The following Frequently Asked Questions (FAQs) have been removed from OFAC's primary FAQ pages and have been archived here for reference purposes.
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- Executive Order 13622, "Authorizing Additional Sanctions With Respect to Iran"
- Determination Pursuant to Section 312 of the Iran Threat Reduction and Syria Human Rights Act (TER)
- Section 4 of Executive Order "Authorizing the Implementation of Certain Sanctions Set Forth in the Iran Threat Reduction and Syria Human Rights Act of 2012 and Additional Sanctions with Respect to Iran"
- Implementation of Section 504 of the Iran Threat Reduction and Syria Human Rights Act of 2012 (the TRA)
- Issuance of the Executive Order 13645 “Authorizing the Implementation of Certain Sanctions Set Forth in the Iran Freedom and Counter-Proliferation Act of 2012 and Additional Sanctions With Respect to Iran” and the Implementation of Certain Provisions of the Iran Freedom And Counter-Proliferation Act of 2012 (IFCA)
Executive Order 13622, "Authorizing Additional Sanctions With Respect to Iran"
On July 30, 2012, the President signed Executive Order 13622 to authorize additional sanctions with respect to Iran. Effective as of 12:01 a.m. Eastern Standard Time on July 31, 2012, the order provides additional sanctions authorities to the Secretary of the Treasury and the Secretary of State. The order builds, in part, on prior authorities set forth in the National Defense Authorization Act for Fiscal Year 2012 (“NDAA”) and in the Iran Sanctions Act (“ISA”). [07-31-2012]
216. What does E.O. 13622 “Authorizing Additional Sanctions With Respect to Iran” do?
Executive Order 13622 imposes new sanctions against the Iranian energy and petrochemical sectors.
E.O. 13622 authorizes the Secretary of the Treasury, in consultation with the Secretary of State, to impose financial sanctions on foreign financial institutions found to have knowingly conducted or facilitated any significant financial transaction with the National Iranian Oil Company (“NIOC”) or Naftiran Intertade Company (“NICO”) (except for sales of refined petroleum products to NIOC or NICO that are below the dollar threshold that could trigger sanctions under ISA). It also provides new authority to impose sanctions on foreign financial institutions found to have knowingly conducted or facilitated significant transactionsfor the purchase or acquisition of petroleum or petroleum products from Iran through any channel, with the aim of deterring Iran or any other country or institution from establishing workaround payment mechanisms for the purchase of Iranian oil to circumvent the National Defense Authorization Act (NDAA) oil sanctions. The existing exception rules under the NDAA apply to these new sanctions. Thus, countries that are determined by the Secretary of State to have significantly reduced their purchases of Iranian crude oil will be excepted from this new measure as well.
In addition, E.O. 13622 provides new authority to impose sanctions on foreign financial institutions found to have knowingly conducted or facilitated significant transactions for the purchase or acquisition of petrochemical products from Iran.
Finally, E.O. 13622 provides authority for the Secretary of the Treasury to block the property and interests in property of any person determined to have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services in support of:
- NIOC, NICO, or the Central Bank of Iran (“CBI”), or
- the purchase or acquisition of U.S. bank notes or precious metals by the Government of Iran.
Additionally, E.O. 13622 grants the Secretary of State, in consultation with the Secretary of the Treasury and other cabinet officials, new powers to impose a range of sanctions on individuals or entities determined to knowingly engage in significant transactions for the purchase or acquisition of petroleum, petroleum products or petrochemical products from Iran. Individuals or entities determined to meet such criteria will be subject to the same sanctions that may be imposed under ISA. [07-31-2012]
217. Why was this authority needed?
E.O. 13622 further strengthens the Iran sanctions framework by deterring work-around financial transactions involving National Iranian Oil Company (NIOC) or Naftiran Intertade Company (NICO) that were not captured under the sanctions previously implemented against the Central Bank of Iran (CBI). The E.O. also addresses concerns that the Government of Iran is utilizing sales of petrochemical products to replace revenue lost as a result of previously enacted sanctions. In addition, the E.O. provides additional authority to combat and deter the use of non-bank intermediaries to conduct petroleum and petrochemical trade, provide support to or for the CBI, NIOC or NICO, or procure U.S. bank notes or precious metals for the Government of Iran. [07-31-2012]
218. What constitutes a “significant” financial transaction under the new E.O. 13622? Is there a certain dollar threshold?
