I issued this client alert from my law practice on Tuesday.  The text appears below.

OFAC Targets Iranian Shipping and Finance Entities

The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) today added the seven below-named Iranian entities to its list of designated parties.  These designations reflect the Treasury Department’s policy of targeting Iran’s Islamic Republic Guards Corps (IRGC) and the Islamic Republic of Iran Shipping Lines (IRISL), and more broadly the Iranian government and its agents and instrumentalities, effectively helping shut off these entities from the international banking system and mainstream global economy.

1. Bonyad Taavon Sepah, which is also referred to as IRGC Cooperative Foundation or Sepah Cooperative Foundation.
2. Parviz Fattah-Qarebaghi, who serves as the Executive Director of Bonyad Taavon Sepah.
3. Ansar Bank, which is also referred to as Ansar Finance and Credit Fund, and Ansar Savings and Interest Free-Loans Fund, among other names.  Although this entity was originally founded in the late 1980s, Ansar Bank received its banking license in 2009.  Answer serves the IRGC and its personnel, providing services such as payroll to the IRGC.
4. Mehr Bank, which is also referred to as Mehr Finance and Credit Institute and Mehr Interest-Free Bank.  This bank was licensed by the Central Bank of Iran in 2008.  According to the Treasury Department, Mehr was created by Bonyad Taavon Sepah with the intent of providing services for the Basij, a volunteer militia controlled by the IRGC.
5. Moallem Insurance Company, which provides protection and indemnity (P&I) insurance to the IRISL.
6. Liner Transport Kish (LTK) has been cited as providing shipping services in support of Hezbollah and is considered to be part of the IRISL’s policy of engaging in deceptive practices aimed at evading sanctions.
7. Pars Oil and Gas Company (POGC). The Treasury Department identifies POGC as an entity owned or controlled by the Government of Iran as that term is defined in OFAC’s Iranian Transactions Regulations, 31 CFR Part 560 (the “ITR”).  It is a subsidiary of the National Iranian Oil Company (NIOC).  The U.S. State Department recently sanctioned NaftIran, a Swiss entity owned by the NIOC under the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (CISADA).

Bonyad Taavon Sepah, Parviz Fattah-Qarebaghi, Ansar Bank, Mehr Bank, and Moallem Insurance Company were designated under U.S. Executive Order 13382, which was issued in June 2005 with the intention of designating and freezing the assets of proliferators of weapons of mass destructions and supporting entities.  Entities such as Ansar Bank and Mehr Bank have been cited as helping facilitate major commercial activities of the IRGC and its affiliates within Iran.

Line Transport Kish was designated under U.S. Executive Order 13324, which was issued in September 2001 and aimed at designating and freezing the assets of non-U.S. entities that engage in or “pose a significant risk of committing” terrorist activities.

What These Designations Signify

Today’s designations result in a freeze over any U.S.-owned assets held by the entities listed above or any of their assets that may come under U.S. jurisdiction (e.g., through a wire transfer).  Although it may not be likely that any of these entities have assets or operations in the United States, similar designations have in the past resulted in other nations taking reciprocal actions against such entities.  Furthermore, even entities not doing business in or with the United States can often face substantial difficulties in third country business transactions if they are named on U.S. sanctions lists.

More broadly, U.S. persons wherever located are barred from engaging in any commercial activities anywhere with the above-named entities, or any other designated entities, such as Bank Saderat or the IRGC and its affiliates.  This covers activities outside Iran as well.  Although certain limited commercial transactions with Iran may be permitted pursuant to either general or specific licenses, U.S. persons are prohibited from engaging in transactions with designated entities.

The wide scope of the U.S. sanctions regime against Iran highlights the pressing need for all U.S. persons to exercise the utmost care to ensure compliance.  The need for this diligence is furthered by the practices of certain Iranian entities which have taken exceptional measures to evade the sanctions, including creating third country front companies – many without Iranian names and many located far from Iran.  Consequently, U.S. entities operating internationally should embrace robust, comprehensive compliance measures and exercise exceptional caution and diligence, even if they do not engage in any business with Iran.

Please contact Farhad R. Alavi at +1 (202) 686-4859 or farhad.alavi@fralegal.com should you have any questions.

© 2010 The Law Office of Farhad R. Alavi, PLLC
This document and its contents are solely intended for informational purposes and should not be interpreted as constituting legal advice.  You should consult with legal counsel with regard to all topics and issues discussed herein.