On 10 January 2020, in response to missile attacks by the Iranian military targeting two U.S. bases in Iraq, the United States Department of the Treasury, Office of Foreign Assets Control (OFAC) designated a number of senior Iranian military leaders, Iranian metals companies, as well as third-country entities and a vessel on the List of Specially Designated Nationals and Blocked Persons (SDN List). While the Iranian metals sector has been a target of U.S. sanctions for some time, these sanctions are the first to be issued under the May 2019 Executive Order 13871, which targets the Iranian iron, steel, aluminum, and copper sectors.
President Trump concurrently issued a new Executive Order targeting the Iranian construction, mining, manufacturing, and textiles sectors. The State Department separately announced that it was imposing additional sanctions against one of the companies designated by OFAC pursuant to the Iran Freedom and Counter-Proliferation Act of 2012.
These actions follow recent hostilities between the U.S. and Iran, including Iranian missile strikes against a U.S. military installation in Iraq, and mark a continuation of the U.S. campaign of "maximum pressure" against key sectors of the Iranian economy.
While U.S. companies have long been prohibited from most dealings involving Iran, non-U.S. companies, including non-U.S. financial institutions, now face increased risk for any dealings involving a number of key sectors of the Iranian economy, and should assess their potential exposure in the light of these new actions by the U.S. Government.
Importantly, the EO's new restrictions allow for the imposition of sanctions against non-U.S. companies that operate in the additional specified sectors of the Iranian economy or engage in significant transactions involving those sectors or with persons designated for doing so, even if these activities have no U.S. nexus. Non-U.S. companies can therefore face significant risks to their global operations for any dealings involving the specified sectors of the Iranian economy.
New Executive Order targeting construction, mining, manufacturing, and textiles sectors of Iran's economy
The new EO authorizes the Secretary of Treasury to impose sanctions against persons or entities that operate in the construction, mining, manufacturing, or textiles sectors of the Iranian economy. It also authorizes the imposition of sanctions on:
Persons or entities involved in a "significant transaction" in...