Treasury expects to apply the same framework under section 1 of E.O. 13622 that it has applied under section 1245 of the National Defense Authorization Act (NDAA) and section 104 of the Comprehensive Iran Sanctions, Accountability, and Divestment Actof 2010 (“CISADA”). Under that framework, in determining whether transactions are significant, the Secretary of the Treasury may consider a number of factors related to the transaction or services, including, but not limited to: size, number, and frequency; type, complexity, and commercial purpose; the level of awareness or involvement by the bank’s management; whether the activity or payment illustrates a pattern or practice or an isolated event; the ultimate economic benefit conferred upon the sanctions target; and whether the transactions involved the use of deceptive financial practices to obscure the identities of the parties involved. [07-31-2012]
219. Does E.O. 13622 mean that Iranian trade partners should no longer buy petroleum products from Iran? How will this affect exports of Iranian oil?
These new measures further strengthen the existing comprehensive Iran sanctions framework by deterring work-around financial transactions involving National Iranian Oil Company (NIOC) or Naftiran Intertade Company (NICO) that were not being captured under the sanctions previously implemented against the Central Bank of Iran (CBI). Iranian trade partners can continue to buy petroleum and petroleum products from Iran without risking sanctions under this E.O. if they have received a significant reduction exception under the National Defense Authorization Act (NDAA). However, in jurisdictions that do not have a significant reduction exception, the purchase of petroleum or petroleum products and significant dealings with NIOC or NICO may be subject to sanctions under this E.O. [07-31-2012]
220. Does E.O. 13622 mean you are designating NIOC and NICO? Can countries that have been excepted from National Defense Authorization Act (NDAA) sanctions still purchase oil through these companies without facing sanctions?
All property and interests in property of National Iranian Oil Company (NIOC) and Naftiran Intertade Company (NICO)subject to U.S. jurisdiction are already blocked pursuant to E.O. 13599 and U.S. persons are prohibited from all dealings with these entities. This new E.O. 13622 provides authority to sanction foreign financial institutions that knowingly conduct or facilitate any significant transaction with NIOC or NICO. Financial institutions in countries that have received a significant reduction exception are not subject to these sanctions for petroleum purchase transactions with NIOC and NICO while the exemption is in effect. [07-31-2012]
221. E.O. 13622 targets transactions between foreign financial institutions and National Iranian Oil Company (NIOC) or Naftiran Intertrade Company (NICO). What about a NIOC or NICO subsidiary? Are transactions with those entities also sanctionable under this E.O.?
Yes. E.O. 13622 defines these terms to include any entity owned or controlled by, or operating for or on behalf, these entities. [07-31-2012]
222. Does E.O. 13622 make sanctionable activities related to the pipeline project to supply natural gas from the Shah Deniz gas field in Azerbaijan to Europe and Turkey, given that NICO reportedly has a 10 percent stake in the project?
No. The relevant provisions of E.O. 13622 do not apply to transactions involving the pipeline project to supply natural gas from the Shah Deniz gas field in Azerbaijan to Europe and Turkey. [07-31-2012]
223. Are barter arrangements or other non-cash trade transactions involving petroleum, petroleum products, or petrochemical products originating from Iran sanctionable under the terms of the new E.O. 13622?
