2019/09/10

New Sanctions: Petroleum and petroleum product shipments to Iran

On September 4, 2019, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) imposed sanctions on a shipping network it said was run by Iran's Revolutionary Guards, alleging it sold millions of barrels of oil to benefit Syrian President Bashar al-Assad.  According to an advisory that OFAC issued the same day, the United States is targeting private and public sector entities around the world that engage in sanctionable conduct relating to shipping petroleum and petroleum products from Iran to Syria, China, and elsewhere.  OFAC is implementing these sanctions by adding 16 entities, 10 individual and 11 vessels suspected of being involved in such sanctionable activities to its List of Specially Designated Nationals and Blocked Persons (SDN List).  Among them was Mehdi Group, an India-based ship management company that OFAC alleges handles crewing and management of at least 7 of the vessels used in the Iranian oil smuggling network.  

Iranian oil shipments create significant sanctions risk for entities and individuals in the shipping industry, including shipping companies, bunkering service providers, vessel owners, managers, operators, insurers, and financial institutions. Those who knowingly engage in significant transactions for the purchase, acquisition, sale, transport, or marketing of petroleum or petroleum products from Iran, or knowingly provide significant support to an Iranian person on the SDN List, such as the National Iranian Oil Company (NIOC), the National Iranian Tanker Company (NITC), and the Islamic Republic of Iran Shipping Lines (IRISL), are at serious risk of being targeted by the United States for sanctions, regardless of the location or nationality of those engaging in such activities.  

OFAC administers and enforces a comprehensive trade embargo against Iran, as set forth in the Iranian Transactions and Sanctions Regulations, 31 C.F.R. part 560 (ITSR), issued under the authority of the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701-06 and other authorities. The ITSR prohibits most direct and indirect transactions with Iran by U.S. persons or within the United States, unless authorized by OFAC or exempted by statute.  Absent an applicable exemption or express OFAC authorization, foreign persons, including foreign financial institutions, are prohibited from processing transactions to or through the United States in violation of these prohibitions, including transactions through U.S. correspondent accounts for or on behalf of Iranian financial institutions, other persons located in Iran, or where the benefit of those services is otherwise received in Iran.

In addition, non-U.S. persons, including foreign financial institutions, may be subject to U.S. sanctions for knowingly conducting significant transactions for, or knowingly providing significant support to, certain Iran-related persons on the SDN List, including NIOC, NITC, and IRISL, unless an exception applies.  Further, non-U.S. persons that knowingly own, operate, control, or insure a vessel that transports crude oil exported from Iran could be subject to secondary sanctions under the Iran Sanctions Act. Even if an exception applies, the involvement of the Islamic Revolutionary Guard Corps (IRGC) or any other person designated in connection with Iran’s support for international terrorism or its proliferation of weapons of mass destruction or their means of delivery is nonetheless subject to U.S. sanctions. 

The risk of engaging in sanctionable activity or processing prohibited transactions can be potentially mitigated by implementing the following types of measures:

• Avoid providing underwriting services or insurance or reinsurance to any Iranian person on the SDN List or transactions involving the designated entity Kish Protection & Indemnity Club (aka Kish P&I), a major Iranian insurance provider;

• Conduct appropriate due diligence to corroborate the origin of shipments of petroleum and petroleum products when transported or delivered by vessels exhibiting deceptive behaviors or where connections to sanctioned persons or locations are suspected;

• Employ “know your customer” due diligence risk mitigation measures consistent with Financial Action Task Force standards designed to combat money laundering and terrorist and proliferation financing;

• Be wary of vessels that appear to have turned off their Automatic Identification Systems while operating in the Mediterranean and Red Seas and near China. Any other signs of manipulating AIS transponders should be considered red flags for potential illicit activity and should be investigated fully prior to continuing to provide services to, processing transactions involving, or engaging in other activities with such vessels;

• Request and review complete and accurate shipping documentation. Satisfactory shipping documentation should reflect the details of the underlying voyage and the relevant vessel(s), flagging, cargo, origin, and destination. Any indication that shipping documentation has been manipulated should be considered a red flag for potential illicit activity and should be investigated fully prior to continuing with the transaction.

Individuals and entities engaged in certain transactions involving petroleum or petroleum products from Iran or certain Iran-related persons on the SDN List should be aware that engaging in such conduct may result in designation on the SDN List or other sanctions under U.S. sanctions authorities.
In addition, violations of the ITSR could result in civil enforcement actions or criminal penalties for persons or transactions subject to U.S. jurisdiction.  Persons that violate the ITSR can be subject to significant civil monetary penalties.

King & Wood Mallesons has an industry leading economic sanctions team. If you have any questions related to economic sanctions matters, do not hesitate to contact Aaron Wolfson at [email protected] or Meg Utterback at [email protected]


主要联系人

“一带一路”文章系列

我们带领您一起探索“一带一路”倡议带来的机遇,为您提供全面的专业服务。

Share on LinkedIn Share on Facebook Share on Twitter
    您可能感兴趣

    我们将结合《国务院反垄断委员会关于平台经济领域的反垄断指南》(“平台经济反垄断指南”),简析《行政指导书》中涉及的反垄断合规必知要点,以期为相关企业开展反垄断合规工作提供参考。

    2021/04/13

    2020年10月12日,经济合作与发展组织(“OECD”)分别发布了关于“支柱一”和“支柱二”方案的蓝图报告(“支柱一蓝图报告”和“支柱二蓝图报告”,合称为“支柱蓝图报告”),向公众征询意见。通过该做法,OECD推后了其此前关于OECD成员国能在今年年底前达成全球技术性和政治性共识的期望。考虑到世界正聚焦于COVID-19及美国总统选举,这并不令人感到惊讶。

    09 December 2020

    Over the last decade or so there has been dramatic growth in PRC real estate developments in the larger cities, and much of that has been financed by debt.

    20 October 2020

    2020年6月,美国决定“暂停”加入经济合作与发展组织(“OECD”)的支柱一和支柱二方案,该方案为OECD税基侵蚀与利润转移(BEPS)项目的“第二阶段”。尽管如此,OECD仍然强调,美国既未退出谈判,也没有停止磋商。这一事件及时提醒我们,对于实施OECD的支柱一和支柱二方案,还存在着一系列障碍。本文对相关方案进行了概述,并就在国家间无法达成共识的情况下推进这些方案的替代性方法展开了思考。

    07 October 2020

    您可能感兴趣的内容

    与您的行业相关的服务。

    本网站使用Cookie来增强您的体验并帮助我们改善网站。请参阅我们的隐私政策以获取更多信息。如果您继续浏览网站而不更改设置,我们将假设您愿意收到这些Cookie。您可以随时更改Cookie设置

    有关我们使用哪些类型Cookie的更多信息,请参阅我们的Cookie使用政策