Last Thursday, the United States Department of the Treasury’s Office of Foreign Assets Control (OFAC), updated its notice regarding the imposition of sanctions under the Iran Sanctions Act of 1996 (ISA) to include three (3) new entities. The newly designated entities include Fal Oil Company, Ltd., Kuo Oil (S) Pte. Limited, and Zhuhai Zhenrong Company. These companies have been determined to have made certain investments in Iran’s energy sector or to have engaged in certain activities relating to Iran’s refined petroleum sector. E.O. 13574 provides IEEPA implementation and enforcement authority for the five ISA sanctions that regulate private conduct. Among other sanctions, the Secretary of State has chosen to impose an ISA sanction on the persons listed below that involves a prohibition on U.S. financial institutions making certain loans or credits.

It is important to note that despite these ISA designations, the three entities do not appear on the OFAC Specially Designated Nationals (SDN) List. As such, the assets of these entities are not to be blocked upon entering into the jurisdiction of the United States. Nonetheless, the impact of the sanctions might be more than just to deny the targeted entities credits and loans. There is a certain degree of reputational risk associated with being targeted by the U.S. Government for imposition of sanctions. Typically, both U.S. and foreign firms alike will feel very wary about becoming involved in activities with such entities, particularly if they believe the targeted parties are engaged in transactions related to the development of Iran’s petroleum resources, as that could subject them to liability under a variety of other sanctions programs.

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