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Financial Services Law Insights and Observations

OFAC sanctions 18 major Iranian banks

Financial Crimes OFAC Department of Treasury Of Interest to Non-US Persons Sanctions Iran

Financial Crimes

On October 8, the U.S. Treasury Department announced that the Secretary of the Treasury, in consultation with the Secretary of State, sanctioned 18 major Iranian banks, consistent with E.O. 13902, which identified Iran’s financial sector “as an additional avenue that funds the Iranian government’s malign activities.” E.O. 13902 provides Treasury with the authority to sanction any Iranian financial institution. The sanctioned banks include 16 banks operating in Iran’s financial sector and one bank that is owned or controlled by a sanctioned Iranian bank. In addition, OFAC sanctioned an Iranian military-affiliated bank under Treasury’s counter-proliferation authority pursuant to E.O. 13382. “Today’s action to identify the financial sector and sanction eighteen major Iranian banks reflects our commitment to stop illicit access to U.S. dollars,” Treasury Secretary Steven T. Mnuchin stated. OFAC noted that the sanctions under E.O. 13902 do not affect existing authorizations and exceptions for humanitarian trade (covered by a Buckley Special Alert), “which remain in full force and effect for these seventeen banks.”

As a result, all property and interests in property of the designated entities that are in the U.S. or in the possession or control of U.S. persons must be blocked and reported to OFAC. U.S. persons are also generally prohibited from engaging in transactions with the designated entities. OFAC is providing a 45-day period for non-U.S. persons to wind down non-humanitarian transactions that may become subject to sanctions as a result of the designations. OFAC further warned that “financial institutions and other persons that engage in certain transactions or activities with the sanctioned entities after a 45-day wind-down period may expose themselves to secondary sanctions or be subject to an enforcement action.”

Concurrent with the action, OFAC issued General License L, which outlines transactions and activities involving the sanctioned entities “that are authorized, exempt, or otherwise not prohibited under the Iranian Transactions and Sanctions Regulations.” Additional guidance is also provided in recently issued FAQs.

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