Legal Update: Recent Sanctions on Iranian Entities
On September 3, 2019 U.S. Department of Treasury Office of Foreign Assets Control (“OFAC”) has announced that, entities based in Iran: Astronautics Research Institute, Iran Space Agency and Iran Space Research Center have been added to the OFAC’s Specially Designated Nationals (“SDN”) List as part of the on-going Iran sanctions related with the non-proliferation of the ballistic missiles.
Legal Basis for Sanctions
As per the Weapons of Mass Destruction of Proliferators Sanctions Regulations (“Regulation”), U.S. President through executive orders, Secretary of State and Secretary of Treasury may impose sanctions to the foreign persons in accordance with the Regulation. The first sanctions were imposed through the Executive Order 13382 concurrently to Regulation’s entry into force. Sanctioned persons are determined as SDN and added to the SDN List
Pursuant to the Regulation, all property and property interests (including but not limited to pledges, mortgages and liens) in property of SDNs that are located in the United States or transferred to the United States, or are in the possession or control of U.S. persons, including their overseas branches, are blocked and all property and property interests may not be transferred, paid, exported, withdrawn, or otherwise dealt with the SDNs. As such assets of the SDNs located in U.S. have been frozen and transactions involving SDNs are substantially restricted except for the exemptions granted under the Regulation. U.S. person definition includes: (i) U.S. citizens; (ii) Permanent residents (including green card holders); and (iii) legal entities incorporated in accordance with the U.S. law.
Regulation also oversees penalties to be imposed for the violation of the provisions of the Regulation. Such penalties are calculated based on the volume of the transaction. OFAC may also enter into settlement agreements with the U.S. person violators regarding the penalties.
Compliance Requirements for Non-U.S. Persons
The Countering America's Adversaries Through Sanctions Act (“CAATSA”) sets forth additional sanctions to foreign persons’ activities regarding Iran in addition the ones stipulated under the Regulation. Sanctions listed under Section 104 of CAATSA are specifically related with the Iran’s ballistic missile program. Sanctions include but not limited to: denying entry to the United States of America, freezing assets and other penalties vested to the U.S. President under the International Emergency Economic Powers Act. It should be noted that a foreign person that is not a citizen of Republic of Iran can be sanctioned as well if such person(s) contribute to activities related with the Iran’s ballistic missile program in any way.