In short
- The Treasury added these sectors to its list of sector-based determinations, expanding action against entities operating in them.
- OFAC issued two new sectoral sanctions determinations under E.O. 13902, also referencing E.O. 13871.
What happened
The United States, as part of Operation Economic Outcast, imposed new sanctions on networks in the Middle East, East Asia, and Europe that support Iran’s rail, automotive, and metals industries, aiming to disrupt Iran’s access to international markets and its ability to evade existing sanctions.
The Department of the Treasury expanded its sector-based determinations to include Iran’s automobile and rail industries, enabling further action against individuals and entities operating in these sectors, with OFAC issuing new sectoral sanctions determinations under E.O. 13902 and referencing E.O. 13871.
The Department of State is working closely with countries to close off every avenue Iran uses to generate illicit revenue and ensure that governments and businesses around the world understand the risks of doing business with the Iranian regime.
What compliance teams should check
- Screen all transactions and counterparties for links to Iran’s rail and automotive sectors as newly designated by OFAC under E.O. 13902.
- Update sanctions compliance programs to include the expanded sector-based determinations covering Iran’s automobile and rail industries.
- Review exposure to entities in the Middle East, East Asia, and Europe that may be part of networks supporting Iran’s rail, automotive, and metals industries.
Why it matters
This development significantly expands the scope of U.S. secondary sanctions risk for financial institutions and businesses worldwide, as the inclusion of Iran’s rail and automotive sectors under sectoral sanctions means that a broader range of transactions and relationships could now be subject to enforcement. Compliance officers must ensure their organizations are not inadvertently facilitating illicit revenue generation for Iran, as the U.S. government is actively working with international partners to close off all avenues for such activity. Failure to adapt to these changes could result in severe penalties and reputational harm.
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