United States: New Sanctions On Iran's Iron, Steel, Aluminum, And Copper Sectors

Last Updated: May 31 2019
Article by Eric R. Markus

What Happened: In an effort to target revenue streams that may provide support for the Government of Iran's nuclear program, President Donald Trump issued an Executive Order on May 8, 2019 (Metals Order) authorizing broad sanctions with respect to the iron, steel, aluminum and copper sectors (i.e., industrial metals sector) of the Islamic Republic of Iran.

The Bottom Line: These sanctions reach far beyond Iran's borders and create heightened risks for foreign companies and foreign financial institutions (FFIs) engaged in business related to Iran's industrial metals sector.

The Full Story

The Order authorizes the secretary of the US Department of the Treasury (Treasury Secretary), acting in consultation with the secretary of the US Department of State, to impose both blocking sanctions on foreign persons and correspondent and payable-through account (CAPTA) sanctions on FFIs. Specifically, the Treasury Secretary may designate as Specially Designated Nationals (SDNs) and "block" the property of any person that, after May 8, 2019:

  1. operates in Iran's industrial metals sector or, by virtue of ownership and control rules established by the Office of Foreign Assets Control (OFAC) of the US Department of Treasury, owns, controls or operates any entity that is part of these sectors;
  2. knowingly engages in a significant transaction for the sale, supply or transfer of goods or services in connection with Iran's industrial metals sector; or
  3. knowingly engages in a significant transaction for the purchase, acquisition, sale, transport or marketing of metals and products from Iran's industrial metals sector. 

In addition, the Metals Order authorizes the imposition of US economic sanctions against any person that materially assists a person sanctioned for any of the above activities or that is deemed to be owned or controlled by any such person by virtue of OFAC's ownership and control rules.

In addition to the general blocking sanctions described above, the Metals Order authorizes OFAC to impose CAPTA sanctions on FFIs determined to have facilitated significant financial transactions related to the sale, supply or transfer of goods or services in connection with Iran's industrial metals sector or purchase, acquisition, sale, transport or marketing of metals and products from Iran's industrial metals sector as well as for facilitating transactions with blocked persons. Per OFAC's March 14, 2019 announcement, FFIs determined to have facilitated these types of transactions will be designated on OFAC's CAPTA List. CAPTA-designated FFIs will be prohibited from, or have strict conditions imposed upon, maintaining correspondent or payable-through accounts in the United States.

Also on May 8, 2019, OFAC released limited guidance on the Metals Order that summarizes the sanctions and clarifies that persons engaged in transactions that could be sanctioned under the Order will have a 90day wind-down period to conclude existing transactions without exposure to these sanctions. All new transactions—even ones that are completed within this 90-day window—are potentially subject to being sanctioned under the Metals Order. OFAC has not yet provided guidance specific to the Metals Order on what constitutes a "significant transaction," but has indicated that it intends to adopt a standard similar to that used in interpreting the Iran Freedom and Counter-Proliferation Act. Under this standard, OFAC considers the totality of the facts and circumstances of a given transaction(s), particularly the size, number and frequency of the transactions, the nature of the transaction, whether the transaction is performed with the involvement or approval of management, the proximity between the person or FFI engaging in the transaction, the impact of the transaction on the objectives of the sanctions and whether the transaction involves an attempt to obscure or conceal the actual parties or true nature. Given the wide reach of the sanctions on Iran's industrial metals sector, further guidance may be forthcoming.

In light of the Metals Order, OFAC's guidance and accelerating tensions between Iran and the United States, foreign entities that conduct business related to Iran's industrial metals sector, FFIs and others should promptly assess their sanctions exposure under the Order. Under the Metals Order, for example, a foreign (non-FFI) company that has no US presence but that utilizes the US financial system for wire transfers may be subject to the potential blocking of its funds as they transit the US financial system even where such transfer is being made between two foreign companies. Foreign companies seeking to mitigate sanctions risk and US-connected companies seeking to limit exposure to potential enforcement actions should also take careful note of the wind-down period and plan for forthcoming SDN designations under the Order. The full text of the Metals Order and OFAC's guidance thereon is available online here, and the president's statement regarding the administration's position with respect to Iran is available online here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions