We have been getting a host of questions recently, particularly from foreign companies, regarding the designation of twenty (20) private Iranian financial institutions by the United States Department of the Treasury’s Office of Foreign Assets Control (OFAC) on July 12, 2012. These Iranian financial institutions were designated pursuant to Executive Order 13599 and placed on OFAC’s List of Specially Designated Nationals and Blocked Persons (SDN List). Individuals and entities placed on OFAC’s SDN List are typically blocked and are considered to be unable to have any dealings with the U.S. As a result of this common perception, many foreign firms with U.S. ties or utilizing OFAC license authorizations thought that they could no longer receive payment from any of the Iranian financial institutions under those licenses. As I wrote shortly after the designations came out, there is no impact of the placement of these entities on the OFAC SDN List for those operating under an OFAC specific or general license.

The reason for this is because these entities, despite not appearing on the SDN List until July 12, 2012, had been targeted for sanctioning on February 5, 2012 when Executive Order 13599 first was issued. However, OFAC did not place these entities names on the list until this past July. The reason why the designation does not impact the validity of the license authorization to receive payment from these financial institutions is because on the same day that Executive Order 13599 was issued, OFAC issued General Licenses A and B. Those two general licenses ensured the validity of any current and future specific license authorizations and general licenses to transact with those Iranian financial institutions which had been designated pursuant to Executive Order 13599 alone. The way you can tell if an Iranian financial institution was designated only under Executive Order 13599 is by looking at their entry on the OFAC SDN List. If the only notation that appears is an [IRAN] notation, then that Iranian financial institution has only been designated pursuant to Executive Order 13599. If there are other notations such as [NPWMD] or [SDGT] then those Iranian financial institutions are designated pursuant to other OFAC administered sanctions program.

The inclusion of the Iranian financial institutions to the OFAC SDN List on July 12, 2012, definitely caused a lot of people to scratch their heads and wonder if their licenses were useless. Those who are afraid their license to receive funds from those institutions were negatively impacted should not fret, the licenses are still good and payments from those institutions can still be made as long as the Iranian financial institution remains designated as [IRAN] alone.

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.