831. How will OFAC define the sectors of the Iranian economy specified in Executive Order (E.O.) 13902 of January 10, 2020?
E.O. 13902 imposes sanctions with respect to any person determined by the Secretary of the Treasury to operate in the construction, mining, manufacturing, and textiles sectors of the Iranian economy, and any additional sectors of the Iranian economy as may be determined by the Secretary of the Treasury, in consultation with the Secretary of State. On October 8, 2020, the Secretary of the Treasury identified the financial sector of the Iranian economy for additional sanctions under E.O. 13902. Iranian and non-Iranian persons operating in these sectors of the Iranian economy or sectors of the Iranian economy identified in the future could be subject to sanctions.
OFAC expects to promulgate regulations that define the terms construction sector of the Iranian economy, mining sector of the Iranian economy, manufacturing sector of the Iranian economy, textiles sector of the Iranian economy, and financial sector of the Iranian economy consistent with the following:
Construction sector of the Iranian economy: The term construction sector of the Iranian economy means the production, procurement, devising, framing, or arranging in Iran of parts or materials to fabricate, shape, or form buildings or structures, including the on-site development, assembly, or construction of residential, commercial, or institutional buildings in Iran. The term applies to engaging in new work, additions, alterations, maintenance, and repairs of residential, commercial, or institutional buildings. Persons such as for-sale builders, design-build firms, and project construction management firms in Iran may be considered as operating in this sector.
Mining sector of the Iranian economy: The term mining sector of the Iranian economy means any act, process, or industry of extracting, at the surface or underground, ores, coal, precious stones, or any other minerals or geological materials from the Earth in Iran.
Manufacturing sector of the Iranian economy: The term manufacturing sector of the Iranian economy means the creation in Iran of goods by manual labor or machinery that are for export from Iran or for sale within Iran. For the purposes of evaluating sanctions pursuant to E.O. 13902, persons in Iran manufacturing medicines, medical devices, or products used for sanitation, hygiene, medical care, medical safety, and manufacturing safety, including soap, hand sanitizer, ventilators, respirators, personal hygiene products, diapers, infant and childcare items, personal protective equipment, and manufacturing safety systems, solely for use in Iran and not for export from Iran, will not be considered to be operating in the manufacturing sector of the Iranian economy. Note that persons conducting or facilitating transactions for the provision, including any sale, of agricultural commodities, food, medicine, or medical devices to Iran will not be subject to sanctions under E.O. 13902.
Textiles sector of the Iranian economy: The term textiles sector of the Iranian economy means the fiber synthesis, dyeing, weaving, knitting, or felting in Iran of textiles, including apparel, carpets, cloths, fabric, or related goods, that are for export from Iran.
Financial sector of the Iranian economy: The term financial sector of the Iranian economy includes all Iranian financial institutions as defined in Section 561.320 of the Iranian Financial Sanctions Regulations, meaning any entity (including foreign branches), wherever located, organized under the laws of Iran or any jurisdiction within Iran, or owned or controlled by the Government of Iran, or in Iran, or owned or controlled by any of the foregoing, that is engaged in the business of accepting deposits, making, granting, transferring, holding, or brokering loans or credits, or purchasing or selling foreign exchange, securities, commodity futures or options, or procuring purchasers and sellers thereof, as principal or agent. Iranian financial institutions include but are not limited to depository institutions, banks, savings banks, money service businesses, trust companies, insurance companies, securities brokers and dealers, commodity futures and options brokers and dealers, forward contract and foreign exchange merchants, securities and commodities exchanges, clearing corporations, investment companies, employee benefit plans, dealers in precious metals, stones, or jewels, and holding companies, affiliates, or subsidiaries of any of the foregoing.
Persons who knowingly engage in a significant transaction for the sale, supply, or transfer to or from Iran of significant goods or services used in connection with the above-named sectors of the Iranian economy risk exposure to blocking sanctions pursuant to E.O. 13902. In addition, persons that have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, persons designated pursuant to E.O. 13902 could themselves be designated. Furthermore, foreign financial institutions that have knowingly conducted or facilitated any significant financial transaction for such designated persons risk exposure to U.S. correspondent account or payable-through account sanctions.
Date Released
December 7, 2020
1) Read in conjunction with Executive Order 13902 - Executive Order on Imposing Sanctions with Respect to Additional Sectors of Iran, and comments thereto.
2) FAQ amended on 12-7-2020 to add a definition for "Financial sector of the Iranian economy." See comments to 561.320 of the IFSR for further details.
3) In FAQ 847, OFAC clarified that the following transactions by foreign financial institutions would not be sanctionable, provided that they "involve the Iranian financial sector or Iranian FIs sanctioned solely pursuant to E.O. 13599 and E.O. 13902":
• The sale, supply, or transfer of goods and services to Iran – as well as intermediate goods used for manufacturing of such goods in Iran – solely for use in Iran and not for export from Iran, to ensure the protection of life, health, and safety, such as: products used for sanitation, hygiene, medical care, medical safety, and manufacturing safety, including soap, hand sanitizer, ventilators, respirators, personal hygiene products, diapers, infant and childcare items, personal protective equipment, manufacturing safety systems, safety devices, alarm systems, and ventilation systems. (Emphasis added).
That suggests that the "intermediate goods used for manufacturing" otherwise non-sanctionable goods are also probably not goods that OFAC would consider to be within the scope of "Manufacturing sector of the Iranian economy." This is not entirely clear.