In connection with the recently negotiated deal releasing five
U.S. citizens wrongfully imprisoned by the government of Iran, on
September 18 the U.S. government announced the establishment of a
humanitarian channel ("HC") in Qatar to administer $6
billion in Iranian funds. The funds, comprised of payments made to
Iran by South Korea for the purchase of oil, have not been frozen
under U.S. law. Until now, they have been held in a restricted
account in South Korea. Under the terms of the deal, the funds are
being transferred to a restricted account in Qatar, and may only be
used for the purchase of food, agricultural goods, medicine, and
medical devices for the Iranian people. The funds may not be
released to the government of Iran or to Iranian companies. As part
of the deal, five Iranian prisoners charged with, or convicted of,
crimes in the United States have been freed as well.
The deal does not entail any lifting of U.S. sanctions against
Iran, which have long included broad exceptions and authorizations
for the supply of humanitarian goods by U.S. and non-U.S. persons.
The newly established HC provides an option – not a
requirement – for facilitating payments for humanitarian
exports to Iran. Financial institutions participating in the HC
have received guidance from the U.S. government and have committed
to conducting stringent due diligence. The U.S. government intends
to monitor the HC closely and to take appropriate action if Iran
attempts to use the funds for any purpose other than permitted
humanitarian purchases.
As of now, the details of the HC have not been promulgated. Time
will tell if the restrictions hold firm. Companies interested in
participating in transactions under the HC are advised to
communicate with the Qatari International Media Office at info@imo.gov.qa.
In a related development, the U.S. government has designated former
Iranian President Mahmoud Ahmadinejad, as well as Iran's
Ministry of Intelligence and Security ("MOIS") as
Specially Designated Nationals based on their involvement in the
wrongful detention of U.S. citizens. The legal bases for the
designations are (i) the Robert Levinson Hostage Recovery and
Hostage-Taking Accountability Act of 2020, which provides criteria
for the Secretary of State to determine whether a person has been
wrongfully detained abroad, and (ii) Executive Order 14078, issued
by President Biden on July 19, 2022 and titled "Bolstering
Efforts to Bring Hostages and Wrongfully Detained U.S. Nationals
Home," which empowers the Secretary of State, in consultation
with the Secretary of the Treasury and the Attorney General, to
place on OFAC's List of Specially Designated Nationals and
Blocked Persons ("SDN List") any foreign person
determined to be responsible for or complicit in, to have directly
or indirectly engaged in, or to be responsible for ordering,
controlling, or otherwise directing, the hostage-taking of a U.S.
national or the wrongful detention of a U.S. national abroad; to
have attempted to engage in such activity; or to be or have been a
leader or official of an entity that has engaged in, or whose
members have engaged in, such activity if it relates to the
leader's or official's tenure.
Robert Levinson was a former U.S. federal agent who was abducted
and detained in Iran by MOIS in 2007, during President
Ahmadinejad's term in office. He is believed to have died in
Iranian custody.
The effect of being placed on the SDN List is to exclude the listed
party from participating in the U.S. economic system and to block
any property or interest in property of the party in the United
States or in the possession or custody of a U.S. person. Both the
former president of Iran and MOIS have been subjected to these
restrictions for years, based on other sources of authority,
including executive orders imposing and implementing the
comprehensive U.S. embargo on Iran. The new designations,
therefore, are not expected to materially impact either the former
president or MOIS. The evident purpose of the designations is to
warn persons everywhere that they will face severe economic
consequences if they participate in the wrongful detention of any
U.S. national. This is in keeping with the U.S. government's
prioritization of combating the burgeoning practice in certain
parts of the globe of seizing U.S. nationals and holding them
hostage.
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