OFAC Continues to Impose Additional Sanctions Related to Russia and Iran

OFAC Designates Actors Facilitating Iran’s Transfer of Lethal Aid to Russia

On September 10, 2024, the Office of Foreign Assets Control (“OFAC”) designated ten individuals and six entities based in Iran and Russia and identified four vessels as blocked property that are enabling Iran’s delivery of weapons components and systems, to Russia.

According to OFAC, these designations are the result of the contract signed between Iran and Russia for supply of missiles and the subsequent training provided by Iran to the Russian military Other international partners announced measures which will not allow Iran Air to operate in their territory in the future and are pursuing further designations of Iran-and Russia-based individuals, entities, and vessels involved in the transfer of Iranian lethal aid to Russia.

The Department of State has designated three entities, including Iran Air, pursuant to Executive Order (“E.O.”) 13949, the Iran conventional arms authority, for playing a role in transferring arms (including spare parts) for the use or benefit of Iran.

Department of State has also identified five vessels as blocked property involved in the proliferation of Iranian weapons systems to Russia.

A. IRGC and MODAFL Officials

The following three individuals have been designated pursuant to E.O. 13382 for acting or purporting to act for or on behalf of Ministry of Defence and Armed Forces Logistics (“MODAFL”), Shahid Kharrazi Industries and the IRGC Air Force respectively which were designated before on June 16, 2010:

• Russia-based Ruhollah Katebi is the Russian government’s point of contact for Iran’s MODAFL in Moscow
• Iran-based Ebrahim Bahrami is an employee of Shahid Kharrazi Industries, and has been a point of contact in Iran for the Russian government and the training of Russian military personnel in Iran
• Iran-based Ali Ja’farabadi is the Commander of the IRGC Air Force’s Salman Farsi Space Command and has overseen satellite launches in Iran

B. TransMorFlot Update and MG-Flot Vessels

OFAC has updated the entries of both TransMorFlot and Etim Emin who changed their name to MG-FLOT and Sapfir respectively to include the new names and the other identifying information as entries on the Specially Designated Nationals (“SDN”) List. The current chairman of the board of МG-FLOT, Dzhamaldin Emirmagomedovich Pashaev, has also been designated for operating or having operated in the defense or related materiel sector of the Russian economy.

The following four vessels have been designated pursuant to E.O. 14024 as property in which MG-FLOT, has an interest:

• Boris Kustodiev
• Port Olya-3
• Port Olya-4
• Kompozitor Rakhmaninov

C. AZADEGAN Transportation Company Network

Azadegan Transportation Company has been designated pursuant to E.O. 13224, as amended, for being owned, controlled, or directed by, directly or indirectly, the Islamic Revolutionary Guard Corps (“IRGC”). The following three companies which are the members of the board of directors of Azadegan Transportation Company have been designated pursuant to E.O. 13224 along with the individuals who are representing them in the board:

• Amad Behineh Saz Engineering Company, Ali Zare
• Talieh Sabz Jehan Group Company, Gholamreza Eini Sarkalleh
• Sanjesh Gostar Dana Engineering and Quality Control Inspection Company, Masoud Noorahmadi

D. FARZANEGAN Propulsion Systems Design Bureau and Company Officials

Farzanegan has been designated pursuant to E.O. 14024 for supplying Russian weapons makers with samples of Farzanegan’s engines in support of Russian cruise missile development. The following individuals have been designated pursuant to E.O. 14024 for being the leaders or officials of Farzanegan:

• Hossein Pourfarzaneh
• Zahra Pourfarzaneh
• Hassan Pourfarzaneh

E. Sanctions Implications

As a result of this action, all property and interests in property of the persons above that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC. In addition, any entities that are owned, directly or indirectly, 50% or more by one or more blocked persons are also blocked. All transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or blocked persons are prohibited unless authorized by a license issued by OFAC or if they are found otherwise exempt. These prohibitions include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person and the receipt of any contribution or provision of funds, goods, or services from any such person.

Non-U.S. persons are also prohibited from causing or conspiring to cause U.S. persons to violate U.S. sanctions, as well as from engaging in conduct that evades U.S. sanctions. In addition, persons that engage in certain transactions or activities with the sanctioned entities and individuals may expose themselves to sanctions or be subject to an enforcement action. The prohibitions include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any designated person, or the receipt of any contribution or provision of funds, goods, or services from any such person. Furthermore, any foreign financial institution that knowingly facilitates a significant transaction or provides significant financial services for any of the or entities designated today could be subject to U.S. sanctions.

OFAC Designates Additional Russian Individuals and Entities

On September 13, 2024, OFAC designated three individuals and three entities on its SDN list, including the following:

• Dmitry Konstantinovich Kiselev, a Russian national with a secondary sanctions risk.
• Nelli Alekseyevna Parutenko, a Russian national with a secondary sanctions risk.
• Autonomous Non Profit Organization Tv Novosti (“RT”), a Russian media organization with a secondary sanctions risk
• Avtonomnaya Nekommercheskaya Organizatsiya Sodeystviya Razvitiyu Mezhdunarodnovo Sotrudnichestva Evraziya (“Ano Evraziya”), a Russian organization with a secondary sanctions risk
• Federal State Unitary Enterprise International Information Agency Rossiya Segodnya (“Russia Today”), a Russian government agency with a secondary sanctions risk

OFAC Issues Final Rule and Reminder Related to Procedures Related to Blocking Property

OFAC published a rule on Updating Provisions Related to Blocking and Other Actions Related to Specific Property or Interests in Property. This rule will become final in the Federal Register on September 17, 2024.

The rule clarifies OFAC’s process of issuing orders that block or identify specific blocked property or impose partial restrictions. The updated rule has added guidance to the blocking provisions in 35 parts of 31 CFR chapter V (i.e., OFAC’s sanctions regulations).

OFAC has outlined the different types of actions it can take which are as follows:

• Identifying property or interest in property of already blocked person, particularly in cases in which OFAC has access to information supporting its determination that a blocked person has an interest in specific property.
• Identifying property or interests in property of a person who is not blocked, but whom OFAC is investigating for potential designation.
• Blocking or imposing other prohibitions with respect to specific property or interests in property less than full, blocking sanctions which may be narrower than blocking the entirety of the person’s property and interests in property.

OFAC has also outlined the different forms of notices that it will use to inform the affected parties about its actions which are as follows:

• Publication in the Federal register to provide public the constructive notice of OFAC’s action.
• Provide written notice specifically to a person affected by the prohibition directly or through the financial institutions or other transaction intermediaries with whom the recipient maintains direct commercial relationships. These financial institutions or other transaction intermediaries will have to notify the affected person.

On the same day, OFAC also issued a reminder to holders of blocked property that 31 C.F.R. § 501.603, of the Reporting, Procedures and Penalties Regulations (“RPPR”) requires holders of blocked property to submit an Annual Report of Blocked Property to OFAC by September 30, 2024 (“2024 ARBP”), detailing all blocked property held as of June 30 of the current year.

OFAC further clarified that in case no blocked property was held as of June 30 of the current year then no report was required. Only property blocked under OFAC regulations needs to be included, while property unblocked or related to terminated sanctions programs do not need to be included.

Furthermore, persons filing the 2024 ARBP are required to utilize spreadsheet form TD-F 90-22.50. Completed forms should be filed through the OFAC Reporting System. Failure to submit a required ARBP by September 30 constitutes a violation of the RPPR.