general licenses and/or permitted to apply for specific licenses from OFAC?
240. Is there a wind-down or safe harbor provision in Section 4 of Executive Order 13628?
The Office of Foreign Assets Control (“OFAC”) issued a final rule in the Federal Register on October 22, 2012, changing the heading of the Iranian Transactions Regulations, 31 C.F.R. part 560 (the “ITR”), to the Iranian Transactions and Sanctions Regulations, 31 C.F.R. part 560 (the “ITSR”), and amending the renamed ITSR to implement Executive Order (“E.O.”) 13599 (other than section 11) and sections 1245(c) and (d)(1)(B) of the National Defense Authorization Act for Fiscal Year 2012 (the “NDAA”). These new regulations implement the blocking of the Government of Iran and all Iranian financial institutions pursuant to E.O. 13599 and the NDAA.
OFAC is adding numerous new sections to the ITSR, including prohibitions, definitions, interpretations, and licensing provisions. OFAC also is revising many existing sections of the ITSR in order to take account of the new government-wide blocking as well as the blocking of all Iranian financial institutions. Due to the extensive nature of these and other amendments described below, OFAC is reissuing the ITSR in their entirety.
In addition, OFAC is publishing on the Iran section of its Web site a Statement of Licensing Procedure on Support of Human Rights-, Humanitarian-, and Democracy-Related Activities with Respect to Iran. The Statement of Licensing Procedure reflects procedures established pursuant to the Iran Threat Reduction and Syria Human Rights Act of 2012 (the “TRA”), which was signed into law by the President on August 10, 2012.
241. What are the major changes that the ITSR implement in superseding the ITR?
The ITSR block the property and interests in property of the Government of Iran and all Iranian financial institutions that come within the possession or control of any U.S. person, including any foreign branch, and prohibit all U.S. persons from dealing with any property interests whatsoever, present, future, or contingent, of persons identified as already blocked pursuant to E.O. 13599 and the NDAA.
242. The ITSR includes revisions to the ITR pertaining to the transfer of funds to or from Iran. Accordingly, how may I transfer funds to or from Iran that arise from, and are ordinarily incident and necessary to give effect to, an underlying transaction that is authorized under the ITSR?
The ITSR authorize United States depository institutions to process transfers of funds to or from Iran, or for the direct or indirect benefit of persons in Iran or the Government of Iran, if the transfer arises from, and is ordinarily incident and necessary to give effect to, an underlying transaction that has been authorized by a specific or general license issued pursuant to, or set forth in, the ITSR and does not involve debiting or crediting an Iranian account. See 31 CFR 560.516(a).
In addition, the ITSR authorize United States registered brokers or dealers in securities to process transfers of funds to or from Iran, or for the direct or indirect benefit of persons in Iran or the Government of Iran, if the transfer arises from, and is ordinarily incident and necessary to give effect to, an underlying transaction that has been authorized by a specific or general license issued pursuant to, or set forth in, the ITSR and does not involve debiting or crediting an Iranian account. See 31 CFR 560.516(b).
243. How can I send personal remittances to or from Iran under the ITSR?
The ITSR authorize the transfer of funds that are noncommercial and personal in nature to or from Iran or for or on behalf of an individual ordinarily resident in Iran, other than an individual whose property and interests in property are blocked pursuant to § 560.211, subject to certain restrictions and limitations. See 31 CFR 560.550. Such transfers must be processed by a United States depository institution or a United States registered broker or dealer in securities and not by any other U.S. person. The personal remittances general license does not permit a U.S. person to deal directly with money service businesses (MSBs) or hawalas, wherever located. However, this general license does not preclude United States depository institutions or United States registered brokers or dealers in securities from engaging or dealing with third-country MSBs or hawalas in the processing of the authorized transfers pursuant to section 560.550 of the ITSR.
244. What effect will the ITSR have on Iranian-Americans and the people of Iran?
245. What does the Statement of Licensing Procedure on Support of Human Rights-, Humanitarian-, and Democracy-Related Activities with Respect to Iran do?
On August 10, 2012, the President signed into law the Iran Threat Reduction and Syria Human Rights Act of 2012, Public Law 112-158 (“TRA”). Section 504 of the TRA amends section 1245(d)(4)(D) of the National Defense Authorization Act for Fiscal Year 2012, Public Law 112-81 (“NDAA”), which the President signed into law on December 31, 2011. The section 504 amendments to the NDAA took effect February 6, 2013. Amendments to the Iranian Financial Sanctions Regulations, 31 C.F.R. part 561 (the “IFSR”) were published on March 15, 2013, to implement sections 503 and 504 of the Iran Threat Reduction and Syria Human Rights Act of 2012 (the “TRA”) and certain provisions of Executive Order 13622 of July 30, 2012.
