Iran Export Controls

The Office of Foreign Assets Control fined an Oklahoma steel manufacturer about $435,000 for violating U.S. sanctions against Iran, OFAC said April 19. Alliance Steel committed 61 sanctions violation by maintaining a “business relationship” with an Iranian company for five years, OFAC said.

The Office of Foreign Assets Control fined an Italian gas equipment manufacturer $950,000 for violating U.S. sanctions against Iran, OFAC said in a March 26 notice. The company, Nordgas S.r.l., knowingly reexported 27 shipments of U.S.-origin “air pressure switches” to Iran, OFAC said, and caused a U.S. company to “indirectly” export goods to Iran.

The Office of Foreign Assets Control fined a Cleveland process controls and instrument manufacturer more than $215,000 for violating U.S. sanctions against Iran, OFAC said in a March 15 notice. The company, UniControl, Inc., exported goods to European companies despite knowing they would ultimately be sent to Iran, OFAC said. The agency said the company failed to “act on multiple apparent warning signs.”

The Bureau of Industry and Security denied export privileges for a German aircraft maintenance company and fined it more than $50,000 for procuring U.S. parts and components for a sanctioned Iranian airline. MSI Aircraft Maintenance Services International GmbH & Co. worked with Iran’s Mahan Airways (see 2011270001) to illegally export U.S.-origin reservoir and valve assemblies, which were controlled under the Export Administration Regulations, BIS said in a March 5 order. The agency said it will waive MSI’s three-year export denial if the company pays the fine, cooperates with BIS during a three-year probationary period and doesn’t commit any more EAR violations.

Five companies said they may have violated U.S. sanctions, export controls or anti-corruption laws, according to their February Securities and Exchange Commission filings. The potential violations involved illegal exports, providing services to sanctioned territories and gift cards sent to the Chinese government.

The U.S.’s decision to rejoin the Iran nuclear deal and rescind Iranian sanctions would be complex and time-consuming, likely taking months of bureaucratic work and negotiations, sanctions and Iran experts said. The new President Joe Biden administration has a range of Iranian-related sanctions issues to tackle before rejoining the agreement, the experts said, such as which Iranian entities and officials to de-list, whether to endorse Europe’s INSTEX and how to address humanitarian exports to Iran.

The State Department announced penalties on two foreign entities and one foreign official for illegal transfers under the Iran, North Korea and Syria Nonproliferation Act. The agency said the three transferred items subject to multilateral control lists that contribute to weapons proliferation or missile production, in a notice. The entities are China-based Ningbo Vet Energy Technology, Ningbo Zhongjun International Trade and their subsidiaries. Also sanctioned was Rim Ryong Nam, a North Korean official based in China and working for North Korea’s Munitions Industry Department. The two entities and the official are barred from purchasing items controlled on the U.S. Munitions List and by the Arms Export Control Act. The State Department also will suspend any current export licenses used by the entities and official and bar them from receiving new export licenses for any goods subject to the Export Administration Regulations. Government agencies are barred from entering into procurement contracts with them. The measures took effect Jan. 13.

No short-term action should be expected on sanctions, export controls or foreign investment scrutiny, as President Joe Biden takes over U.S. trade policy following President Donald Trump's thorough shake-up of traditional policy, lawyers said on a Thompson Hine webinar Jan. 19. The Trump administration made significant policy changes in all three of these areas, and it appears Biden will shy away from any immediate course reversal due to a stated desire to focus initially on domestic concerns and to use Trump measures as a leverage point in future negotiations, lawyer David Schwartz of Thompson Hine said. The only difference the lawyers predict for the Biden administration will be in the general approach to these issues, with a special emphasis on a more measured tone, they said. For instance, while the sanctions themselves may stay in place, Biden will shift from dubbing the White House's approach to Iran as a “maximum pressure” campaign to one that applies “compliance pressure,” Schwartz said. He also predicts a more measured use of the Specially Designated Nationals and Blocked Persons List to promote multilateral cooperation.

While the Joe Biden administration will likely pursue more multilateral sanctions than the Trump administration, industry should not expect the Office of Foreign Assets Control to reverse its yearslong trend of increased sanctions, a former OFAC official and law firms said.

U.S. sanctions under the Trump administration have at times been imposed recklessly, which could permanently alienate allies and lead to less effective sanctions programs, according to a November Atlantic Council report. But the trend can be corrected under the incoming Joe Biden administration, the report said, which should be more patient with its sanctions use, provide a clear “endgame” and strategy for its sanctions programs, and work closer with allies to pressure dangerous actors.