On December 11, 2019, the US State Department announced the designations of the Islamic Republic of Iran Shipping Lines (“IRISL”), its China-based subsidiary, E-Sail Shipping Company Ltd (“E-Sail”), and Mahan Air, a privately-owned airline based in Tehran, under Executive Order 13382 (“E.O. 13382”), for their involvement in the transporting of weapons of mass destruction (“WMD”). All three entities had previously been designated to the Specially Designated Nationals and Blocked Persons List (“SDN List”) administered by US Treasury Department’s Office of Foreign Assets Control (“OFAC”). OFAC will implement the new designations by adding the [NPWMD] and [IFSR] tags to the SDN List entries of IRISL and E-Sail effective June 8, 2020. OFAC updated the Mahan Air entry effective immediately. OFAC published two related Frequently Asked Questions, FAQs 810 and 811.
IRISL and E-Sail
IRISL and E-Sail were designated on the SDN List with the [IRAN] tag on November 5, 2018, for being owned or controlled by the Government of Iran and thus blocked parties under Executive Order 13599 and the Iranian Transactions and Sanctions Regulations (“ITSR”). IRISL was also designated under the Iran Freedom and Counter-Proliferation Act of 2012 for being part of the Iranian shipping sector, as marked on the SDN List with an [IFCA] tag.
Once the E.O. 13382 designations become effective, US companies will generally be prohibited from, and non-US persons will risk exposure to secondary sanctions for, engaging in any transactions involving IRISL or E-Sail, including exports of humanitarian goods to Iran (such as those authorized under the ITSR “Ag/Med” licensing regime). As indicated above, recognizing that some US and non-US exporters of humanitarian goods have permissibly been using IRISL and E-Sail to ship the goods to Iran, OFAC is granting a wind-down period until June 7, 2020 to find alternative shipping methods.
Effective December 11, 2019, Mahan Air and three of its general sales agents have been designated to the SDN List under the [NPWMD] and [IFSR] tags. Mahan Air was previously designated as an SDN under the Global Terrorism Sanctions Regulations, with the [SDGT] tag. Accordingly, the new designations should not have a practical impact on US or non-US companies since US companies were already prohibited from transacting with Mahan Air, and non-US companies were already subject to potential secondary sanctions for transacting with Mahan Air.