254. What does section 504 of the TRA do?
Pursuant to the restrictions already in place under the NDAA, foreign financial institutions (“FFIs”) face restrictions on, or loss of, correspondent and payable-through account access in the United States if they knowingly engage in significant financial transactions with the Central Bank of Iran (“CBI”) or a designated Iranian financial institution, unless an NDAA exception, such as the significant reduction exception, applies. The NDAA significant reduction exception applies if the Secretary of State, in consultation with the Secretary of the Treasury and other agencies, has determined that the country with primary jurisdiction over the FFI has significantly reduced its purchases of Iranian crude oil during a specified period of time.
(ii) clarifies that countries that have reduced their Iranian crude oil purchases to zero may continue to receive the significant reduction exception.
The sale of agricultural commodities, food, medicine, or medical devices to Iran (the “Humanitarian Exception”) is not impacted by section 504 of the TRA.
255. Do the section 504 modifications restrict any other dealings with Iran?
Yes, the section 504 modifications also narrow the scope of transactions excepted from certain sanctions available under E.O. 13622. Accordingly, FFIs in countries that are determined by the Secretary of State to have significantly reduced their purchases of Iranian crude oil pursuant to the NDAA, that knowingly conduct significant financial transactions with the National Iranian Oil Company (“NIOC”), the Naftiran Intertrade Company (“NICO”), or otherwise for the purchase of petroleum or petroleum products from Iran, are only eligible for the significant reduction exception if the FFIs adhere to the bilateral trade restrictions, credit the funds to an account in the country with primary jurisdiction over the FFI, and do not repatriate the funds to Iran.
Example 1: A FFI in a country which has received a significant reduction exception and with primary jurisdiction over the FFI may facilitate a transaction enabling an oil refinery in that country to purchase crude oil from Iran without having exposure to U.S. correspondent account sanctions, so long as the transaction meets section 504’s bilateral trade requirements, the funds are credited to an account in the FFI in the country with primary jurisdiction over the FFI, and the funds are not repatriated to Iran.
256. What transactions are impacted by section 504 of the TRA?
(ii) the significant financial transaction is for bilateral trade only, and any funds owed to Iran as a result of such trade are credited to an account at the FFI in the country that has primary jurisdiction over the FFI and are not repatriated to Iran.
*These do not include sales relating to the Humanitarian Exception.
257. To which jurisdictions does the significant reduction exception apply?
As of February 6, 2013, 20 jurisdictions have been granted a 180-day significant reduction exception.
The following jurisdictions received their 180-day significant reduction exception to NDAA sanctions on September 14, 2012: Belgium, the Czech Republic, France, Germany, Greece, Italy, Japan, the Netherlands, Poland, Spain, and the United Kingdom.
258. What is meant by section 504’s requirement that bilateral trade consist of trade in goods and services between the country with primary jurisdiction over the FFI and Iran?
and the trade in services cannot include brokering transactions involving goods or services from or to third countries.
Furthermore, the goods or services must be exported and sold directly to either the country with primary jurisdiction over the FFI (in the case of Iranian-origin goods or services), or Iran (in the case of goods or services originating in the country with primary jurisdiction over the FFI).
259. What can a FFI do with the funds resulting from the import of Iranian-origin goods or services once the funds are credited to an account? Can funds be transferred to other accounts?
Section 504 of the TRA requires that, in order for a sanctionable transaction to fall within the bounds of the significant reduction exception, any funds owed to Iran as a result of the bilateral trade transaction must be credited to an “account located in the country with primary jurisdiction over the [FFI].” For purposes of implementing this requirement, OFAC interprets the “account located in the country with primary jurisdiction over the [FFI]” to be an account in the country with primary jurisdiction over the FFI, and at the same FFI that facilitated the transaction for the importation of goods or services from Iran.
(ii) transferred to a SPECIAL PURPOSE ACCOUNT (see FAQ 260) within that same FFI, in the country with primary jurisdiction over the FFI, where the funds may be later debited to purchase goods or services originating in the country with primary jurisdiction over the FFI which are exported and sold directly to Iran, or for the Humanitarian Exception (see Figure 2).
