On September 20, 2019, OFAC announced the designation of the Central Bank of Iran (“CBI”), the National Development Fund of Iran (Iran’s sovereign wealth fund), and an Iran-based company allegedly involved in concealing financial transactions on behalf of Iran’s military. These designations were made under Executive Order 13224, as recently amended, which is OFAC’s main counterterrorism sanctions authority. OFAC said in its press release that “Iran’s Central Bank has provided billions of dollars to the Islamic Revolutionary Guards Corps (IRGC), its Qods Force (IRGC-QF) and its terrorist proxy, Hizballah.” These designations were announced in response to aerial strikes against oil facilities in Saudi Arabia, although a designation of the CBI may not come as a complete surprise given the multiple U.S. sanctions designations in the past several months of senior CBI officials including the CBI Governor for alleged involvement in financial support to the IRGC-QF and Hizballah. President Trump tweeted that, in response to the strikes in Saudi Arabia, he had directed Secretary of the Treasury Steven Mnuchin “to substantially increase Sanctions on the country of Iran.” Secretary of State Mike Pompeo called the attacks an “act of war.” At a press event President Trump characterized these sanctions as “[t]he highest sanctions ever imposed on a country. We’ve never done it to this level.” Secretary of the Treasury Steven Mnuchin specified that “this is very big — we’ve now cut off all source of funds to Iran.”
So what do these new sanctions against the CBI actually do? To be clear, the CBI was previously subject to U.S. sanctions, including secondary sanctions that apply to non-U.S. persons. However, these previous sanctions against the CBI were imposed only under OFAC’s authority targeting parties associated with the Government of Iran. Now an additional layer of sanctions have been imposed on the CBI – this time under OFAC’s counterterrorism authority in EO 13224. The conventional wisdom seems to be that this added layer of counterterrorism sanctions against the CBI will now make it unlawful or sanctionable to deliver humanitarian goods to Iran. In practice, that could be the way things develop, as this additional sanctions designation against the CBI could heighten the already considerable level of anxiety many international banks face in considering whether to engage with Iran, by creating yet more complexity and uncertainty. However, it is worth examining more closely the extent to which U.S. law still contemplates lawful humanitarian trade with Iran in agricultural commodities, medicine and medical devices.