This blog is normally devoted strictly to issues surrounding the sanctions programs administered and enforced by the United States Department of the Treasury Office of Foreign Assets Control (OFAC). However, there have been a number of developments over the past few weeks which have occured outside of OFAC, but that might dramatically impact one of the sanctions programs administered by OFAC: the Iranian Transactions Regulations.

Many people know that in addition to U.S. economic sanctions against Iran, there are also international U.N. sanctions against the Islamic Republic. What some people might not know is that those U.N. sanctions only call upon Member States to exercise vigilance or restraint in interacting with Iran on certain issues, such as weapons trade, banking, and shipping. However, there are now new proposed sanctions being circulated around the U.N. which call for actual prohibitions on particular transactions with Iran. These new sanctions in particular look to attack Iran’s banking system by banning transactions with certain banks much in the same way the U.S. sanctions ban transactions with Bank Melli and Bank Saderat. Furthermore, these sanctions would augment the travel ban and freezing of assets of some individuals.

Essentially, the goal with these proposed U.N. sanctions against Iran is to make them look more like the U.S. economic sanctions against Iran by mimicking sanctions available through various U.S. programs. Currently, the U.S. employs a number of sanctions programs to restrict both the physical and financial movements of targets in Iran or involving Iran. These programs include the Iranian Transactions Regulations, the Iranian Assets Control Regulations, and the Non-Proliferation Sanctions Regulations. It seems the proposed U.N. sanctions seek to draw a page  from OFAC administered sanctions programs in establishing their approach.

Also, the U.S. House and Senate have passed the Comprehensive Iran Sanctions, Accountability and Divestment Act. That bill seeks to vastly expand U.S. economic sanctions against Iran. Some of the new key provisions include: penalizing non-U.S. companies involved in Iranian petroleum refining and importation, prohibiting the U.S. government from entering into contracts with any firms that sell equipment to Iran which would be used for censoring and monitoring its people, and requiring licensing for certain exports to countries deemed to be “Destinations of Possible Diversion Concern”.

While its clear that these proposed laws greatly expand sanctions against Iran. What is unclear is who will be responsible for administration of these sanctions from a U.S. prespective. Currently, OFAC does the majority of the work in regards to Iranian sanctions, however, if these new sanctions are in fact signed into law, will OFAC remain the primary player when it comes to administration and enforcement of the sanctions? Or will the United States Department of Commerce Bureau of Industry and Security (“BIS”) take the lead?

Also, what will be the impact on the Iranian Transactions Regulations be? Will they be amended? Will a completely new program be implemented into the regulations? These are important issues to consider because every government agency operates in their own fashion. Therefore, those in the private sector who have found themselves working with (or against) OFAC in regards to Iran sanctions, might soon find themselves dealing with another agency which operates differently. It is important to remember that the sanctions regulations are often ambigious, therefore, it is not what they say, but how they are administered and enforced which is vital to those trying to navigate their prohibitions and exemptions.

The author of this blog is Erich Ferrari, an attorney specializing in OFAC litigation. If you have any questions please contact him at 202-280-6370 at 202-351-6161 or ferrari@ferrari-legal.com.