260. What is a SPECIAL PURPOSE ACCOUNT for purposes of the NDAA’s significant reduction exception?
261. Are there any circumstances in which funds can be transferred to third-country financial institutions?
262. Can funds be withdrawn from the RECIPIENT ACCOUNT or a SPECIAL PURPOSE ACCOUNT?
263. Who can receive payments from funds credited to a RECIPIENT ACCOUNT or SPECIAL PURPOSE ACCOUNT?
(ii) an entity organized under the laws of the country with primary jurisdiction over the FFI maintaining such accounts.
*The term “Government of Iran” as defined in 31 CFR Part 561.321 includes: (a) The state and the Government of Iran, as well as any political subdivision, agency, or instrumentality thereof; (b) Any entity owned or controlled directly or indirectly by the foregoing; (c) Any person to the extent that such person is, or has been, or to the extent that there is reasonable cause to believe that such person is, or has been, acting or purporting to act directly or indirectly on behalf of any of the foregoing; and (d) Any person or entity identified by the Secretary of the Treasury to be the Government of Iran under 31 CFR Part 560.
264. Can funds be remitted to Iran or the GOI without exposure to sanctions?
265. Can the funds be used for sales made under the Humanitarian Exception?
314. Can an exporter of agricultural commodities, food, medicine, or medical devices get paid out of a Central Bank of Iran (CBI) account at a foreign financial institution (FFI) in a country with a significant reduction exception, even though the exporter is located in a third-country? Can the third-country exporter’s bank handle this transaction?
Yes. So long as the transaction does not involve a designated individual or entity, banks on the Part 561 List located on OFAC’s website (http://www.treasury.gov/ofac/downloads/561list.pdf), or otherwise proscribed conduct, such transactions are not sanctionable under U.S. law. Furthermore, there is no requirement under U.S. law that agricultural commodities, food, medicine, or medical devices be routed through the country with the significant reduction exception.
Such a payment mechanism is not the exclusive mechanism for the purchase of agricultural commodities, food, medicine, or medical devices under U.S. law. Other options include receiving payment from a third-country account of the CBI or a non-designated Iranian financial institution.
266. Does the November 8, 2012 designation of NIOC under E.O. 13382 impact the scope of permissible transactions by FFIs in significantly reducing countries?
Yes. On September 24, 2012, NIOC was identified as an agent or affiliate of Iran’s Islamic Revolutionary Guard Corps (“IRGC”) under section 312 of the TRA, and designated on November 8, 2012, under E.O. 13382 for providing services and support to the IRGC. Accordingly, CISADA applies to transactions with NIOC. As a result of these additional sanctions against NIOC, only transactions solely for the purchase of petroleum or petroleum products from NIOC will fall within the scope of the significant reduction exception. A FFI in a significantly reducing country that is found to knowingly conduct or facilitate other types of significant transactions with NIOC (i.e., transactions unrelated to the purchase of petroleum or petroleum products from Iran) would face exposure to CISADA sanctions.
267. What are definitions for the following NDAA terms: “significant financial transaction,” “knowingly,” “food, medicine, and medical devices,” “foreign financial institution,” and “country with primary jurisdiction over the FFI,”?
313. What is the Iran Freedom and Counter-Proliferation Act of 2012 (IFCA)?
IFCA was signed into law on January 2, 2013, as a part of the National Defense Authorization Act for Fiscal Year 2013, and provides for several new sanctions related to Iran. IFCA authorizes broad sanctions on: certain activities related to Iran’s energy, shipping, and shipbuilding sectors; the sale, supply, or transfer to or from Iran of precious and certain other metals, graphite, coal, and industrial software; the provision of underwriting services, insurance, or reinsurance to activities and persons targeted by U.S. sanctions against Iran; financial transactions involving sanctioned Iranian individuals and entities; and persons involved in the diversion of goods intended for the Iranian people. Most of the IFCA provisions target conduct occurring on or after July 1, 2013.
288. What is the purpose of the Executive Order of June 3, 2013 entitled “Authorizing the Implementation of Certain Sanctions Set Forth in the Iran Freedom and Counter-Proliferation Act of 2012 and Additional Sanctions With Respect to Iran” (E.O.)?
The E.O. implements certain statutory provisions of IFCA. The E.O. also authorizes the imposition of additional sanctions with respect to Iran, targeting certain transactions and other activity related to the Iranian rial, Iran’s automotive sector, and persons that materially assist Iranian persons on the list of Specially Designated Nationals and Blocked Persons (SDN List) as well as certain persons whose property and interests in property are blocked under the E.O. or Executive Order 13599. The E.O. becomes effective at 12:01 a.m. eastern daylight time on July 1, 2013. Questions and Answers (Q&As) 306-312 below provide guidance regarding the E.O.
