U.S. and EU Sanctions

1. U.S. and EU Sanctions ABA Section of International Law 2011 Fall Meeting in Dublin, Ireland October 14, 2011

2. Outline Winding down sanctions on Libya Ramping up sanctions on Syria Augmenting pressure on Iran Coordination with European Union authorities

3. U.S. sanctions on Libya On February 25, 2011, the President issued Executive Order 13566, “Blocking Property and Prohibiting Certain Transactions Related to Libya” Blocks the property and interests in property of the Government of Libya, its agencies, instrumentalities, and controlled entities, and the Central Bank of Libya, as well as persons designated and listed on the Annex to the Executive order.

4. U.S. sanctions on Libya When circumstances in Libya began to change, the U.S. Treasury Department’s Office of Foreign Assets Control first issued Libya General License No. 6, offering guidance on and authorizing transactions with the Transitional National Council of Libya.

5. U.S. sanctions on Libya Contemporaneously with action by the European Union and action in the United Nations, the Office of Foreign Assets Control issued Libya General License No. 7A, authorizing all transactions with the Libyan National Oil Corporation and its subsidiaries, including the unblocking of the property thereof.

6. U.S. sanctions on Libya The Office of Foreign Assets Control also issued Libya General License No. 8A, authorizing all prospective transactions with the Government of Libya and its agencies and instrumentalities. All funds of the Government of Libya, including cash, securities, bank accounts, investment accounts, and precious metals, remain blocked.

7. U.S. sanctions on Libya The USG continues to impose full sanctions on Gaddafi and other officials pursuant to the annex to General License No. 8A.

8. U.S. sanctions on Syria On August 17, 2011, the President added to sanctions on Syria by issuing Executive Order 13582, “Blocking Property of the Government of Syria and Prohibiting Certain Transactions With Respect to Syria.” Broader than the Libya program, insofar as the exportation and importation of services was also prohibited.Broader than the Libya program, insofar as the exportation and importation of services was also prohibited.

9. U.S. sanctions on Syria The Office of Foreign Assets Control acted quickly to issue standard general licenses regarding Syrian diplomatic missions in the United States, provision of legal services, and entries in blocked accounts for normal service charges. OFAC also introduced several general licenses unique to the Syria sanctions program.

10. U.S. sanctions on Syria With General License No. 4, OFAC moved to harmonize its licensing with that of the U.S. Commerce Department regarding the exportation and reexportation of items subject to the Export Administration Regulations, 15 C.F.R. parts 730-744. Frequently asked questions at www.treasury.gov/resource-center/faqs/Sanctions/Pages/answer.aspx#135

11. U.S. sanctions on Syria In subsequent days, OFAC issued Syria General License No. 7, authorizing the “wind down” of contracts or other agreements involving the Government of Syria that were in effect prior to the imposition of broad sanctions on Syria, through November 25, 2011, but not authorizing: debit of blocked accounts, or transactions with blocked persons other than the Government of Syria.

12. U.S. sanctions on Syria Syria General License No. 11 authorizes certain services in support of non-governmental organizations’ activities in Syria, including: Humanitarian projects to meet basic human needs; Activities to support democracy building; Activities to support education in Syria; and Activities to support non-commercial development projects This general license is unique to the Syria program. OFAC is working on public guidance to aid in the interpretation of this general license. If you have questions, please approach OFAC.This general license is unique to the Syria program. OFAC is working on public guidance to aid in the interpretation of this general license. If you have questions, please approach OFAC.

13. U.S. sanctions on Syria Other general licenses authorize: Services incident to internet-based communications Noncommercial, personal remittances Official activities of international organizations; Transactions related to U.S. persons residing in Syria Operation of accounts for individuals in Syria

14. U.S. sanctions on Syria Other general licenses authorize: Third-country diplomatic and consular funds transfers Overflights of Syrian airspace Transactions related to telecommunications

15. Iran: New Designations Designation of Mahan Air pursuant to E.O. 13224 on October 12, 2011. Mahan Air has provided transportation, funds transfers, and personnel travel to the Islamic Revolutionary Guard Corps-Qods Force. U.S. exporters are prohibited from shipping goods aboard Mahan Air, absent OFAC authorization. Travel on Mahan Air is also prohibited without OFAC authorization.

16. Iran: New Designations On October 11, 2011, Treasury designated individuals involved in arranging a plot by the Islamic Revolutionary Guards Corps-Qods Force to assassinate the Saudi Arabian ambassador to the United States Adel Al-Jubeir while he was in the United States and to carry out follow-on attacks against other countries’ interests inside the United States and in another countries.

17. Iran: New Designations Designation of Iran Air pursuant to E.O. 13382 on June 23, 2011. Iran Air has provided support and services to, inter alia, Iran’s Ministry of Defense and Armed Forces Logistics and Iran’s Islamic Revolutionary Guard Corps (IRGC) through the transport and/or transfer of goods for, or on behalf of, these entities. U.S. exporters are prohibited from shipping goods aboard Iran Air, absent OFAC authorization.