Yes. To the extent a financial institution is involved, that financial institution could be sanctioned under E.O. 13622 for a barter arrangement related to the purchase or acquisition of petroleum, petroleum products, or petrochemical products from Iran. In addition, barter transactions knowingly conducted with National Iranian Oil Company (NIOC), Naftiran Intertade Company (NICO), or the Central Bank of Iran (CBI) also could result in sanctions – regardless of whether a financial institution is involved – to the extent that those transactions constitute material support for, or services to, NIOC, NICO, or the CBI. [07-31-2012]
224. What are the definitions of “petroleum products” and “petrochemical products”?
The term “petroleum products” includes unfinished oils, liquefied petroleum gases, pentanes plus, aviation gasoline, motor gasoline, naphtha-type jet fuel, kerosene-type jet fuel, kerosene, distillate fuel oil, residual fuel oil, petrochemical feedstocks, special naphthas, lubricants, waxes, petroleum coke, asphalt, road oil, still gas, and miscellaneous products obtained from the processing of: crude oil (including lease condensate), natural gas, and other hydrocarbon compounds. The term does not include natural gas, liquefied natural gas, biofuels, methanol, and other non-petroleum fuels.
The term “petrochemical products” includes any aromatic, olefin, and synthesis gas, and any of their derivatives, including ethylene, propylene, butadiene, benzene, toluene, xylene, ammonia, methanol, and urea. [07-31-2012]
Determination Pursuant to Section 312 of the Iran Threat Reduction and Syria Human Rights Act (TER)
Section 312 of the Iran Threat Reduction and Syria Human Rights Act of 2012 (TRA) requires the Secretary of the Treasury, no later than 45 days after the date of the enactment of TRA, to determine whether the National Iranian Oil Company (NIOC) or the National Iranian Tanker Company (NITC) is an agent or affiliate of Iran’s Islamic Revolutionary Guard Corps (IRGC), and to report to Congress on these determinations and the reasons for them. On September 24, 2012, the Department of the Treasury made a determination that NIOC is an agent or affiliate of the IRGC. Based on the information currently available, Treasury is not able to determine at this time whether NITC is an agent or affiliate of the IRGC.
233. Isn’t the National Iranian Oil Company (NIOC) already subject to sanctions?
Yes. Executive Order 13622 provides for sanctions on foreign financial institutions found to have knowingly conducted or facilitated significant financial transactions with NIOC (except for sales of refined petroleum products to NIOC that fall below the dollar threshold that could trigger sanctions under the Iran Sanctions Act). Executive Order 13622 also provides authority for the Secretary of the Treasury to block the property and interests in property of persons determined to have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services in support of, NIOC (as well as other specified entities). Note, however, that these sanctions are not applicable to certain transactions related to the Shah Deniz pipeline project, in which NIOC has a minority stake, under Executive Order 13622. In addition, NIOC was already blocked as an entity of the Government of Iran under E.O. 13599, which was issued pursuant to the International Emergency Economic Powers Act (IEEPA), as amended, among other authorities. Nevertheless, as described below, the determination that NIOC is an agent or affiliate of the IRGC carries consequences.
235. What are the implications for petroleum purchase transactions involving NIOC by financial institutions and entities in countries that have received a significant reduction exception from the Secretary of State?
Significant transactions, financial services, or material support involving National Iranian Oil Company (NIOC) for the purchase of Iranian petroleum or petroleum products by a foreign financial institution or entity based in a country that has received a significant reduction exception from the Secretary of State do not carry potential sanctions consequences – under the Comprehensive Iran Sanctions, Accountability, and Divestment Act (CISADA), sections 302 and 312 of the Iran Threat Reduction and Syria Human Rights Act (TRA), section 1245 of the National Defense Authorization Act for Fiscal Year 2012 (NDAA), or sections 1 and 2 of Executive Order 13622. Sections 302 and 312 of TRA authorize the President not to impose sanctions for the purchase of petroleum or petroleum products from Iran if an exception under subsection 1245(d)(4)(D) of the NDAA applies to the country with primary jurisdiction over the foreign financial institution at the time of the transactions or the provision of services. Notwithstanding the foregoing, any significant transaction for other sanctioned entities (such as Iranian designated banks or other persons described in section 104(c)(2)(E) of CISADA) may result in sanctions, regardless of whether the transaction is for the purchase of petroleum or petroleum products and involves NIOC.