289. How will the following IFCA terms be interpreted: “Iran,” “knowingly,” “significant,” “transfer,” “Iranian person included on the SDN List ”?
As a general matter, we intend to rely, where applicable, on definitions of terms previously included in Treasury regulations.
OFAC anticipates publishing on its website a list to assist in identifying Iranian persons included on the SDN List for purposes of IFCA and the E.O.
As a general matter, in determining for purposes of IFCA and the E.O. whether transactions, financial transactions, or financial services are significant, the Department of the Treasury will rely on the interpretation set out in §561.404 of the IFSR. The IFSR provide a list of broad factors that can play a role in the determination whether transactions, financial services, and financial transactions are significant, including: (a) the size, number, and frequency of the transactions, financial services, or financial transactions; (b) the type, complexity, and commercial purpose of the transactions, financial services, or financial transactions; (c) the level of awareness of management and whether the transactions are part of a pattern of conduct; (d) the nexus of the transactions, financial services, and financial transactions and blocked persons; (e) the impact of the transactions, financial services, and financial transactions on statutory objectives; (f) whether the transactions, financial services, and financial transactions involve deceptive practices; (g) whether the transactions solely involve the passive holdings of Central Bank of Iran (CBI) reserves or repayment by the CBI of official development assistance or the transfer of funds required as a condition of Iran’s membership in an international financial institution; and (h) other relevant factors that the Secretary of the Treasury deems relevant. We anticipate adopting a similar approach to interpreting the term “significant” as it applies to goods or services.
290. Are payments or deliveries that are made on or after July 1, 2013, for contracts that existed prior to July 1, 2013, exempted from IFCA provisions?
291. How does the Executive Order relate to the IFCA provisions?
292. What are the implications of IFCA on the provision of humanitarian goods to the people of Iran?
IFCA provides for sanctions involving activities or transactions related to Iran’s energy, shipping, and shipbuilding sectors.
293. What will the “energy, shipping, and shipbuilding sectors of Iran” mean for the purposes of IFCA?
We anticipate that regulations to be promulgated will define “shipping sector of Iran” to include activities involving the transportation of goods by seagoing vessels, including oil tankers and cargo vessels, flying the flag of the Islamic Republic of Iran, or owned, controlled, chartered, or operated directly or indirectly by the Government of Iran. Two entities previously identified or designated under Treasury authorities that are part of the shipping sector of Iran are the National Iranian Tanker Company and the Islamic Republic of Iran Shipping Lines.
294. How will I know if someone is part of Iran’s energy, shipping, or shipbuilding sectors or is a port operator in Iran?
295. What are goods or services used in connection with Iran’s energy, shipping, or shipbuilding sectors for purposes of section 1244(d)(3)?
Iran’s ability to import or export petroleum or petroleum products.
Any other goods or services relating to the maintenance, supply, bunkering, and docking of vessels flying the flag of the Islamic Republic of Iran, or owned, controlled, chartered, or operated directly or indirectly by, or for or on behalf of the Government of Iran (GOI) or an Iranian person.
Technical assistance and training relating to, and financing of, the building, maintenance or re-fitting of vessels.
296. Will payment for bunkering of third-country ships carrying non-sanctionable goods to or from Iran be subject to sanctions?
297. Are there any exceptions to the sanctions provisions of section 1244 of IFCA?
The following transactions are excepted from the provisions of section 1244 of IFCA.
a. Transactions for the sale of agricultural commodities, food, medicine, or medical devices to Iran or for the provision of humanitarian assistance to the people of Iran.
b. The export of petroleum or petroleum products from Iran to a country with a significant reduction exception under section 1245(d)(4)(D)(i) of the National Defense Authorization Act for Fiscal Year 2012.
c. A significant financial transaction conducted or facilitated by a foreign financial institution (FFI), provided that a significant reduction exception under 1245(d)(4)(D)(i) of the National Defense Authorization Act For Fiscal Year 2012 (NDAA) applies to the country with primary jurisdiction over the FFI and the financial transaction is for trade in goods or services (i) between Iran and the country with primary jurisdiction over the FFI and (ii) not otherwise subject to sanctions under the law of the United States, and any funds owed to Iran as a result of the trade are credited to an account located in the country with primary jurisdiction over the FFI. We anticipate the implementation of these trade requirements to be similar to the trade requirements set forth in the IFSR, in particular 31 CFR §561.203(j) and 31 CFR §561.203(k).
d. The sale, supply, or transfer of natural gas to or from Iran. Section 1244, however, does set out sanctions that may apply to FFIs that conduct or facilitate a transaction for the sale, supply, or transfer of natural gas to or from Iran unless the financial transaction is for trade in goods or services (i) between Iran and the country with primary jurisdiction over the FFI and (ii) not otherwise subject to sanctions under the law of the United States, and any funds owed to Iran as a result of the trade are credited to an account located in the country with primary jurisdiction over the FFI. We anticipate the implementation of these trade requirements to be similar to the trade requirements set forth in the IFSR, in particular 31 CFR §561.203(j) and 31 CFR §561.203(k).
