The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) made a sweeping set of designations on dozens of entities related to Iranian networks on Friday (August 29). These include banks and individuals, including the following:
1. Asia Bank (aka Chemeximbank). This is a Moscow-based, Iranian-owned financial institution. It has worked with the Iranian Central Bank as well as with the Export Development Bank of Iran and Bank Tejarat, both blocked banks (remember, Iranian financial institutions are generally designated, but some are subject to blocking, meaning their assets must be blocked if they come into possession of a U.S. person).
2. Asian Aviation Logistics Company Limited. This company is based in Thailand.
3. Caspian Airlines. Caspian Airlines is an Iranian airline.
3. Ghavamin Bank. Ghavamin Bank, like Kish International Bank and Middle East Bank, is an Iranian financial institution.
4. Dettin SPA. Dettin is based in Italy and in the stainless steel business.
4. Kafolat Bank. This is a financial institution based in Dushanbe, Tajikistan. It is owned by Bank Sarmayeh, an Iranian financial institution
5. Kish International Bank. This bank is based in Kish Island, a free trade zone in the Persian Gulf opposite the UAE. It is a joint venture between the Iranian government and Bank Refah Kargaran, a government bank.
6. Middle East Bank (aka Bank Khavar Mianeh). Middle East Bank is a small, relatively new private bank based in Tehran.
7. Nefertiti Shipping Company. Nefertiti is based in Egypt and is alleged to be affiliated with the Islamic Republic of Iran Shipping Lines (IRISL), which was designated by OFAC nearly six years ago. Nefertiti also provides assistance to the National Iranian Tanker Corporation (NITC), also sanctioned by OFAC.
8. Pioneer Logistics. This company is based in Turkey. It was added to the U.S. Department of Commerce’s Bureau of Industry & Security (BIS) Entity List in December 2013 for its involvement in procuring for Mahan Airlines, a private Iranian carrier.
Also included are two vessels (Katerina 1, registered in Panama; and Gas Camellia LPG tanker, registered in St. Kitts & Nevis), as well as eight individuals holding Swiss, Turkish, and Iranian citizenship, as well as UAE residency.
Why these designations are so important
Three particular facts make Friday’s designations very interesting.
For one, the entities were designated under various regulations and Executive Orders, meaning that they are not all designated for the same reason. As such, different rules apply to them.
Second, they corroborate the statement that I have been making for years – the shortcut answer of “we do not do business with Iran” is an increasingly poor and misinformed excuse for implementing and enforcing robust and rigid compliance programs for companies. Compliance programs are not just to avoid direct business transactions with Iran – that can be taught to employees in a matter of 30 seconds. What compliance really means is realizing that carelessness can cause one could to inadvertently do business with Iran indirectly. Few can imagine that companies in places like Egypt (which has had strained relations with Iran for 35 years), Turkey, Italy, and Thailand could be designated for Iranian sanctions issues.
Lastly, the Iranian sanctions are far from over. Even if the P5+1 and Iran reach a deal by November 24, there will still be many sanctions on Iran and the U.S. has, contrary to what many may think, not given up on its very comprehensive sanctions on Iran.
In summary, the threat of violating Iranian (and increasingly Russian) sanctions is still high. Russian sanctions are ramping up, and in some ways so are the Iran sanctions. The nature of international business is such that real threats are increasingly manifesting themselves well beyond the sanctioned country’s borders. As such, written procedures, heightened due diligence and increasing awareness is critical to reduce your exposure to potential violations.