November 2, 2018: OFAC amends Iranian sanctions regulations

Last Friday, OFAC issued amendments to the Iranian Transactions and Sanctions Regulations (ITSR). Here’s the narrative (non-legalese) section of the Federal Register notice:

Background

Implementing the President’s May 8, 2018 Decision by Reinstating Certain Authorities in the ITSR and Making Certain Technical and Conforming Changes

On May 8, 2018, the President issued National Security Presidential Memorandum-11 (NSPM–11), which set forth his decision to cease the United States’ participation in the JCPOA. In NSPM–11, the President directed the Secretary of State and the Secretary of the Treasury to immediately begin taking steps to reimpose all U.S. sanctions lifted or waived in connection with the JCPOA as expeditiously as possible, and in no case later than 180 days from the date of NSPM–11. In accordance with his decision, on August 6, 2018, the President issued Executive Order 13846 (83 FR 38939, August 7, 2018) (E.O. 13846) to, among other things, re-impose relevant authorities from certain Executive Orders that had been revoked previously. Today, OFAC is amending the ITSR, 31 CFR part 560, and appendix A to 31 CFR chapter V to take additional regulatory steps to implement the President’s May 8, 2018 decision.

Previously revoked authorities. On January 16, 2016, the President issued Executive Order 13716 (81 FR 3693, January 21, 2016) (E.O. 13716), which, among other things, revoked Executive Order 13622 of July 30, 2012 (77 FR 45897, August 2, 2012) (E.O. 13622) in connection with the JCPOA. In light of this revocation, on January 21, 2016, OFAC amended the ITSR to, among other things, remove regulatory provisions that implemented sections 5 and 6 of E.O. 13622. (See 81 FR 3330). In that rule, OFAC also made certain technical and conforming changes to the ITSR and appendix A to 31 CFR chapter V related to (1) the removal of certain individuals and entities from OFAC’s Specially Designated Nationals and Blocked Persons List (SDN List), the Foreign Sanctions Evaders List, and the Non-SDN Iran Sanctions Act List on January 16, 2016, and (2) the concurrent transfer of certain individuals and entities that OFAC had previously identified as blocked pursuant to E.O. 13599 of February 5, 2012, to a ‘‘List of Persons Identified as Blocked Solely Pursuant to Executive Order 13599’’ (E.O. 13599 List), which OFAC made available on its website on January 16, 2016.

Reinstating certain authorities and removing E.O. 13599 List references. In furtherance of the President’s May 8, 2018 decision and in light of the issuance of E.O. 13846, OFAC is now amending the ITSR and appendix A to 31 CFR chapter V by: (1) Reinstating the regulatory provisions implementing the authorities that were previously in sections 5 and 6 of E.O. 13622 and now are in sections 1 and 10 of E.O. 13846 by revising paragraph (c) of § 560.211 of the ITSR; and (2) removing references to the E.O. 13599 List by revising notes in §§ 560.211 and 560.304 of the ITSR, revising note 1 to § 560.324 of the ITSR, and revising a note to appendix A to 31 CFR chapter V.

Sections 1(a)(i) and 1(a)(ii) of E.O. 13846 authorize the Secretary of the Treasury to block all property and interests in property that are in the United States, that come within the United States, or that are or come within the possession or control of any U.S. person, including any foreign branch, of a person upon determining that: (i) On or after August 7, 2018, the person has materially assisted, sponsored, or provided financial, material, or technological 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, or (ii) on or after November 5, 2018, the person has materially assisted, sponsored, or provided financial, material, or technological 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. Section 16 of E.O. 13846 defines the terms ‘‘NIOC’’ and ‘‘NICO’’ as including any entity owned or controlled by, or operating for or on behalf of, respectively, NIOC or NICO. Section 10 of E.O. 13846 provides that section 1(a) of the order, among other specified provisions, shall not apply to any person for conducting or facilitating a transaction involving a project described in subsection (a) of section 603 of the Iran Threat Reduction and Syria Human Rights Act of 2012 to which the exception under that section applies. Although it is not named in the section, section 10 of E.O. 13846 refers to the Shah Deniz natural gas field in Azerbaijan’s sector of the Caspian Sea and related pipeline projects to bring the gas from Azerbaijan to Europe and Turkey.

By separate action, effective November 5, 2018, OFAC is removing the E.O. 13599 List from its website and relisting on the SDN List, as appropriate, individuals and entities that were previously listed on the E.O. 13599 List.

Sale of Certain Personal Property and Transfer of Proceeds to the United States

Separately, OFAC is amending an existing general license in the ITSR to authorize U.S. persons to sell certain personal property in Iran and transfer the proceeds to the United States. Section 560.543 of the ITSR authorizes U.S. persons to engage in transactions necessary and ordinarily incident to the sale of real property in Iran, and to transfer the proceeds to the United States, provided that such real property was either acquired before the individual became a U.S. person or inherited from persons in Iran. OFAC routinely receives and approves specific license applications related to the sale of personal property in Iran which, prior to today’s rule, were outside the scope of § 560.543. OFAC is therefore amending this general license to authorize U.S. persons to engage in transactions necessary and ordinarily incident to the sale of personal property in Iran, and to transfer the proceeds to the United States, provided that such personal property was either (1) acquired before the individual became a U.S. person or (2) inherited from persons in Iran. This authorization will complement § 560.518, which authorizes certain transactions in Iranian-origin household and personal effects, as referenced in a new note OFAC is adding to § 560.518.

Link:

OFAC Notice

Federal Register Notice

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