On April 8, 2019, the Trump administration escalated pressure on Iran by announcing its plan to designate the Islamic Revolutionary Guard Corps (“IRGC”) as a Foreign Terrorist Organization (“FTO”) under Section 219 of the Immigration and Nationality Act. The designation marks the first time the United States has branded a foreign government military entity a terrorist group. In retaliation, Iran designated US forces in the Middle East as a terrorist group.  

The designation of the IRGC as an FTO only has limited additional US sanctions compliance impact given that the IRGC is already listed on the Specially Designated Nationals and Blocked Persons List (“SDN List”) under a number of sanctions authorities.  Most recently, the IRGC was designated under the Global Terrorism Sanctions Regulations.  See our prior blog post on this designation here.  The IRGC is also blocked under Executive Orders 13382 (relating to WMD proliferation), 13553 (Iranian human rights abuses), 13606 (Iranian and Syrian human rights abuses via information technology), and 13224 (counterterrorism).  The FTO designation has the following additional consequences:

 

  • Material Support or Resources. The FTO designation makes it a crime to provide “material support or resources” to the IRGC including any property, tangible or intangible, or service, including currency or monetary instruments or financial securities, financial services, lodging, training, expert advice or assistance, safehouses, false documentation or identification, communications equipment, facilities, weapons, lethal substances, explosives, personnel (1 or more individuals who maybe or include oneself), and transportation, except medicine or religious materials.

    The Justice Department said Monday it would support the Administration’s efforts in designating the IRGC as an FTO.  The IRGC is involved in a wide range of projects in various sectors of Iran’s economy, including construction, automotive, telecommunications, and energy.  The IRGC’s designation as an FTO could expose parties subject to the jurisdiction of the United States and engaged in transactions with the IRGC to criminal prosecution for providing material support to the IRGC.

  • Inadmissible and Removable. Representatives and members of the IRGC, if they are aliens (i.e., non-US citizens or nationals), are inadmissible to and, in certain circumstances, removable from the United States.
  • Blocking. Upon notification to Congressional leaders, the Secretary of the Treasury may require United States financial institutions possessing or controlling any assets of IRGC included in the notification to block all financial transactions involving those assets until further directive from either the Secretary of the Treasury, Act of Congress, or order of court. This blocking requirement overlaps with existing blocking requirements pursuant to the IRGC’s listing on the SDN List.
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Andrea practices international commercial law with a focus on cross-border transactions including post-acquisition integration IP migrations and technology licensing. She also advises companies on export controls, sanctions, customs and international corporate compliance. Andrea also has an active pro bono practice, including helping organizations with international constitutional matters and victims of domestic abuse.

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Inessa Owens is an associate in the Washington, D.C. office and member of the Firm’s International Trade practice group. She focuses on outbound trade compliance issues, including compliance with the Export Administration Regulations, anti-boycott rules, and economic sanctions administered by the US Treasury Department’s Office of Foreign Assets Control, including those targeting Cuba, Iran, North Korea, Syria, and Russia. She has worked with clients in diverse industries that include finance, pharmaceuticals, and energy.

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Paul Amberg is a partner in Baker McKenzie’s Amsterdam office, where he handles international trade and compliance issues. He advises multinational companies on export controls, trade sanctions, antiboycott rules, customs laws, anticorruption laws, and commercial law matters. Paul helps clients assess and address compliance risks presented by export controls, trade sanctions, antiboycott rules, customs laws, and anticorruption laws. His practice especially focuses on internal reviews, voluntary disclosure filings, and enforcement actions brought by, the US Government in relation to the Export Administration Regulations (EAR), International Traffic in Arms Regulations (ITAR), trade and economic sanctions programs, and US customs laws.