237. How does the effect of this determination compare to the effect of section 1(a) of Executive Order 13622 as to transactions with National Iranian Oil Company (NIOC)?
The effect of the determination is similar to the effect of Executive Order 13622 section 1(a), which provides for prohibitions on the opening of and prohibitions or strict conditions on maintaining correspondent accounts or payable-through accounts in the United States for foreign financial institutions determined by the Secretary of the Treasury, in consultation with the Secretary of State, to have knowingly conducted or facilitated significant financial transactions with NIOC. Executive Order 13622 likewise contains an exception that covers transactions with NIOC conducted or facilitated by foreign financial institutions based in NDAA-excepted jurisdictions. A significant difference between these authorities is that the National Defense Authorization Act (NDAA) exception in the Iran Threat Reduction and Syria Human Rights Act (TRA) section 312 is limited to transactions or financial services for the purchase of petroleum or petroleum products from Iran.
Section 4 of Executive Order "Authorizing the Implementation of Certain Sanctions Set Forth in the Iran Threat Reduction and Syria Human Rights Act of 2012 and Additional Sanctions with Respect to Iran"
Executive Order 13628 of October 9, 2012, “Authorizing the Implementation of Certain Sanctions Set Forth in the Iran Threat Reduction and Syria Human Rights Act of 2012 (TRA) and Additional Sanctions with Respect to Iran,” (“E.O. 13628”) implements certain statutory requirements of the Iran Threat Reduction and Syria Human Rights Act of 2012 (the “TRA”), including amendments to the Iran Sanctions Act (ISA) and the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (CISADA). Specifically, E.O. 13628 implements the requirements of Sections 204, 402, and 403 of the TRA. In addition, consistent with Section 218 of the TRA, Section 4 of E.O. 13628 prohibits foreign subsidiaries (defined below) of United States persons from knowingly violating the Iranian Transactions Regulations, E.O. 13599, section 5 of E.O. 13622, or Section 12 of E.O. 13628, and provides for civil penalties on the U.S. parent company for any such violations.
238. What is the new prohibition on foreign subsidiaries of U.S. persons, and how does it work?
Section 4 of Executive Order 13628 prohibits an entity owned or controlled by a U.S. person and established or maintained outside the United States (a “foreign subsidiary”) from knowingly engaging in any transaction, directly or indirectly, with the Government of Iran or any person subject to the jurisdiction of the Government of Iran, if that transaction would be prohibited by certain Executive orders prohibiting trade and other dealings with, and investment in, Iran and blocking the Government of Iran and Iranian financial institutions, or any regulation issued pursuant to the foregoing, if the transaction were engaged in by a United States person or in the United States. Civil penalties for the foreign subsidiary’s violation shall be applied to the U.S. parent company to the same extent that they would apply to a U.S. person for the same conduct. [10-9-2012]
239. Are foreign subsidiaries of U.S. companies covered under OFAC general licenses and/or permitted to apply for specific licenses from OFAC?
