Yesterday, the President signed an executive order (“Executive Order”) that authorizes the Secretary of the Treasury (“Treasury”) to impose certain financial sanctions (“Sanctions”) on foreign financial institutions found to have knowingly conducted or facilitated any significant financial transactions:
(i) with the National Iranian Oil Company (“NIOC”) or Naftiran Intertrade Company (“NICO”);
(ii) for the purchase and acquisition of petroleum or petroleum products from Iran; or
(iii) for the purchase or acquisition of petrochemical products from Iran.
The Sanctions include prohibiting the opening, or imposing strict conditions on maintaining, in the United States, of a correspondent account or a payable through account by such foreign financial institution. Furthermore, the Executive Order provides authority for Treasury to block the property and interests in property of any person determined to have materially assisted, sponsored or provided financial, material or technological support for, or goods or services in support of, NIOC, NICO or the Central Bank of Iran, or the purchase or acquisition of U.S. bank notes or precious metals by the Government of Iran.
In addition, yesterday, Treasury announced the imposition of sanctions under the Comprehensive Iran Sanctions, Accountability and Divestment Act of 2010 (CISADA), against two financial institutions for knowingly facilitating significant transactions or providing significant financial services for designated Iranian banks. The financial institutions sanctioned by the Office of Foreign Assets Control (OFAC) are Bank of Kunlun in China and Elaf Islamic Bank in Iraq. OFAC’s action against the Bank of Kunlun and Elaf Islamic Bank bars the banks from directly accessing the U.S. financial system. As a result of OFAC’s action, financial institutions may not open correspondent or payable-through accounts for Bank of Kunlun or Elaf Islamic Bank in the United States and any financial institution that currently holds such accounts must close them within ten (10) days.
As a result, U.S. financial institutions should review and update their OFAC policies and procedures to reflect the aforementioned actions.
Read a copy of the Executive Order.
This publication is for general information only. It is not legal advice, and legal counsel should be contacted before any action is taken that might be influenced by this publication.
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