Yesterday, President Obama issued a new Executive Order aimed at augmenting the Iran Sanctions Act of 1996 (ISA). The new executive order states that once someone has been designated by either the President or the Secretary of State pursuant to Section 5 of ISA that the U.S. Department of Treasury shall take the following actions:
1. Prohibit any United States financial institution from making loans or providing credits to any sanctioned person totaling more than $10,000,000 in any 12-month period unless such person is engaged in activities to relieve human suffering and the loans or credits are provided for such activities;
2. Prohibit any transactions in foreign exchange that are subject to the jurisdiction of the United States and in which the ISA-sanctioned person has any interest;
3. Prohibit any transfers of credit or payments between financial institutions or by, through, or to any financial institution, to the extent that such transfers or payments are subject to the jurisdiction of the United States and involve any interest of the ISA-sanctioned person;
4. Block all property and interests in property that are in the United States, that come within the United States, or that are or come within the possession or control of any United States person, including any overseas branch, of the ISA-sanctioned person, and provide that such property and interests in property may not be transferred, paid, exported, withdrawn, or otherwise dealt in;
5. Restrict or prohibit imports of goods, technology, or services, directly or indirectly, into the United States from the ISA-sanctioned person.
Section 5 of ISA calls for sanctions to be imposed against those parties investing in the development of Iran’s petroleum resources.
Today, the Secretary of State designated seven foreign entities pursuant to the ISA for their activities in support of Iran’s energy sector. These companies are Petrochemical Commercial Company International (PCCI), Jersey and Iran; Royal Oyster Group, UAE; Speedy Ship, UAE, Iran; Tanker Pacific, Singapore; Ofer Brothers Group, Israel; Associated Shipbroking, Monaco; and Petroleos de Venezuela, sometimes known as PDVSA, in Venezuela.
It is believed that all of these companies have engaged in activities related to the supply of refined petroleum products to Iran. Such activities include the direct supply of gasoline and related products to the Islamic Republic of Iran Shipping Lines (IRISL), an entity that has been designated by the United States and placed on the Specially Designated Nationals List (SDN LIst) administered by the United States Department of the Treasury Office of Foreign Assets Control (OFAC).
The Obama administration is the first administration to invoke sanctions on firms under the ISA, and has been very proactive in imposing and enforcing sanctions against Iran. With this latest move the administration is send a clear message to international businesses: companies around the world: those who continue to facilitate Iran’s efforts to evade U.S. sanctions will face significant consequences.
The author of this blog is Erich Ferrari, an attorney specializing in OFAC matters. If you have any questions please contact him at 202-280-6370 or firstname.lastname@example.org.