There are thousands of OFAC “Specially Designated Nationals.” The plurality, arguably, are designated because of a connection to Iran. These SDNs generally are treated as pariahs . . . shut off from commercial dealings not only by the United States but throughout the world, because the U.S. government has threatened to blacklist anyone who deals with these SDNs – imposing so-called “secondary sanctions” on those who dare.
What is the effect of the Iran deal (the JCPOA) on these radioactive SDNs? The answer won’t be clear until OFAC implements U.S. obligations under the JCPOA, which could be sometime late this year or early 2016. But let’s look at the JCPOA text, and see what is in store for the population of SDNs fortunate enough to be featured in the JCPOA.
One JCPOA annex (Annex II, Attachment 3) lists over 400 SDNs that will receive some sanctions relief early on (which means probably early next year, though the exact timing is uncertain), assuming the IAEA verifies Iran’s compliance with its nuclear-related commitments. The SDNs in Attachment 3 are designated under one or more of the following OFAC programs, with program “tags” indicated in brackets:
- Foreign Sanctions Evaders – Iran [FSE-IR]
- Iran Freedom and Counter-Proliferation Act [IFCA]
- Iranian Financial Sanctions Regulations [IFSR]
- Iranian Transactions and Sanctions Regulations [IRAN]
- Iran Threat Reduction and Syria Human Rights Act [IRAN-TRA]
- Iran Sanctions Act [ISA]
- Weapons of Mass Destruction Proliferators Sanctions Regulations [NPWMD]
- Executive Order 13622 [EO13622]
- Executive Order 13645 [EO13645]
One can surmise that amidst the multitude of sanctions programs designations, many SDNs designated under these programs have been judged by the U.S. Government to be entitled to some relief under the core feature of the deal: the U.S. (and its JCPOA partners) will lift some sanctions against Iran in exchange for Iran agreeing to restrictions on its nuclear program.
But note – not all SDNs designated under these programs will be removed from OFAC sanctions lists. The SDNs in Attachment 3, for whom relief apparently is forthcoming, are just a subset of all the SDNs designated under the programs identified above. For example, SDNs designated under one of the programs above, but also designated under another program – such as Anti-Terrorism Foreign Sanctions Evaders [FSE-SDGT], or Iran Human Rights [IRAN-HR] – are not scheduled for sanctions relief.
And for nearly half of the 400+ SDNs on Attachment 3, the scheduled relief bears a major caveat. Nearly 200 of the SDNs listed include asterisks, and the annex explains that these asterisked SDNs have been identified as Government of Iran agents. These “GOI” SDNs will remain subject to “primary” sanctions. That is, U.S. persons (and anyone owned or controlled by a U.S. person) will continue to be prohibited from dealing with these SDNS, absent an OFAC license. Non-U.S. persons may deal with these asterisked SDNs – i.e., non-U.S. persons will no longer be under the threat of secondary sanctions. But it remains to be seen whether non-U.S. persons will be comfortable dealing with these asterisked SDNs, since the asterisked SDNs will presumably remain subject to OFAC primary (but not secondary) sanctions.
In short: (1) many SDNs not identified in Attachment 3 will receive no relief, because they were not designated exclusively under programs considered nuclear-related; (2) there will be SDNs seemingly open for business by U.S. and non-U.S. persons alike (those listed without asterisks in Annex II Attachment 3); and (3) other SDNs (the asterisked SDNs) apparently will receive relief from secondary sanctions (non-U.S. persons can deal with them) but not from primary sanctions (U.S. persons cannot). Simple enough? The already complex “list-based” sanctions now have an Iranian-related subset of SDNs that enjoy a modified status requiring further attention.
But wait . . . notwithstanding the treatment of SDNs, the U.S. embargo on Iran generally will remain in place. With limited exceptions, U.S. persons (and anyone owned or controlled by a U.S. person) cannot export goods or services or technical data to Iran, nor import into the U.S. items from Iran (other than carpets, food, and pistachios). For example, even with respect to a person who is removed from the SDN list, exports to that person would appear to be prohibited if that person were in Iran. No one thought this was going to be easy.