The Department of the Treasury Office of Foreign Assets Control ("OFAC") designated nine Iranian individuals and entities under Executive Order 13224 (Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism). The designation stems from a joint action by the U.S. and United Arab Emirates ("UAE") against an alleged illicit Iranian currency exchange network.

Treasury Secretary Steven T. Mnuchin stated that the Iranian regime, including Iran's Central Bank, abused access to entities in the UAE in order to acquire U.S. dollars to fund the Islamic Revolutionary Guard Corps-Qods Force's ("IRGC-QF") "malign activities, including to fund and arm its regional proxy groups, by concealing the purpose for which the U.S. dollars were acquired." The designated Iranian individuals and entities "procured and transferred millions to the IRGC-QF" using a large-scale currency exchange network.

All property and interests in property of the individuals and entities designated are blocked subject to U.S. jurisdiction, and U.S. persons generally are prohibited from nearly all dealings with them. In addition, non-U.S. persons who continue to have dealings with the designated parties risk exposure to "secondary sanctions," which could include a prohibition on access to the U.S. financial system or the blocking of property under U.S. jurisdiction.

Commentary / James Treanor

These sanctions are not directly related to Iran's nuclear program, nor are they a consequence of President Trump's announcement last week that the United States will withdraw from the Iran nuclear deal (known as the Joint Comprehensive Plan of Action or "JCPOA"). The re-imposition of broad U.S. nuclear-related sanctions against Iran is generally subject to a "wind-down" period of 90 or 180 days (depending on the activity involved). OFAC's action against the alleged Iranian currency exchange network does, however, serve as a reminder that the Trump administration has numerous non-nuclear related authorities under which sanctions can be imposed on Iran with immediate effect. The administration has delivered a clear message that it will not hesitate to make full use of these authorities, and that the U.S. "wind down" of its JCPOA commitments may be accompanied by a gradual (or not-so-gradual) escalation of non-nuclear Iran sanctions. This only underscores the importance for U.S. and foreign financial institutions and other parties to prepare sooner rather than later for the return of broad restrictions on dealings with Iran.

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