315. Will routine payments or fees be subject to sanctions if they are made to a person determined to be a port operator in Iran and if the vessel is carrying non-sanctioned goods?
IFCA provides for sanctions involving the sale, supply, or transfer of certain materials to or from Iran.
298. What materials are considered graphite, raw or semi-finished metals?
299. What are considered precious metals?
300. For purposes of sanctions under section 1245, how will I know which sectors are controlled by Iran’s Islamic Revolutionary Guard Corps?
301. How will the determination be made as to whether materials are used in a manner that would make them subject to sanctions under section 1245 of IFCA?
302. Are there any exceptions to section 1245 of IFCA?
303. Which insurance, reinsurance, or underwriting activities are potentially subject to sanctions under section 1246(a)(1)?
304. Are there exceptions to insuring, reinsuring, or underwriting sanctioned activities?
Yes. IFCA includes the following exceptions to insuring, reinsuring, or underwriting sanctioned activities.
a. Transactions for the sale of agricultural commodities, food, medicine, or medical devices to Iran or for the provision of humanitarian assistance to the people of Iran can be insured, reinsured, or underwritten.
305. Sanctions under section 1247 of IFCA apply to FFIs that facilitate financial transactions on behalf of an Iranian person on the SDN List. How does the Executive Order relate to section 1247?
306. How does the Executive Order relate to the IFCA provisions?
307. In addition to implementing certain IFCA provisions, what else does the Executive Order do?
In addition to implementing IFCA, the E.O. authorizes both new sanctions with respect to Iran and the broadening of existing sanctions.
The new sanctions under the E.O. target significant transactions related to (1) the purchase or sale of Iranian rials and derivative, swap, future, forward, or other similar contracts whose value is based on the exchange rate of the Iranian rial, as well as the maintenance of significant funds and accounts outside the territory of Iran denominated in the Iranian rial (see Q&A 309 below), and (2) Iran’s automotive sector (see Q&As 310 and 311 below).
308. What are the implications of the material assistance provision of the Executive Order?
Subsection 2(a)(i) of the E.O. authorizes the Department of the Treasury to block the property and interests in property of persons determined to have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, (i) Iranian persons included on the SDN List as well as other persons included on the SDN List whose property and interests in property are blocked pursuant to Executive Order 13599, in both cases other than Iranian depository institutions whose property and interests in property are blocked solely pursuant to Executive Order 13599, and (ii) persons whose property and interests in property are blocked pursuant to subsection 2(a)(i) of the E.O. Certain activities relating to the pipeline project to supply natural gas from the Shah Deniz gas field in Azerbaijan to Europe and Turkey are excepted from the material support provision of the E.O.
309. What transactions involving the Iranian rial will be subject to sanctions?
310. What is considered Iran’s automotive sector for purposes of the Executive Order?
311. What are goods or services used in connection with Iran’s automotive sector for purposes of the E.O.?
We anticipate that regulations to be promulgated will define goods or services used in connection with Iran’s automotive sector to include goods or services that contribute to (i) Iran’s ability to research, develop, manufacture, and assemble light and heavy vehicles, and (ii) the manufacturing or assembling of original equipment and after-market parts used in Iran’s automotive industry.
316. Is the sale, supply, or transfer of finished vehicles or “auto kits” to Iran sanctionable under the E.O.?
The E.O. does not make sanctionable the export of finished vehicles to Iran if no further assembly or manufacturing is required. As such, exporting fully assembled and finished vehicles to Iran for sale by a non-sanctioned Iranian dealer or distribution network would not be sanctionable.
317. Is the sale, supply, or transfer of goods or services for the maintenance of finished vehicles sanctionable under the E.O.?
312. How does the Executive Order tighten the financial sanctions applicable to FFIs under section 1247 of IFCA?
Section 3 of the E.O. tightens the financial sanctions applicable to FFIs under section 1247 of IFCA and provides for correspondent and payable-through account sanctions on FFIs that knowingly conduct or facilitate a significant financial transaction on behalf of an Iranian person included on the SDN List (other than Iranian depository institutions whose property and interests in property are blocked solely pursuant to Executive Order 13599) or any other person included on the SDN List whose property and interests in property are blocked pursuant to Executive Order 13599 (other than Iranian depository institutions whose property and interests in property are blocked solely pursuant to Executive Order 13599) or subsection 2(a)(i) of the E.O.
a. Transactions for the provision of agricultural commodities, food, medicine, or medical devices to Iran.
b. A significant financial transaction conducted or facilitated by a FFI for the purchase of petroleum or petroleum products from Iran if a significant reduction exception under section 1245(d)(4)(D) of the NDAA applies to the country with primary jurisdiction over such FFI and the financial transaction is for trade between Iran and the country with primary jurisdiction over the FFI, and any funds owed to Iran as a result of the trade are credited to an account located in the country with primary jurisdiction over the FFI. We anticipate the implementation of these trade requirements to be similar to the trade requirements set forth in the IFSR, in particular 31 CFR § 561.203(j) and 31 CFR § 561.203(k).
c. A significant financial transaction conducted or facilitated by a FFI for the sale, supply, or transfer of natural gas to or from Iran only if the financial transaction is solely for trade between the country with primary jurisdiction over the FFI and Iran, and any funds owed to Iran as a result of such trade are credited to an account located in the country with primary jurisdiction over the FFI. We anticipate the implementation of these trade requirements to be similar to the trade requirements set forth in the IFSR, in particular 31 CFR § 561.203(j) and 31 CFR § 561.203(k).
318. Does the GL for medical devices authorize the exportation or reexportation of all medical devices?
319. Does the GL for medical devices authorize the exportation or reexportation of these items to all entities in Iran?
361. What items and persons are excluded from the agricultural commodities general license in the ITSR?
The specified items excluded from the scope of the agricultural commodities general license are: castor beans, castor bean seeds, certified pathogen-free eggs (unfertilized or fertilized), dried egg albumin, live animals (excluding live cattle, shrimp, and shrimp eggs), embryos (excluding cattle embryos), Rosary/Jequirity peas, non-food-grade gelatin powder, peptones and their derivatives, super absorbent polymers, western red cedar, and all fertilizers.
The persons excluded from the scope of the agricultural commodities general license are Iranian military, intelligence, or law enforcement purchasers or importers. In addition, the agricultural commodities general license does not authorize exports or reexports to persons whose property and interests in property are blocked under any of the programs administered by OFAC, except for persons whose property and interests in property are blocked solely pursuant to Executive Order 13599 and the ITSR. .
362. Is the exportation or reexportation of non-U.S.-origin agricultural commodities, medicine, or medical devices by a U.S. person to Iran authorized?
363. Is the exportation or reexportation by non-U.S. persons of agricultural commodities, medicine, or medical devices that are subject to the EAR to Iran authorized?
Yes. A non-U.S. person may export or reexport agricultural commodities, medicine, or medical devices to Iran under the relevant general licenses in the ITSR, provided that the items are subject to the EAR and all conditions of the relevant general license are otherwise satisfied. For example, a non-U.S. person would be authorized under the medicine and medical devices general license to arrange for the exportation or reexportation to Iran of EAR99 medicines located in the United States or a third country.
364. Who can apply for a specific license if an export or reexport to Iran is not authorized by general license?
365. What is authorized with respect to brokerage services related to exports or reexports of agricultural commodities, medicine, or medical devices to Iran?
366. Do I still need to come in to OFAC for a specific license to export certain types of agricultural commodities to Iran?
OFAC will no longer issue specific licenses for exports or reexports that are covered by the agricultural commodities general license in the ITSR.
However, a small number of specified agricultural commodities and certain persons are excluded from the agricultural commodities general license and continue to require the level of review afforded by specific licensing. As a result, persons seeking authorization for the exportation or reexportation to Iran of castor beans, castor bean seeds, certified pathogen-free eggs (unfertilized or fertilized), dried egg albumin, live animals (excluding live cattle, shrimp, and shrimp eggs), embryos (excluding cattle embryos), Rosary/Jequirity peas, non-food-grade gelatin powder, peptones and their derivatives, super absorbent polymers, western red cedar, or all fertilizers, or for the exportation or reexportation of any agricultural commodities to Iranian military, intelligence, or law enforcement purchasers or importers, must still apply for a specific license from OFAC.