To the extent a transaction is exempt from the prohibitions of the Iranian Transactions Regulations, E.O. 13599, section 5 of E.O. 13622, or Section 12 of E.O. 13628, or is authorized by a general license issued pursuant to these authorities if engaged in by a U.S. person, it would not be prohibited for a foreign subsidiary (as defined above) to engage in the transaction, provided that it satisfies all the conditions and requirements of the exemption or general license. Similarly, if the transaction is one for which a U.S. person might apply for a specific license — for example, the exportation of medical devices to Iran — a foreign subsidiary or its U.S. parent may apply for a specific license for the foreign subsidiary to engage in the transaction. Note: Whether a U.S. parent company’s specific license covers transactions by its foreign subsidiary that are otherwise prohibited by section 4 of E.O. 13628 will depend on the terms of that license and the scope of the authorized activities. [10-9-2012]
240. Is there a wind-down or safe harbor provision in Section 4 of Executive Order 13628?
Consistent with Section 218(d) of the Iran Threat Reduction and Syria Human Rights Actof 2012 (the "TRA"), Subsection 4(c) of Executive Order 13628 provides that civil penalties shall not apply if the U.S. person divests or terminates its business with the foreign subsidiary (as defined above) not later than February 6, 2013. [10-9-2012]
Implementation of Section 504 of the Iran Threat Reduction and Syria Human Rights Act of 2012 (the TRA)
On August 10, 2012, the President signed into law the Iran Threat Reduction and Syria Human RightsAct of 2012, Public Law 112-158 (“TRA”). Section 504 of the TRA amends section 1245(d)(4)(D) of the National Defense Authorization Act for Fiscal Year 2012, Public Law 112-81 (“NDAA”), which the President signed into law on December 31, 2011. The section 504 amendments to the NDAA took effect February 6, 2013. Amendments to the Iranian Financial Sanctions Regulations, 31 C.F.R. part 561 (the “IFSR”) were published on March 15, 2013, to implement sections 503 and 504 of the “TRA” and certain provisions of Executive Order 13622of July 30, 2012.
255. Do the section 504 modifications of the TRA restrict any other dealings with Iran?
Yes, the section 504 modifications also narrow the scope of transactions excepted from certain sanctions available under E.O. 13622. Accordingly, foreign financial institutions (FFIs) in countries that are determined by the Secretary of State to have significantly reduced their purchases of Iranian crude oil pursuant to the NDAA, that knowingly conduct significant financial transactions with the National Iranian Oil Company (“NIOC”), the Naftiran Intertrade Company (“NICO”), or otherwise for the purchase of petroleum or petroleum products from Iran, are only eligible for the significant reduction exception if the FFIs adhere to the bilateral trade restrictions, credit the funds to an account in the country with primary jurisdiction over the FFI, and do not repatriate the funds to Iran.
Example 1: A FFI in a country which has received a significant reduction exception and with primary jurisdiction over the FFI may facilitate a transaction enabling an oil refinery in that country to purchase crude oil from Iran without having exposure to U.S. correspondent account sanctions, so long as the transaction meets section 504’s bilateral trade requirements, the funds are credited to an account in the FFI in the country with primary jurisdiction over the FFI, and the funds are not repatriated to Iran.
Example 2: If, however, a FFI in a country which has received a significant reduction exception facilitates a third country’s crude oil purchase – even a third country with a significant reduction exception – from Iran, the FFI would have exposure to sanctions because the transaction was not solely for the FFI host country’s purchase of crude oil from Iran. [2-6-2013]
257. To which jurisdictions does the significant reduction exception apply (section 504 of the TRA)?
As of February 6, 2013, 20 jurisdictions have been granted a 180-day significant reduction exception.
The following jurisdictions received their 180-day significant reduction exception to the National Defense Authorization Act (NDAA) sanctions on September 14, 2012: Belgium, the Czech Republic, France, Germany, Greece, Italy, Japan, the Netherlands, Poland, Spain, and the United Kingdom.
The following jurisdictions received their 180-day significant reduction exception to NDAA sanctions on December 7, 2012: China, India, Malaysia, Republic of Korea, Singapore, South Africa, Sri Lanka, Taiwan, and Turkey. [2-6-2013]
266. Does the November 8, 2012 designation of National Iranian Oil Company (NIOC) under E.O. 13382 impact the scope of permissible transactions by foreign financial institutions (FFIs) in significantly reducing countries?
