In tandem with its certification of Iran’s compliance with the Joint Comprehensive Plan of Action (JCPOA) – the nuclear accord between the U.S., other major world powers, and Iran – the Trump administration imposed new sanctions on the Islamic Republic, targeting individuals and entities engaged in support of Iran’s Islamic Revolutionary Guard Corps (IRGC) or involved in the hacking of U.S. software programs. OFAC’s designation action follows what is now a routine practice of certifying Iran’s compliance with the JCPOA on the one hand, while at the same time imposing new sanctions on Iran for activities outside the scope of its nuclear program. In addition, despite the Trump administration’s public messaging that its action represents a new, tougher focus on Iran’s malign activities outside of the nuclear realm, OFAC’s designation action is qualitatively consistent with the Obama administration’s prior activities for reasons explained below.
OFAC — Executive Order 13382
Acting under the authority of Executive Order (E.O.) 13382, “Blocking Property of Weapons of Mass Destruction Proliferators and Their Supporters,” OFAC designated seven (7) entities and five (5) individuals “for engaging in activities in support of Iran’s military or Iran’s Islamic Revolutionary Guard Corps.” OFAC designated Rayan Roshd Afzar Company, an Iran-based entity, as well as three related individuals, for providing or attempting to provide financial, material, technological, or other support for, or goods or services in support of, the IRGC – an entity designated under E.O. 13382. Specifically, OFAC alleged that Rayan Roshd Afzar Company had “produced technical components for the IRGC’s unmanned aerial vehicle (UAV) program and [had] sought to repair IRGC military equipment.” Moreover, OFAC alleged that Rayan Roshd Afzar Company had “worked to produce software for the IRGC’s aerospace program” and “tools that supported IRGC efforts to restrict or block social media and telecommunications content in Iran.”
OFAC designated Qeshm Madkandaloo Shipbuilding Cooperative Co. “for having provided, or attempted to provide financial, material, technological or other support for, or goods or services in support of, the IRGC.” More particularly, OFAC alleged that Qeshm Madkandaloo “has been a supplier to the IRGC-Navy of dockside equipment, as well as general support and maintenance services, since as early as 2011.” Further, OFAC alleged that Qeshm Madkandaloo “assisted in the development of fast attack boat platforms, built dock infrastructure worth hundreds of thousands of dollars, and provided repair and maintenance services for dockside equipment such as cranes.” Related to this designation, OFAC designated the Ramor Group and a related individual for having “provided, or attempted to provide, financial, material, technological, or other support for, or goods or services in support of, Qeshm Madkandaloo.” OFAC alleged that the Ramor Group “acted as a consignee for U.S.-origin goods ultimately destined for Qeshm Madkandaloo and sold goods directly to Qeshm Madkandaloo.”
Finally, OFAC designated a “China-based procurement agent Emily Liu and four associated entities…for proliferation activities related to a key supporter of Iran’s military.” Specifically, Liu “provided, or attempted to provide, financial, material, technological, or other support for, or goods or services in support of, Iran’s Shiraz Electronics Industries (SEI),” including by seeking “to procure U.S.-, Canadian-, and European-origin electronic components on behalf of SEI.” Four China-based entities were likewise designated under E.O. 13382 “for being owned or controlled by, or for having provided, or attempted to provide, financial, material, technological, or other support for, or goods or services in support of,  Liu.”
State Department — E.O. 13382
The State Department utilized its own authorities under E.O. 13382 to designate two Iranian entities “for engaging, or attempting to engage, in activities or transactions that have materially contributed to, or pose a risk of materially contributing to, the proliferation of weapons of mass destruction or their means of delivery.” These entities include the IRGC Aerospace Force Self Sufficiency Jihad Organization (ASF SSJO) and the IRGC Research and Self Sufficiency Jehad Organization (RSSJO). Both of these Iranian entities are alleged to be intimately involved in the research, development, and production of Iran’s ballistic missiles.
OFAC & DOJ – E.O. 13581
Acting under the authority of Executive Order (E.O.) 13581, “Blocking Property of Transnational Criminal Organizations,” OFAC designated the Ajily Software Procurement Group as a significant transnational criminal organization (TCO). OFAC alleged that the Ajily Software Procurement Group, which is based in Iran, “uses hackers to steal engineering software programs from the United States and other western countries,” some of which have later been “sold to Iranian military and government entities, which are unable to acquire it overtly because of U.S. export controls and sanctions.”
OFAC also designated two (2) individuals and one (1) entity for acting or purporting to act for or on behalf of, directly or indirectly, the Ajily Software Procurement Group: Mohammed Saeed Ajily; Mohammed Reza Rezakhah; and the Andisheh Vesal Middle East Company. In addition, the U.S. Department of Justice unsealed an indictment charging these two individuals “with criminal conspiracy relating to computer fraud and abuse, unauthorized access to and theft of information from computers, wire fraud, exporting a defense article without a license, and violating sanctions against Iran.” Notably, this case relates to that for which Obama granted a pardon to Nima Golestaneh as part of the U.S.-Iran prisoner exchange in January 2016.
New Era in Iran Sanctions…?
The Trump administration has argued that its approach to Iran sanctions has proven more aggressive than that undertaken by the Obama administration, punishing Iran for its malign activities outside the scope of the nuclear program. Yet, the most recent designation action appears to be qualitatively consistent with what we had seen during the Obama administration post-JCPOA; and, as such, the designation action is unlikely to pose a significant threat to permissible business ties with Iran.
Instead of engaging in designation actions that could provoke conflict between the JCPOA parties and foil renewed business ties with Iran, OFAC and other U.S. government agencies have elected to do two things: (1) designate Iranian parties that are already likely constructively blocked under OFAC’s 50 Percent Rule (e.g., the ASF SSJO and the RSSJO); and (2) designate low-level Iranian or foreign actors that are altogether marginal to Iran’s core economic activities. In addition, it is worthwhile to note that the conduct for which parties are being designated appears to be historical — i.e., not necessarily contemporary and/or ongoing. This latest designation action represents not so much a rupture with the approach taken by the Obama administration, as much as it does a logical outgrowth of that prior approach. In other words, there continues to be more bark than bite in the Trump administration’s sanctions designation actions.