International Law Advisory - OFAC Adds Bank Sepah International to SDN List

This week, the U.S. Treasury Department, Office of Foreign Assets Control (“OFAC”) made additions to the Specially Designated Nationals and Blocked Persons List (the “SDN List”). Of particular note is the addition of Iranian state-owned bank, Bank Sepah.

Bank Sepah’s designation is based on its alleged involvement in the financing of the proliferation of weapons of mass destruction (WMD) and is issued under the authority granted to the Treasury Department through Executive Order 13382 (“the Executive Order”). The Executive Order authorizes sanctions against entities and individuals involved in the proliferation of weapons of mass destruction, freezes any assets of the designees that are in the possession of U.S. persons or subject to U.S. jurisdiction, and prohibits virtually all transactions between designees and any U.S. persons, including (i) the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any designated entity or person; and (ii) the receipt of any contribution, funds, goods, services, etc., from designated entities or persons. According to U.S. Treasury Under Secretary Stuart Levey, Bank Sepah “provides direct and extensive financial services to Iranian entities responsible for developing missiles capable of carrying weapons of mass destruction.” (For the Under Secretary’s remarks in full, see http://www.treas.gov/press/releases/hp220.htm.)

The full list of this week’s additions reads as follows:

• DERAKHSHANDEH, AHMAD, c/o BANK SEPAH, No. 33 Hormozan Building, Pirozan St., Sharak Ghods, Tehran, Iran; DOB 11 Aug 1956; POB Iran (individual) [NPWMD]
• BANK SEPAH INTERNATIONAL PLC, 5-7 Eastcheap, London EC3M 1JT, United Kingdom [NPWMD]
• BANK SEPAH, Imam Khomeini Square, P.O. Box 11364-9569, Tehran, Iran; all offices worldwide [NPWMD]

U.S. economic sanctions against Iran already impose comprehensive restrictions on U.S. persons doing any business in or with Iran. These additional designations create, however, an additional “blocking” requirement with regard to the designated entities, which means that if U.S. persons come into possession of property that these designated entities have an interest in, the acquisition of such property must be reported to OFAC, and the property generally cannot be dealt with further without specific OFAC authorization (except that blocked funds must be placed into interest-bearing accounts). Companies should update their OFAC compliance screening mechanisms to ensure that their existing business relationships and transactions, and any relationships or transactions in the future, are in compliance with the revised SDN List. A complete copy of the SDN List is available on the OFAC website at www.treas.gov/offices/enforcement/ofac/sdn/index.shtml.

We will continue to keep you apprised of sanctions or export control developments. If you have any questions please feel free to contact Edward Krauland (1.202.429.8083; ekrauland@steptoe.com).