Yes. On September 24, 2012, NIOC was identified as an agent or affiliate of Iran’s Islamic Revolutionary Guard Corps (“IRGC”) under section 312 of the TRA , and designated on November 8, 2012, under E.O. 13382 for providing services and support to the IRGC. Accordingly, the Comprehensive Iran Sanctions, Accountability, and Divestment Act (CISADA) applies to transactions with NIOC. As a result of these additional sanctions against NIOC, only transactions solely for the purchase of petroleum or petroleum products from NIOC will fall within the scope of the significant reduction exception. A FFI in a significantly reducing country that is found to knowingly conduct or facilitate other types of significant transactions with NIOC (i.e., transactions unrelated to the purchase of petroleum or petroleum products from Iran) would face exposure to CISADA sanctions.
Example 3: If a FFI in a country with a significant reduction exception facilitates a transaction enabling a company in that country to purchase drilling equipment from NIOC, the FFI risks restrictions on, or loss of, correspondent and payable-through account access in the United States, because the transaction was not solely for the purchase of petroleum or petroleum products from Iran. [2-6-2013]
Issuance of Executive Order 13645 “Authorizing the Implementation of Certain Sanctions Set Forth in the Iran Freedom and Counter-Proliferation Act of 2012 and Additional Sanctions With Respect to Iran” and the Implementation of Certain Provisions of the Iran Freedom And Counter-Proliferation Act of 2012 (IFCA)
On June 3, 2013, the President signed Executive Order 13645 “Authorizing the Implementation of Certain Sanctions Set Forth in the Iran Freedom and Counter-Proliferation Act of 2012 and Additional Sanctions With Respect to Iran.” The E.O. implements certain statutory provisions of the Iran Freedom and Counter-Proliferation Act of 2012 (IFCA) and authorizes the imposition of additional sanctions with respect to Iran. Most of the IFCA provisions target conduct occurring on or after July 1, 2013. The E.O. becomes effective on July 1, 2013. [06-03-13]
288. What is the purpose of Executive Order 13645 of June 3, 2013 entitled “Authorizing the Implementation of Certain Sanctions Set Forth in the Iran Freedom and Counter-Proliferation Act of 2012 and Additional Sanctions With Respect to Iran” (E.O.)?
E.O. 13645 implements certain statutory provisions of IFCA. The E.O. also authorizes the imposition of additional sanctions with respect to Iran, targeting certain transactions and other activity related to the Iranian rial, Iran’s automotive sector, and persons that materially assist Iranian persons on the list of Specially Designated Nationals and Blocked Persons (SDN List) as well as certain persons whose property and interests in property are blocked under the E.O. or E.O. 13599. The E.O. becomes effective at 12:01 a.m. eastern daylight time on July 1, 2013. Questions and Answers (Q&As) 306-312 below provide guidance regarding the E.O.
The Department of the Treasury will be issuing regulations to implement certain provisions in the E.O. In addition, the Department of State expects to adopt an interpretation of the E.O. similar to that set forth below [06-03-13]
291. How does Executive Order 13645 relate to the IFCA provisions?
E.O. 13645 implements and builds upon certain provisions of IFCA as set out in more detail in Q&As 306 and 312 below. [06-03-13]
305. Sanctions under section 1247 of IFCA apply to foreign financial institutions (FFIs) that facilitate financial transactions on behalf of an Iranian person on the SDN List. How does the Executive Order relate to section 1247?