367. What is the definition of a “bioactive peptide”?
482. What key changes did the December 23, 2016 regulatory amendment to the Iranian Transactions and Sanctions Regulations (ITSR) make relating to the exportation and reexportation of agricultural commodities, medicine, and medical devices to Iran?
The amendment primarily expands the scope of medical devices that can be exported or reexported to Iran without specific authorization. It authorizes the exportation or reexportation to Iran of all items meeting the definition of the term “medical device” as defined in section 560.530(e)(3) of the ITSR, except for certain excluded persons as well as certain medical devices that are excluded from the authorization and published on the List of Medical Devices Requiring Specific Authorization. The exportation and reexportation of items on the List of Medical Devices Requiring Specific Authorization or to excluded persons requires a specific license from OFAC. The amendment also adds shrimp and shrimp eggs to the list of agricultural commodities that may be exported to Iran without specific authorization, other than to certain excluded persons.
483. How does an exporter determine which medical devices need to be specifically licensed by OFAC for exportation or reexportation to Iran?
484. What types of training activities are considered to be necessary and ordinarily incident to the safe and effective use of medicine and medical devices?
485. What key changes did the December 23, 2016 regulatory amendment to the ITSR make to the definition of “Iranian-origin goods” or “goods of Iranian origin”?
486. What is an example of goods otherwise coming into contact with Iran?
487. Are goods that are unloaded from a ship in an Iranian port, put on a truck, and driven out of the boundaries of the port or place of unloading considered to be Iranian-origin goods?
488. Are goods that are unloaded from a ship in an Iranian port, moved within the boundaries of the port, and loaded onto a second ship en route to a destination outside of Iran, without ever leaving the port considered to be Iranian-origin goods?
For information regarding specific licenses authorizing exports of agricultural commodities, medicine, and medical devices to Iran and Sudan pursuant to the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA), please see the following topic.
On May 30, 2013, the Department of the Treasury, in consultation with the Departments of State and Commerce, issued General License D (“GL D”) authorizing the export and reexport to Iran of certain hardware, software, and services incident to personal communications. On February 7, 2014, the Department of the Treasury, in consultation with the Departments of State and Commerce, issued amended Iranian General License D-1 (“GL D-1”), which clarifies certain aspects of GL D and adds certain new authorizations. Effective February 7, 2014, GL D-1 replaces and supersedes in its entirety GL D.
337. What are key changes made by amended General License D-1?
First, GL D-1 expands the authorization in GL D to permit the exportation, reexportation, or provision, directly or indirectly, to Iran of certain personal communications software, hardware, and related services subject to the Export Administration Regulations, 15 C.F.R. parts 730 through 774 (“EAR”) (rather than just the exportation or reexportation from the United States or by a U.S. person of such software, hardware, and services). See GL D-1, paragraphs (a)(2)(i) & (a)(3). For purposes of GL D-1, the term “provision” could include, for example, an in-country transfer of covered software or hardware. The general license now authorizes, for example, a non-U.S. person located outside the United States to export certain hardware and software subject to the EAR to Iran. See FAQ #341.
Second, GL D-1 adds new authorizations for the exportation, reexportation, or provision, directly or indirectly, by a U.S. person located outside the United States to Iran of certain software and hardware not subject to the EAR. See GL D-1, paragraphs (a)(2)(ii) & (a)(3). The general license now authorizes, for example, a U.S. company to export to Iran, from a location outside the United States, certain hardware or software that is not subject to the EAR (including foreign-origin hardware or software containing less than a de minimis amount of U.S. controlled content). See FAQ #342.
Third, a new Note has been added to paragraphs (a)(2) and (a)(3) clarifying that the authorization in those paragraphs includes the exportation, reexportation, or provision, directly or indirectly, of the authorized items by an individual leaving the United States for Iran. GL D-1 also adds a new authorization for the importation by an individual into the United States of certain hardware and software previously exported by the individual to Iran pursuant to other provisions of GL D-1 or 31 C.F.R. § 560.540. See GL D-1, paragraph (a)(5). The general license now authorizes, for example, an individual to carry a smartphone that falls within the scope of the GL D-1 authorization while traveling to and from Iran. See FAQ #343.
Finally, to further ensure that the sanctions on Iran do not have an unintended chilling effect on the willingness of companies to make available certain publicly available, no cost personal communications tools to persons in that country, GL D-1 adds a new authorization related to the potential recipients of certain publicly available, no cost services and software. See GL D-1, paragraph (a)(6).
