Notable "Derivative" Designations / Secondary Sanctions Enforcement Announcement - Sanctioning Companies Supporting Iran’s Metal Industry

Date issued: Jan. 05 2021

TURBOFAC Commentary (246 words)

Notes:

1) For the criteria we use to determine what designation notices to include in the Research System, see Introductory Note Common to all Derivative Designation Notices Included in the Research System.

2) This designation notice includes some designations that are of a "pure secondary sanctions" nature, meaning that they were made in response to international trade transactions that were not alleged to have been deceptive, contrary to international law, or illegal in any country having jurisdiction over the transactions.

This is a relatively rare case of the "material assistance" designation criterion being invoked in response to an international trade transaction not involving a government-owned entity and not involving the oil and gas sectors. The rare nature of the designation—in particular as it relates to the extent to which it can be seen as a signal that the "material assistance" criterion will be used as a "quasi secondary sanctions" authority in the future—is tempered by the fact that the transactions were relatively clearly within the scope of the "significant transaction" criterion of EO 13871. Compare Treasury Targets Iran’s Billion Dollar Metals Industry and Senior Regime Officials, a similar designation notice.

Kaifeng (KFCC) was designated by both Treasury (EO 13871) and the State Department (section 1245 of IFCA). Compare Imposing Sanctions Related to the Islamic Republic of Iran Shipping Lines and Iranian Shipping Entities (State Dep't), where a Chinese entity was designated solely pursuant to section 1245 of IFCA for metals-related transactions.