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U.S. Sanctions against Iranian Authorities and Other Persons

Summary:
The Executive Order. And what it means, according to the Treasury Department’s FAQs page (my coloring): E.O. 13846 reimposes relevant blocking sanctions, correspondent and payable-through account sanctions, and menu-based sanctions previously provided for in E.O.s 13574, 13590, 13622, and 13645, which were revoked by E.O. 13716, and continues in effect sanctions authorities provided for in E.O.s 13628 and 13716. As incorporated into E.O. 13846, these measures include implementing authority for and additional tools related to: the Iran Sanctions Act of 1996, as amended (ISA), the Comprehensive Iran Sanctions, Accountability and Divestment Act of 2010, as amended (CISADA), the Iran Threat Reduction and Syria Human Rights Act of 2012 (TRA), and the Iran Freedom Counter-Proliferation Act

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The Executive Order. And what it means, according to the Treasury Department’s FAQs page (my coloring):

E.O. 13846 reimposes relevant blocking sanctions, correspondent and payable-through account sanctions, and menu-based sanctions previously provided for in E.O.s 13574, 13590, 13622, and 13645, which were revoked by E.O. 13716, and continues in effect sanctions authorities provided for in E.O.s 13628 and 13716. As incorporated into E.O. 13846, these measures include implementing authority for and additional tools related to: the Iran Sanctions Act of 1996, as amended (ISA), the Comprehensive Iran Sanctions, Accountability and Divestment Act of 2010, as amended (CISADA), the Iran Threat Reduction and Syria Human Rights Act of 2012 (TRA), and the Iran Freedom Counter-Proliferation Act of 2012 (IFCA) (see FAQ 605). As a general matter, E.O. 13846 incorporates exceptions to these sanctions, including for transactions for the provision of agricultural commodities, food, medicine, or medical devices to Iran, to the same extent such exceptions applied under the prior E.O.s. E.O. 13846 also broadens the scope of certain provisions contained in those E.O.s, as outlined in FAQ 601 below.

Section 1 of E.O. 13846 authorizes blocking sanctions on persons determined:

i. On or after August 7, 2018, to have provided material support for, or goods or services in support of, the purchase or acquisition of U.S. bank notes or precious metals by the Government of Iran (GOI) (subsection 1(a)(i));
ii. On or after November 5, 2018, to have provided material support for, or goods or services in support of, the National Iranian Oil Company (NIOC), the Naftiran Intertrade Company (NICO), or the Central Bank of Iran (CBI) (subsection 1(a)(ii));
iii. On or after November 5, 2018, to have provided material support for, or goods or services in support of:

a. Any Iranian person on the List of Specially Designated Nationals and Blocked Persons (SDN List) (other than an Iranian depository institution whose property and interests in property are blocked solely pursuant to E.O. 13599) (subsection 1(a)(iii)(A)); or
b. Any other person on the SDN List whose property and interests in property are blocked pursuant to subsection 1(a) of E.O. 13846 or E.O. 13599 (other than an Iranian depository institution whose property and interests in property are blocked solely pursuant to E.O. 13599) (subsection 1(a)(iii)(B)); or

iv. Pursuant to the relevant statutory authorities in IFCA, to be:

a. Part of Iran’s energy, shipping, or shipbuilding sectors (subsection 1(a)(iv)(A));
b. A port operator in Iran (subsection 1(a)(iv)(B)); or
c. A person that knowingly provides significant support to a person determined to be part of Iran’s energy, shipping, or shipbuilding sectors, a port operator in Iran, or an Iranian person included on the SDN List (other than a person described in section 1244(c)(3) of IFCA)) (subsection 1(a)(iv)(C)).

Section 2 of E.O. 13846 authorizes correspondent and payable-through account sanctions on foreign financial institutions (FFIs) determined to have knowingly conducted or facilitated any significant financial transaction:

i. On or after August 7, 2018, for the sale, supply, or transfer to Iran of significant goods or services used in connection with Iran’s automotive sector (subsection 2(a)(i));
ii. On or after November 5, 2018, on behalf of an Iranian person on SDN List (other than an Iranian depository institution whose property and interests in property are blocked solely pursuant to E.O. 13599) or any other person on the SDN List whose property is blocked pursuant to subsection 1(a) of E.O. 13846 or E.O. 13599 (other than an Iranian depository institution whose property and interests in property are blocked solely pursuant to E.O. 13599) (subsection 2(a)(ii));
iii. On or after November 5, 2018, with NIOC or NICO, except for the sale or provision to NIOC or NICO of the products described in section 5(a)(3)(A)(i) of ISA provided that the fair market value of such products is lower than the applicable dollar threshold specified in that provision (subsection 2(a)(iii));
iv. On or after November 5, 2018, for the purchase, acquisition, sale, transport, or marketing of petroleum or petroleum products from Iran (subsection 2(a)(iv)); and
v. On or after November 5, 2018, for the purchase, acquisition, sale, transport, or marketing of petrochemical products from Iran (subsection 2(a)(v)).

