OFAC Targets Two Iranians for SDN Designation
December 14, 2011 Leave a comment
Yesterday, the United States Department of the Treasury Office of Foreign Assets Control (OFAC) and the United States Department of State targeted for economic sanctions two Iranian senior officials for their alleged involvement in human rights abuses in violation of Executive Order (E.O.) 13553. The two officials were Hassan Firouzabadi, the Chairman of Iran’s Joint Chiefs of Staff, and Abdollah Araqi, the Deputy Commander of the Islamic Revolutionary Guard Corps.
The sanctions program under which the individuals were designated, the Iranian Human Rights Abuses Sanctions Regulations, targets officials of the Government of Iran who were or are involved in serious human rights abuses since the June 2009 election. Once an individual is designated under this program, U.S. persons are prohibited from engaging in any transactions with them and any assets that they may have under U.S. jurisdiction are to be blocked. Moreover, the designation results in visa sanctions by the Department of State which prohibit the issuance of visas to visit the U.S. to these individuals.
As I have written many times before, OFAC SDN Designations are incredibly difficult to remove. This may be even more so in the case of the two individuals designated yesterday. Generally speaking, the basis of an OFAC SDN removal has to involve either: 1) a change in the circumstances which formed the basis of the designation; or 2) a case of mistaken identity. While perhaps a case of mistaken identity has occurred–which I believe OFAC would find unlikely–there would have to be a change in circumstances. However, that raises the question: how can you change the circumstances surrounding the designation if those circumstances have already occurred. More directly stated, if these individuals were involved in human rights abuses in 2009, then that activity has already occurred and can not be changed. The argument could be made that these individuals continue to engage in such activities, however, there was no mention in that in the Treasury press release concerning the designation. Treasury only emphasized these individuals alleged involvement in the crackdown during the 2009 election unrest.
Please allow me to play the Devil’s advocate for a moment. If the purpose of U.S. economic sanctions is to block from the U.S. financial system those parties engaged in activities detrimental to U.S. national security, then there is a nuance here that needs to be reconciled. While it is clear that SDN designations are designed to block those currently involved in any number of specified nefarious activities, should they also extend to those parties who were previously involved in such activity?
In the first instance, sanctions seem to be appropriate because it relates to preventing access to the U.S. financial system of those involved in illicit activity who could use such access to either derive funds from the U.S. or to launder illicit funds. On the other hand, as is the case here, it seems to be employed as a punitive measure against those who are alleged to have engaged in some nefarious activity two and a half years ago. While I concede that if these individuals were still engaged in such activity then the designation would be proper, Treasury did not indicate that this was the case.
Therefore, the question I have for my readers is: should sanctions be used as a merely preventative tool to protect the U.S. financial system or should they be used as a punishment as well? I would love to hear thoughts on this. Please feel free to email me or drop a comment in the comments section.
The author of this blog is Erich Ferrari, an attorney specializing in OFAC matters. If you have any questions please contact him at 202-280-6370 or email@example.com.