338. With respect to the authorizations in paragraphs (a)(1) and (a)(2), what services and software are covered?
Qualifying services or software must be “incident to the exchange of personal communications over the Internet.” In addition, qualifying software under paragraph (a)(2) must meet the stated export control-related criteria. Both paragraphs provide an illustrative but not exhaustive list of the types of services that are authorized: “instant messaging, chat and email, social networking, sharing of photos and movies, web browsing, and blogging.” See FAQ #344 and OFAC’s Interpretive Guidance and Statement of Licensing Policy on Internet Freedom in Iran (March 20, 2012), available at http://www.treasury.gov/resource-center/sanctions/Programs/Documents/internet_freedom.pdf.
339. With respect to the authorization in paragraph (a)(3), do exporters need to make a determination as to whether an export of an item or service listed in the Annex to GL D-1 is “incident to personal communications”?
340. What should I do if I am unsure whether an item or service is covered by GL D-1?
341. May a non-U.S. person export, reexport, or provide to Iran hardware and software that is subject to the EAR pursuant to GL D-1?
342. Does GL D-1 authorize U.S. persons located outside the United States to export or reexport to Iran certain specified hardware or software that is not subject to the EAR?
343. Does GL D-1 authorize the exportation to Iran and importation into the United States of personal communication devices by persons travelling from the United States to Iran and back to the United States?
344. How do the authorizations in paragraphs (a)(1), (a)(2), and (a)(6) of GL D-1 compare to the previously existing general license in 31 C.F.R. § 560.540 authorizing certain services and software incident to Internet-based communications?
The general license in § 560.540 authorizes the exportation from the United States or by U.S. persons, wherever located, to persons in Iran of no-cost services incident to the exchange of personal communications over the Internet and no-cost software necessary to enable such services. Please also see OFAC’s Interpretive Guidance and Statement of Licensing Policy on Internet Freedom in Iran (March 20, 2012). See http://www.treasury.gov/resource-center/sanctions/Programs/Documents/internet_freedom.pdf. Paragraphs (a)(1) and (a)(2) of GL D-1 go beyond § 560.540 by, among other things, authorizing fee-based services and software incident to the exchange of personal communications over the Internet.
345. How can U.S. companies arrange for payment from Iran for exports authorized under GLD-1?
346. What kind of due diligence is required for the exportation of fee-based services, software, or hardware authorized by GL D-1?
347. Are there any restrictions as to the use of the Farsi language in authorized advertising or software?
348. May U.S. persons employ agents in Iran to facilitate sales, create or fund a physical sales presence on the ground in Iran, or utilize Iranian commercial marketing services in furtherance of exports authorized under GL D-1?
For additional information regarding specific software, hardware, and services in Iran, please see the following topic.
417. Are payments or the facilitation of payments not involving U.S. persons to Iranian civil aviation authorities for overflights of Iran or landing in Iran by aircraft that are owned by a non-U.S. person and registered outside the United States sanctionable under U.S. law?
No. Provided that the relevant transactions do not involve the U.S. financial system or persons on the Specially Designated Nationals and Blocked Persons List (SDN List), payments of charges for services rendered by the Government of Iran in connection with the overflight of Iran or landing in Iran of aircraft owned by a non-U.S. person and registered outside the United States are not subject to sanctions under U.S. law. The involvement of persons on the SDN List, including Iranian financial institutions or airlines designated pursuant to Executive Order 13224 or Executive Order 13382, would create sanctions exposure for participants to such transactions.
455. Is the provision of routine goods and services by non-U.S. persons to diplomatic missions of the Government of Iran located outside the United States sanctionable under U.S. law?
The provision of goods and services for the conduct of the official business of the diplomatic missions of the Government of Iran located outside the United States or for the personal use of the employees of the missions, including financial services such as the opening of a bank account, by a non-U.S. person would not be sanctionable under U.S. law, provided that such goods and services do not involve persons on OFAC’s List of Specially Designated Nationals and Blocked Persons (other than any political subdivision, agency, or instrumentality of the Government of Iran listed solely pursuant to Executive Order 13599 or any Iranian depository institution listed solely pursuant to Executory Order 13599) or other activities that would be sanctionable under U.S. law.
37. My bank operates accounts for individuals living in Iran. OFAC has told us that these accounts cannot be operated. Does this mean that the accounts are blocked?
38. Are U-Turn payments for Iran still permitted?
118. I have a client that is in Iran to visit a relative. Do I need to restrict the account?
54. I have an account with a W-8 showing an address in Iran. Is the account automatically restricted?

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