Section 3 of E.O. 13846 authorizes menu-based sanctions on persons determined to:

i. Have knowingly engaged, on or after August 7, 2018, in a significant transaction for the sale, supply, or transfer to Iran of significant goods or services used in connection with Iran’s automotive sector (subsection 3(a)(i));
ii. Have knowingly engaged, on or after November 5, 2018, in a significant transaction for the purchase, acquisition, sale, transport, or marketing of petroleum or petroleum products from Iran (subsection 3(a)(ii));
iii. Have knowingly engaged, on or after November 5, 2018, in a significant transaction for the purchase, acquisition, sale, transport, or marketing of petrochemical products from Iran (subsection 3(a)(iii)); or
iv. Be a successor entity to a person determined to meet any of the criteria set out in subsections 3(a)(i)-(a)(iii) of E.O. 13846 (subsection 3(a)(iv)); or
v. Own or control a person determined to meet any of the criteria set out in subsections 3(a)(i)-(a)(iii) of E.O. 13846 and to have had knowledge that the person engaged in the activities referred to in the relevant subsection (subsection 3(a)(v)); or
vi. Be owned or controlled by, or under common ownership or control with, a person determined to meet any of the criteria set out in sections 3(a)(i)-3(a)(iii) of E.O. 13846, and knowingly engaged in the activities referred to in the relevant subsection (subsection 3(a)(vi)).

Section 4 of E.O. 13846 provides authority for the heads of relevant agencies of the U.S. government to implement the menu-based sanctions provided for in section 3.

Section 5 of E.O. 13846 provides authority for the Treasury Department to implement the menu-based sanctions provided for in ISA, CISADA, TRA, IFCA, and section 3 of E.O. 13846

Section 6 of E.O. 13846 authorizes correspondent or payable-through account sanctions or blocking sanctions on FFIs that are determined to have, on or after August 7, 2018: (a) knowingly conducted or facilitated any significant transaction related to the purchase or sale of Iranian rials or a derivative, swap, future, forward, or other similar contract whose value is based on the exchange rate of the Iranian rial (subsection 6(a)(i)); or (b) maintained significant funds or accounts outside the territory of Iran denominated in the Iranian rial (subsection 6(a)(ii)).

Section 7 of E.O. 13846 carries forward sections 2 and 3 of E.O. 13628 and subsection 3(c) of E.O. 13716 (see FAQ 602 below) by providing for blocking sanctions on persons determined to:

i. Have engaged, on or after January 2, 2013, in corruption or other activities relating to the diversion of goods, including agricultural commodities, food, medicine, and medical devices, intended for the people of Iran (subsection 7(a)(i));
ii. Have engaged, on or after January 2, 2013, in corruption or other activities relating to the misappropriation of proceeds from the sale or resale of goods described in subsection 7(a)(1) of E.O. 13846 (subsection 7(a)(ii));
iii. Have knowingly, on or after August 10, 2012, transferred or facilitated the transfer of, goods or technologies to Iran, any entity organized under the laws of Iran, or otherwise subject to the jurisdiction of the GOI, or any national of Iran for use in or with respect to Iran, that are likely to be used by the GOI or any of its agencies or instrumentalities, or by any person on behalf of the GOI or any such agencies or instrumentalities, to commit serious human rights abuses against the people of Iran (subsection 7(a)(iii));
iv. Have knowingly, on or after August 10, 2012, provided services, including services relating to hardware, software, or specialized information or professional consulting, engineering, or support services with respect to goods or technologies that have been transferred to Iran and that are likely to be used by the GOI or any of its agencies or instrumentalities, or by any person on behalf of the GOI or any such agencies or instrumentalities, to commit serious human rights abuses against the people of Iran (subsection 7(a)(iv));
v. Have engaged in censorship or other activities with respect to Iran, on or after June 12, 2009, that prohibit, limit, or penalize the exercise of freedom of expression or assembly by citizens of Iran, or that limit access to print or broadcast media, including the facilitation or support of intentional frequency manipulation by the GOI or an entity owned or controlled by the GOI that would jam or restrict an international signal (subsection 7(a)(v));
vi. Have materially assisted or provided other support for activities listed in subsections 7(a)(i)-(a)(v) of E.O. 13846 (subsection 7(a)(vi)); or
vii. Be owned or controlled by, or to have acted or purported to act for or on behalf of, directly or indirectly, any person whose property and interests in property are blocked pursuant section 7 of E.O. 13846 (subsection 7(a)(vii)).

Section 8 of E.O. 13846 continues in effect the sanctions previously contained in section 4 of E.O. 13628, which prohibit an entity owned or controlled by a U.S. person and established or maintained outside the United States (a “U.S.-owned or -controlled foreign entity”) from knowingly engaging in any transaction, directly or indirectly, with the GOI or any person subject to the jurisdiction of the GOI, if that transaction would be prohibited by specified authorities if engaged in by a U.S. person or in the United States (see FAQs 621-623 below).

Section 9 of E.O. 13846 provides that it revokes and supersedes E.O.s 13628 and 13716 (see FAQ 602 below).

Sections 10-22 of E.O. 13846 contain exceptions, definitions, and other implementing provisions related to the sanctions in the E.O. [08-06-2018]

Dirk Niepelt
Dirk Niepelt is Director of the Study Center Gerzensee and Professor at the University of Bern. A research fellow at the Centre for Economic Policy Research (CEPR, London), CESifo (Munich) research network member and member of the macroeconomic committee of the Verein für Socialpolitik, he served on the board of the Swiss Society of Economics and Statistics and was an invited professor at the University of Lausanne as well as a visiting professor at the Institute for International Economic Studies (IIES) at Stockholm University.

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