On June 24, 2019, President Trump issued an Executive Order (EO) imposing new sanctions on Iranian government officials. The EO prohibits transactions with the Supreme Leader of Iran, Ayatollah Ali Khamenei, his office, any government officials appointed by the Supreme Leader, and any directors or officers of designated entities. The EO also authorizes secondary sanctions against foreign financial institutions that conduct significant transactions with the newly blocked persons. These new sanctions will have minimal effect on U.S. businesses, which are already broadly prohibited from dealing with Iran. However, they are intended to further pressure Iranian leadership and third countries that deal with Iran.
The EO directly designates the Iranian Supreme Leader as a blocked person, and authorizes OFAC to designate as blocked persons other Iranian government officials and anyone who provides material support to the Supreme Leader's office. If any foreign financial institution knowingly conducts or facilitates any significant transaction related to the designated persons, it may be barred from opening any correspondent or payable-through accounts in the United States. In addition to the financial sanctions, the EO also blocks the entry of designated persons into the United States.
The White House issued a press release stating that these actions were a response to recent Iranian aggression towards the United States, including the downing of a U.S. drone. President Trump stated that the sanctions are also aimed at stemming Iran's sponsorship of terrorism. He said "[t]hese measures represent a strong and proportionate response to Iran's increasingly provocative actions." They come only a few weeks after the imposition of additional sectoral sanctions (on which we previously reported), and are the latest in a series of measures to pressure Iran to reduce its nuclear threat.
All U.S. companies and any financial institution that conducts business internationally, particularly any companies that do business with Iran, should thoroughly review their business activities and ensure compliance with these new sanctions. Companies should also update their compliance policies and procedures to reflect the latest changes. If you have any questions regarding the Iran sanctions program or how it may affect your business, please reach out to the contacts listed below.