US Department of Treasury Imposes Targeted Sanctions on Iran

The Department of the Treasury's Office of Foreign Assets Control (OFAC) has announced targeted sanctions against multiple individuals and entities involved in Iran's UAV (Unmanned Aerial Vehicle) program, steel industry, and automobile sector.

The sanctions aim to disrupt Iran's UAV production capabilities, particularly focusing on engine types powering Iran's Shahed variant UAVs, which were utilized in the April 13 attack on Israel. These actions are directed towards individuals and entities facilitating Iran's UAV production arm, including Kimia Part Sivan Company (KIPAS) and other Iranian UAV manufacturers. Additionally, OFAC is designating five companies across various jurisdictions involved in supplying component materials for steel production to Iran's Khuzestan Steel Company (KSC), one of Iran's major steel producers.

Moreover, three subsidiaries of the Iranian automaker Bahman Group, known for materially supporting the Islamic Revolutionary Guard Corps (IRGC) and other designated entities, are also facing sanctions. Bahman Group itself is concurrently designated for owning these subsidiaries. The United Kingdom is also imposing sanctions targeting Iranian military organizations, individuals, and entities associated with Iran's UAV and ballistic missile industries.

Janet L. Yellen, Secretary of the Treasury, emphasized the collaborative effort with the United Kingdom and other partners to utilize economic tools effectively in response to Iran's aggression. Yellen stated, "We're using Treasury's economic tools to degrade and disrupt key aspects of Iran's malign activity, including its UAV program and the revenue the regime generates to support its terrorism."

The sanctions are imposed under various executive orders, including counterproliferation authority and counterterrorism authority. The Department of Commerce's Bureau of Industry and Security (BIS) is also implementing new controls to restrict Iran's access to technologies, such as basic commercial grade microelectronics.

OFAC is targeting executives of Iran-based UAV engine manufacturer, Oje Parvaz Mado Nafar Company (Mado Company), which produces UAV engines used in Iran's Shahed-131 and Shahed-136 UAVs. Additionally, individuals and entities associated with Iran's IRGC-QF (Islamic Revolutionary Guard Corps-Qods Force) and their involvement in UAV testing, development, and supply are facing sanctions.

The implications of today's actions extend to the steel industry, with sanctions imposed on companies providing materials for Iran's steel production. Furthermore, the automobile sector, particularly Bahman Group and its subsidiaries, is under scrutiny for their support to designated entities.

Lisa Monaco, Deputy Attorney General for the U.S. Department of Justice (DOJ), previously emphasized the growing role of sanctions in enforcing compliance, stating that "sanctions are the new FCPA." This statement underscores the increasing reliance on sanctions as a tool for combating illicit activities and promoting global security, and compliance departments are increasingly recognizing the importance of sanctions compliance in their risk management and supply chain strategies to avoid legal and reputational repercussions.

As a result of the sanctions, all property and interests in property of the designated persons within the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC. Financial institutions and other entities engaging in transactions with sanctioned entities may also face penalties or enforcement actions.