Treasury Adds Scores of Iranian Companies to SDN List

Posted on October 16, 2018 by Farhad Alavi — Leave a comment

The US Department of the Treasury announced it was adding scores of Iranian entities to its list of Specially Designated Nationals and Blocked Persons (the SDN list) due to their connections with the Islamic Revolutionary Guards Corps (IRGC)-affiliated Basij force, specifically the Bonyad Taavon Basij (Basij Cooperative Foundation). Importantly, however, these additions are not strictly military related, and include some Iranian economic giants across sectors including automotive, finance, and mining, including household names such as:

Bahman Automotive Group
Bank Mellat
Esfahan Mobarakeh Steel Company
Iran Tractor Manufacturing Company (ITMC)
Mehr Eqtesad Bank
Parsian Bank
Sina Bank

Mobarakeh Steel and ITMC are the largest companies in the region in their respective sectors of steel production and tractor manufacturing. Importantly, Bank Mellat and Bank Parsian are among Iran’s largest financial institutions. Bahman Group is a large automotive company that has assembled foreign automobiles in Iran.

The additions of the banks may be the most interesting for many, especially U.S. persons seeking to divest from Iran. Being designated under the SDGT (Executive Order 13224) makes virtually all transactions with such entities prohibited. This covers otherwise exempt or general license transactions such as medical, food, and agricultural sales, and the transfer of personal remittances. As such, to the extent U.S. persons have any transactions with Iran in non-sanctioned areas such as humanitarian sales and divestment or personal remittances, they should take extra care to make sure such entities have no interest in such transactions. Any such involvement can subject such funds to blocking upon coming into possession of a U.S. person. The release of blocked funds requires a specific OFAC license. If such entities have been or are involved, a specific OFAC license will now be needed and such parties should not proceed without first consulting a professional.

This announcement dovetails an advisory issued last week by the Department of the Treasury’s Financial Crime Enforcement Network (FinCen) on deceptive Iranian financial practices.

Importantly, today’s move by the Department of the Treasury does not appear to be related to President Trump’s announcement in May 2018 that the United States would be ceasing participation in the Joint Comprehensive Plan of Action (the “Iran Deal”), but rather part of the Administration’s policy to increase pressure against the Islamic Republic, particularly on the economic front.