18. Iran: New Designations Designation of Tidewater Middle East Company pursuant to E.O. 13382 on June 23, 2011. Tidewater-managed ports are a crucial component of Iran’s infrastructure and transport network, and shipments into Tidewater facilities provide an avenue of revenue to the IRGC in support of its illicit conduct. The Iranian government has repeatedly used Tidewater-managed ports to export arms or related materiel. Tidewater has operations at seven Iranian ports, including Bandar Abbas’ main container terminal, Shahid Rajaee. It manages over 90 percent of Iran’s container operations. The designation of Tidewater has far-reaching implications. Industry actors should ensure that they do not engage in activities in violation of the Weapons of Mass Destruction Proliferators Sanctions Regulations, 31 C.F.R. Part 544, and are encouraged to use ports that are not operated by Tidewater for any goods destined to Iran. Tidewater has operations at seven Iranian ports, including Bandar Abbas’ main container terminal, Shahid Rajaee. It manages over 90 percent of Iran’s container operations. The designation of Tidewater has far-reaching implications. Industry actors should ensure that they do not engage in activities in violation of the Weapons of Mass Destruction Proliferators Sanctions Regulations, 31 C.F.R. Part 544, and are encouraged to use ports that are not operated by Tidewater for any goods destined to Iran.

19. Iran: CISADA Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (“CISADA”). Among other things, Section 104(c) of CISADA gives Treasury significant new authorities to address transactions by foreign banks, including significant transactions between foreign banks and U.S.-designated banks.

20. Iran: CISADA On August 16, 2010, Treasury (OFAC) published the Iranian Financial Sanctions Regulations, 31 C.F.R. Part 561, in implementation of these provisions of CISADA. On October 5, 2011, Treasury (FinCEN) published the Comprehensive Iran Sanctions, Accountability, and Divestment Reporting Requirements at 31 C.F.R. Part 1060. The regulations prohibit or impose strict conditions on any foreign financial institution that Treasury determines knowingly engages in one of the following activities: Facilitating the efforts of the Government of Iran (including the Islamic Revolutionary Guard Corps (IRGC)) to acquire or develop weapons of mass destruction (WMD) or delivery systems for WMD, or to support terrorism; Facilitating the activities of a person subject to financial sanctions pursuant to resolutions of the U.N. Security Council with respect to Iran; Engaging in money laundering to carry out certain illicit conduct; Facilitating the efforts by the Central Bank of Iran or any other Iranian financial institution to engage in certain illicit conduct; and Facilitating significant business for U.S.-designated IRGC individuals or entities, or for financial institutions designated by the U.S. Government in connection with Iran’s WMD program or support for international terrorism. Such U.S.-designated financial institutions include: Bank Mellat Bank Melli Bank Sepah Bank Saderat Europaische-Iranische Handlesbank Export Development Bank of Iran Future Bank B.S.C. Kargoshaee Bank Post Bank of Iran The regulations prohibit or impose strict conditions on any foreign financial institution that Treasury determines knowingly engages in one of the following activities: Facilitating the efforts of the Government of Iran (including the Islamic Revolutionary Guard Corps (IRGC)) to acquire or develop weapons of mass destruction (WMD) or delivery systems for WMD, or to support terrorism; Facilitating the activities of a person subject to financial sanctions pursuant to resolutions of the U.N. Security Council with respect to Iran; Engaging in money laundering to carry out certain illicit conduct; Facilitating the efforts by the Central Bank of Iran or any other Iranian financial institution to engage in certain illicit conduct; and Facilitating significant business for U.S.-designated IRGC individuals or entities, or for financial institutions designated by the U.S. Government in connection with Iran’s WMD program or support for international terrorism. Such U.S.-designated financial institutions include: Bank Mellat Bank Melli Bank Sepah Bank Saderat Europaische-Iranische Handlesbank Export Development Bank of Iran Future Bank B.S.C. Kargoshaee Bank Post Bank of Iran

21. Iran: CISADA The Iranian Financial Sanctions Regulations describe the factors that Treasury may consider when determining whether to impose sanctions under CISADA.

22. Iran: CISADA While any such determination will be made according to the totality of the facts and circumstances of each specific case, the factors that may be considered include: The size, number and frequency of the transactions. The level of awareness of the transactions by senior management and whether they are part of a pattern of conduct. Whether the financial services involve an attempt at deception.

23. Iran: CISADA For U.S. banks, the consequences of section 104(c) are straightforward. Treasury now has the authority to require U.S. banks to close or restrict their correspondent accounts with a foreign bank, if Treasury finds that the foreign bank has knowingly engaged in sanctionable activities.

24. Iran: CISADA For foreign banks, the impact of section 104(c) is different. Treasury can investigate whether foreign banks are engaging in CISADA-sanctionable activities. Treasury can require U.S. banks to close or restrict the correspondent accounts of that foreign bank. The correspondent accounts will not be frozen, but they will no longer be a viable path for financial flows unless and until Treasury lifts the sanctions.

25. Coordination with the EU The impact of sanctions is strengthened to the extent that the sanctions can be made multilateral. Where there is no United Nations sanctions regime, the U.S. government frequently engages with European Union allies on sanctions issues.

26. Coordination with the EU In formulating sanctions policy, the U.S. government is mindful of actions by European Union allies. To the extent consistent with U.S. sanctions goals, the United States may coordinate actions with European Union allies.

27. Coordination with the EU In the case of specific licensing cases, sanctions have evolved in complexity so that license applicants frequently need to seek authorization(s) from multiple jurisdictions for a given transaction.

28. Coordination with the EU Where licensing cases involve authorizations by foreign jurisdictions, the Office of Foreign Assets Control may consult with officials in the foreign governments for their views on such cases.

29. Web Resources