On May 8, 2019, President Trump issued Executive Order 13871 (the “Iran Metals EO”) imposing sanctions on the iron, steel, aluminum, and cooper sectors of Iran subject to a 90-day wind-down period that will expire on August 6, 2019. Although the sale, supply or transfer to/from Iran of steel and aluminum is already targeted by Section 1245 of the Iran Freedom and Counter-Proliferation Act of 2012, the Iran Metals EO expands upon those sanctions and further targets the Iranian iron and copper sectors.

The Iran Metals EO authorizes the US Government to designate as a Specially Designated National (“SDN”) any person or entity that meets the following criteria:

  1. Operating in the iron, steel, aluminum, or copper sector of Iran, or being a person that owns, controls, or operates an entity that is part of the iron, steel, aluminum, or copper sector of Iran;
  2. Knowingly engaging, in a “significant” transaction for the sale, supply, or transfer to Iran of significant goods or services used in connection with the iron, steel, aluminum, or copper sectors of Iran on or after May 8, 2019;
  3. Knowingly engaging in a “significant” transaction for the purchase, acquisition, sale, transport, or marketing of iron, iron products, aluminum, aluminum products, steel, steel products, copper, or copper products from Iran on or after May 8, 2019;
  4. Materially assisting, sponsoring, or providing financial, material, or technological support for, or goods or services in support of any person designated as an SDN pursuant to the Iran Metals EO; or
  5. Being owned or controlled by, or having acted or purported to act for or on behalf of, directly or indirectly, any person designated as an SDN pursuant to the Iran Metals EO.

As such, the Iran Metals EO authorizes the imposition of sanctions on non-US persons operating both within and outside of Iran who engage in the activities described above. In addition, the Iran Metals EO authorizes the imposition of sanctions on non-US financial institutions involved in certain financial transactions involving these metal-related sectors of the Iranian economy. In particular, the Iran Metals EO authorizes the imposition of correspondent account and payable-though account sanctions on non-US financial institutions that, on or after May 8, 2019, knowingly conduct or facilitate any “significant” financial transaction:

  1. For the sale, supply, or transfer to Iran of significant goods or services used in connection with the iron, steel, aluminum, or copper sectors of Iran;
  2. For the purchase, acquisition, sale, transport, or marketing of iron, iron products, aluminum, aluminum products, steel, steel products, copper, or copper products from Iran; or
  3. For or on behalf of any person designated as an SDN pursuant to the Iran Metals EO.

For the purposes of the Iran Metals EO, OFAC anticipates that it will adopt the multi-factor definition of “significant” set out at 31 C.F.R § 561.404, which includes the size, number, and frequency of the transactions and their impact on US sanctions program objectives. OFAC guidance on the Iran Metals EO also clarifies that entering into new business that would be sanctionable under the Iran Metals EO will not be considered wind-down activity, and could be sanctioned even during the wind-down period.

Author

Mr. McMillan's practice involves compliance counseling; compliance programs; licensing; compliance reviews; internal investigations; voluntary disclosures; administrative enforcement actions; criminal investigations; customs inquiries, audits, detentions, and seizures; and trade-compliance due diligence and post-acquisition integration in mergers and acquisitions. His practice includes matters that implicate the US International Traffic in Arms Regulations (ITAR), US Export Administration Regulations (EAR), US National Industrial Security Program (NISP), the US Committee on Foreign Investment in the United States (CFIUS), and equivalent non-US laws. Mr. McMillan regularly advises on and represents clients in matters involving technology, including its control, protection, accidental disclosure, diversion, or unauthorized collection. Mr. McMillan has extensive experience working with companies in the aerospace and defense industry, as well as companies in the Middle East and other parts of Asia.

Author

Ms. Test advices clients on issues relating to licensing, regulatory interpretations, enforcement actions, internal investigations and compliance audits, as well as the design, implementation and administration of compliance programs. She also advises clients on the extra-territorial application of trade compliance-related regulations in cross-border transactions.

Author

Daniel Andreeff’s practice focuses on US economic and trade sanctions, including those targeting Iran, Russia, Cuba, Syria, and North Korea, export controls, and anti-boycott laws. He represents clients in national security reviews before the Committee on Foreign Investment in the United States (CFIUS), and has experience in federal court litigation and congressional investigations. His pro bono practice includes providing sanctions and export control advice to a global humanitarian NGO. * Admitted in New York only. Practice in the District of Columbia is under the supervision of a member of the District of Columbia Bar.