Trump Sanctions Iran

This heading is perhaps a bit more exciting than it should be, but maybe that’s necessary given the tone of the White House this week towards Iran, following that country’s recent missile tests.  Two days after US National Security Advisor Lt. Gen. (Ret) Michael Flynn announced that the administration was “officially putting Iran on notice,” the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) made a handful of designations of Iranian and other entities to its Specially Designated Nationals (SDN) list.

Today’s addition is relatively lengthy, with entities ranging from individuals in Iran to companies in the Persian Gulf and China.  They were designated under Executive Orders dating to the Bush Administration.  While this may sound exceptionally aggressive, it is relatively insignificant by many measures if viewed from a legal standpoint.  The Obama administration frequently made these types of designations.

The true impact of these designations is that they can potentially place a non-legal damper on Iran’s trade with the world.  While the SDN list is an “American” list – there are secondary sanctions, meaning that third country entities dealing with these entities could face some types of repercussions in their affairs in the United States.  Beyond that, all the designated entities are sure to be similarly blocked by other financial institutions and businesses around the world (for example, banks in Asia may also freeze their accounts or not do business with them).  This can naturally impact Iran’s access to missile technologies and related services.

More generally, the more negative press Iran receives and the more Iranian or Iran-related entities are designated on the SDN list.  It will raise the cost of due diligence, increase the number of potential flags. In the greater scheme of things, today’s designations may not be exceptionally significant and certainly more innocuous than any type of military response. It remains to be seen if any fundamental regulatory changes or new Executive Orders could be issued, both of which could have significantly more severe impact.

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An international trade and regulatory lawyer.

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