E.O. 13645 tightens the financial sanctions applicable to FFIs under section 1247 of IFCA. (See Q&A 312 below for a discussion of the applicable financial sanctions and exceptions.) [06-03-13]
306. How does Executive Order 13645 relate to the Iran Freedom and Counter-Proliferation Act (IFCA) provisions?
E.O. 13645 provides additional tools related to the IFCA provisions by:
a. Authorizing prohibitions or restrictions on the importation of goods; and
b. Implementing the statutory requirements of section 105C of the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010, as added by section 1249 of IFCA, by blocking the property and interests in property and suspending the entry into the United States of persons determined to have engaged, on or after January 2, 2013, in corruption or other activities relating to the diversion of goods intended for the Iranian people or the misappropriation of proceeds from the sale or resale of such goods. [06-03-13]
307. In addition to implementing certain IFCA provisions, what else does Executive Order 13645 do?
In addition to implementing IFCA, E.O. 13645 authorizes both new sanctions with respect to Iran and the broadening of existing sanctions.
The new sanctions under the E.O. target significant transactions related to (1) the purchase or sale of Iranian rials and derivative, swap, future, forward, or other similar contracts whose value is based on the exchange rate of the Iranian rial, as well as the maintenance of significant funds and accounts outside the territory of Iran denominated in the Iranian rial (see Q&A 309 below), and (2) Iran’s automotive sector (see Q&As 310 and 311 below).
The broadened sanctions under the E.O. allow for the imposition of sanctions on:
a. Persons that materially assist certain Iranian persons on the SDN List (see Q&A 308 below);
b. Persons that materially assist certain other persons whose property and interests in property are blocked under Executive Order 13599 and the E.O. (see Q&A 308 below); and
c. FFIs that knowingly conduct or facilitate a significant financial transaction on behalf of an Iranian person included on SDN List, and certain other persons whose property and interests in property are blocked under Executive Order 13599 or the E.O. (see Q&A 312 below). [06-03-13]
308. What are the implications of the material assistance provision of Executive Order 13645?
Subsection 2(a)(i) of the E.O. authorizes the Department of the Treasury to block the property and interests in property of persons determined to have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, (i) Iranian persons included on the SDN List as well as other persons included on the SDN List whose property and interests in property are blocked pursuant to Executive Order 13599 , in both cases other than Iranian depository institutions whose property and interests in property are blocked solely pursuant to Executive Order 13599, and (ii) persons whose property and interests in property are blocked pursuant to subsection 2(a)(i) of the E.O. Certain activities relating to the pipeline project to supply natural gas from the Shah Deniz gas field in Azerbaijan to Europe and Turkey are excepted from the material support provision of the E.O.
In implementing this provision, the United States Government will take appropriate steps to avoid, among other things, undue impacts on the access of the people of Iran to humanitarian items, telecommunications, and other basic services. [06-03-13]
309. What transactions involving the Iranian rial will be subject to sanctions?
FFIs risk correspondent and payable-through account and blocking sanctions for (i) knowingly conducting or facilitating, on or after July 1, 2013, significant transactions 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, or (ii) maintaining, on or after July 1, 2013, significant funds or accounts outside the territory of Iran denominated in the Iranian rial. [06-03-13]
310. What is considered Iran’s automotive sector for purposes of Executive Order 13645?
E.O. 13645 authorizes the imposition of correspondent and payable-through account and Iran Sanctions Act-style sanctions for certain transactions, on or after July 1, 2013, for the sale, supply, or transfer to Iran of significant goods or services used in connection with Iran’s automotive sector. The E.O. defines the automotive sector of Iran as the manufacturing or assembling in Iran of light and heavy vehicles including passenger cars, trucks, buses, minibuses, pick-up trucks, and motorcycles, as well as original equipment manufacturing and after-market parts manufacturing relating to such vehicles. [06-03-13]
311. What are goods or services used in connection with Iran’s automotive sector for purposes of E.O. 13645?
We anticipate that regulations to be promulgated will define goods or services used in connection with Iran’s automotive sector to include goods or services that contribute to (i) Iran’s ability to research, develop, manufacture, and assemble light and heavy vehicles, and (ii) the manufacturing or assembling of original equipment and after-market parts used in Iran’s automotive industry.
