In two separate rounds of sanctions designations in the past week, the United States added more parties to the Specially Designated Nationals List (“SDN List”) maintained by the Office of Foreign Assets Control (“OFAC”) in the US Treasury Department. These designations are noteworthy given their scope and, in the case of the Iran-related designations, the fact that they included parties in China, Russia, and Türkiye.
Not only does this increase the risk of encountering sanctioned parties in business transactions, it also increases the so-called “secondary sanctions” risks for parties outside US jurisdiction that may be engaged in the types of activities that can cause them to wind up sanctions targets themselves. These designations included:
- September 14, 2023 – Russian Elites and Industrial Base – OFAC and the US State Department added more than 150 parties, including both individuals and entities, to the SDN List. These designations were made under Executive Order 14024 and targeted Russian elites and Russia’s industrial base, financial institutions, and technology suppliers. The Treasury Department press release issued alongside these designations states that they targeted persons benefiting from, supporting, and sustaining Russia’s war against Ukraine. See the complete list of OFAC designations here, the Treasury Department press release here, and a fact sheet issued by the State Department is here, which includes their new designations.
Alongside these designations, OFAC issued General License 72, authorizing the wind down of transactions with certain of the newly listed entities and any entity in which one or more of the below own, directly or indirectly, individually or in the aggregate, a 50% or greater interest. Separately, OFAC also extended the authorization period for General License 55A, for transactions related to the maritime transport of crude oil originating from the Sakhalin-2 project that is solely for importation into Japan. The general license is now valid through 12:01 a.m. eastern daylight time, June 28, 2024.
- September 19, 2023 – Iranian Drones and Military Aircraft – OFAC issued additional designations targeting Iran’s unmanned aerial vehicle (“UAV”) (i.e., drones) and military aircraft production. While the immediate focus is Iran, sanctions targeting Iranian drone production have recently been a priority for the US Government in light of their use in the Russian invasion of Ukraine. The newly sanctioned parties include seven individuals and four entities based in Iran, the People’s Republic of China (“PRC”), Russia, and Türkiye in connection with Iran’s UAV and military aircraft development. These parties were designated as SDNs pursuant to Executive Order 13382, which targets proliferators of weapons of mass destruction or their means of delivery and their supporters. These designations build on those issued in March 2023, when OFAC designated five PRC-based companies and one individual responsible for the sale and shipment of thousands of aerospace components, including those with UAV applications. The list of designations is linked here and the Treasury Department press release is linked here.
US persons are generally prohibited from dealing directly or indirectly with SDNs, entities that are owned 50% or more by one or more SDNs, and their property or property interests. Non-US persons can be held liable for “causing” violations by US persons involving transactions with SDNs and can also be subject to secondary sanctions risks (which would include, in particular, the risk of designation as an SDN themselves) for providing “material support” to SDNs.
