On February 5, 2012, President Obama signed an Executive Order blocking the property and interests in property of the Government of Iran and Iranian financial institutions. The Executive Order implements Section 1245(c) of the National Defense Authorization Act for Fiscal Year 2012 ("NDAA"). As previously reported (See "United States Working To Implement Additional Iranian Sanctions"), the Administration is expected to take additional steps to implement other provisions of the NDAA.
The Executive Order blocks all property and interests in property of the Government of Iran (including the Central Bank of Iran), all Iranian financial institutions, and all persons determined to be owned or controlled by, or to have acted or purported to act for or on behalf of, directly or indirectly, any person whose property and interests in property are blocked pursuant to the Order. It apples to property or interests in property that are in the United States, that come within the United States, or that come within the possession or control of U.S. persons. In effect, transactions that previously had to be rejected now must be blocked.
The Department of the Treasury's Office of Foreign Assets Control contemporaneously issued two general licenses affecting the scope of the Executive Order. General License A authorizes all transactions that previously had been authorized by general or specific license except the closing of accounts of the Government of Iran or an Iranian financial institution and the lump sum transfers of the balances to accounts outside of the United States (which had been authorized by Sections 560.517(a)(3) and (b)(2) of the Iranian Transactions Regulations). Those accounts must now be blocked. General License B generally authorizes U.S. depository institutions and U.S. registered brokers or dealers in securities to process non-commercial, personal remittances, to or from Iran, or for or on behalf of individuals ordinarily resident in Iran. General License B does not authorize remittances to individuals included within the term "Government of Iran" and does not authorize transactions made by, to, or through a financial institution blocked pursuant to the Weapons of Mass Destruction Proliferators Sanctions Regulations or the Global Terrorism Sanctions Regulations or by, to or through a person whose property and interests in property are blocked by other regulations or Executive Orders. The transactions authorized by General License B need to be processed through a third country because U.S. banks are prohibited from operating correspondent accounts for Iranian banks. Iranian financial institutions blocked solely by the new Executive Order may be involved in the transactions so long as third country, non-U.S. financial institutions serve as intermediaries between the Iranian financial institutions and the United States financial institutions.
Fulbright's International Trade Practice attorneys will continue to monitor development relating to sanctions in Iran and will issue updates as appropriate.
This article was prepared by Stephen M. McNabb (firstname.lastname@example.org or 202 662 4528), Marsha Z. Gerber (email@example.com or 713 651 5296) and Stefan H. Reisinger (firstname.lastname@example.org or 202 662 4698) from Fulbright's International Trade Practice Group. Stephen M. McNabb is a partner in Fulbright's Washington D.C. office and is Head of Fulbright's International Trade Practice Group. Lista M. Cannon (email@example.com or +44 020 7832 3601) is head of the firm's UK and EU Trade and Sanctions Practice in London.
Fulbright's International Trade Practice Group
Fulbright's International Trade Practice Group is comprised of experienced attorneys in several of Fulbright's offices throughout the world. Attorneys in the group assist clients in matters concerning international trade laws and regulations; including economic sanctions regulations, export/import control regulations, anti-boycott regulations, and anti-corruption laws.