The E.O. makes sanctionable certain transactions for the sale, supply, or transfer to Iran of “significant” goods or services used in connection with the automotive sector of Iran. (See Q&A 289 above for an interpretation of “significant.”) [06-03-13]
316. Is the sale, supply, or transfer of finished vehicles or “auto kits” to Iran sanctionable under E.O. 13645?
E.O. 13645 does not make sanctionable the export of finished vehicles to Iran if no further assembly or manufacturing is required. As such, exporting fully assembled and finished vehicles to Iran for sale by a non-sanctioned Iranian dealer or distribution network would not be sanctionable.
In contrast, “auto kits” (or “knock-down kits”) exported to Iran for assembly in Iran would be considered goods or services used in connection with the automotive sector of Iran and the export of such kits to Iran would be sanctionable if the transaction is “significant.” (See Q&A 289 above for an interpretation of “significant.”) [07-01-13]
317. Is the sale, supply, or transfer of goods or services for the maintenance of finished vehicles sanctionable under E.O. 13645?
Goods or services for the maintenance of finished vehicles exported to Iran would generally not be considered “significant goods or services used in connection with the automotive sector of Iran,” for the purposes of the E.O., and the provision of such goods or services would generally not be sanctionable. However, the export, sale, or distribution of goods (e.g., auto parts and accessories) or services that would contribute to Iran’s ability to manufacture or assemble vehicles, or manufacture original equipment and after-market parts in Iran could create exposure to sanctions. Persons exporting parts and services to Iran for the maintenance or upkeep of finished automobiles, and foreign financial institutions (FFIs) facilitating such exports, should exercise caution to ensure that the parts or services are not diverted for the manufacturing or assembly of vehicles in Iran or the manufacturing of original equipment or after-market parts in Iran, and are used only for maintenance and upkeep. [07-01-13]
312. How does Executive Order 13645 tighten the financial sanctions applicable to foreign financial institutions (FFIs) under section 1247 of IFCA?
Section 3 of E.O. 13645 tightens the financial sanctions applicable to FFIs under section 1247 of IFCA and provides for correspondent and payable-through account sanctions on FFIs that knowingly conduct or facilitate a significant financial transaction on behalf of an Iranian person included on the SDN List (other than Iranian depository institutions whose property and interests in property are blocked solely pursuant to Executive Order 13599) or any other person included on the SDN List whose property and interests in property are blocked pursuant to Executive Order 13599 (other than Iranian depository institutions whose property and interests in property are blocked solely pursuant to Executive Order 13599) or subsection 2(a)(i) of the E.O.
The following transactions would not be subject to sanctions under this section of the E.O.:
a. Transactions for the provision of agricultural commodities, food, medicine, or medical devices to Iran.
b. A significant financial transaction conducted or facilitated by a FFI for the purchase of petroleum or petroleum products from Iran if a significant reduction exception under section 1245(d)(4)(D) of the National Defense Authorization Act (NDAA) applies to the country with primary jurisdiction over such FFI and the financial transaction is for trade between Iran and the country with primary jurisdiction over the FFI, and any funds owed to Iran as a result of the trade are credited to an account located in the country with primary jurisdiction over the FFI. We anticipate the implementation of these trade requirements to be similar to the trade requirements set forth in the IFSR, in particular 31 CFR § 561.203(j) and 31 CFR § 561.203(k).
c. A significant financial transaction conducted or facilitated by a FFI for the sale, supply, or transfer of natural gas to or from Iran only if the financial transaction is solely for trade between the country with primary jurisdiction over the FFI and Iran, and any funds owed to Iran as a result of such trade are credited to an account located in the country with primary jurisdiction over the FFI. We anticipate the implementation of these trade requirements to be similar to the trade requirements set forth in the IFSR, in particular 31 CFR § 561.203(j) and 31 CFR § 561.203(k).
d. Certain activities relating to the pipeline project to supply natural gas from the Shah Deniz gas field in Azerbaijan to Europe and Turkey. [06-03-13]