International Trade Update

U.S. and International Trade Sanctions Against Iran Expanded

The U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) recently added certain entities associated with Iranian weapons proliferation to the Specially Designated Nationals and Blocked Persons List (“SDN List”) and issued a final rule amending the Iranian Transactions Regulations (“ITR”), 31 C.F.R. Part 560. OFAC’s actions are in response to, and build upon, the United Nations Security Council Resolution 1929 (“U.N. Sanctions”), which extended the scope of the U.N.’s existing arms embargo and restrictions on financial and shipping companies involved in Iran’s continued nuclear and missile proliferation activities. The new measures adopted by the U.N. and OFAC may pose challenges for companies that are involved in the shipping, finance and energy sectors.

1. New SDN List Entries and the Final Rule Issued by OFAC

OFAC has designated certain Iranian entities as proliferators of weapons of mass destruction and placed these organizations on the SDN List. As a result of this action, U.S. persons are prohibited from engaging in transactions involving any of these entities. The entities include (1) the Post Bank of Iran, for providing financial services to, and acting on behalf of, Bank Sepah, (2) the Islamic Revolutionary Guards Corps (“IRGC”), which controls Iran’s nuclear program and (3) front companies associated with Islamic Republic of Iran Shipping Lines (“IRISL”), which is involved in the smuggling of weapons in violation of the U.N.’s embargo prohibiting the export of arms from Iran.

OFAC also added 27 new vessels connected to IRISL to its SDN List and updated the entries for 71 already-blocked IRISL vessels to identify new names given to these vessels by IRISL as part of the company’s efforts to evade sanctions. Published reports indicate that the IRISL had been undermining previous sanctions by changing the names, flags, operators and managers of its vessels. These steps have made it more difficult for U.S. companies to screen vessel names against the SDN List. We note, however, that despite recent name changes, IRISL is generally unable to change the International Maritime Organization number that is permanently assigned to each of its vessels and generally located in the vessel’s certificate. The SDN List includes the vessel registration identification number for each vessel.

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