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United States | Publication | May 2024
On April 25, 2024, the Department of the Treasury, Office of Foreign Assets Control (OFAC) announced sanctions on one dozen entities, individuals and vessels involved in financing and facilitating the clandestine sale of Iranian unmanned aerial vehicles (UAVs) for Iran’s Ministry of Defense and Armed Forces Logistics (MODAFL). According to OFAC, MODAFL actively supports Russia’s war in Ukraine as well as Iran’s Islamic Revolutionary Guard Corps (IRGC). These designations represent another wave of sanctions in just a few weeks as the US government continues to target the Iranian UAV program. As a whole, these actions build upon the joint guidance issued by the US Department of Commerce, the US Department of Justice, the US Department of State and the US Department of the Treasury this past June to assist companies with understanding the threat posed by Iran’s UAV-related activities and the steps they can take to avoid or prevent any activities that would support the further development of Iran’s UAV program.
These latest actions were taken pursuant to three E.O.s:
Pursuant to these E.O.s, OFAC has designated persons and entities to the Specially Designated Nationals and Blocked Persons (SDN) List. US persons are prohibited from engaging in any transactions with SDNs and must block property of SDNs in their possession or under their control in which an SDN has an interest.
OFAC designated companies, individuals and vessels as part of its comprehensive attack on the Iranian UAV program.
According to OFAC, Sahara Thunder is the primary front company that oversees MODAFL’s commercial activities related to clandestine sale of UAVs. Sahara Thunder reportedly plays a major role in designing, developing, manufacturing and selling thousands of UAVs that ultimately end up in Russia. Since late 2022, Sahara Thunder reportedly had been negotiating a deal with Russian officials to deliver and produce thousands of UAVs to a US-sanctioned facility in Russia, Joint Stock Company Special Economic Zone of Industrial Production Alabuga (SEZ Alabuga). Sahara Thunder has been designated pursuant to two separate authorities, E.O. 13224 and E.O. 14024.
Individuals identified as part of Sahara Thunder’s leadership and network have also been designated as SDNs.
OFAC has also designated a vessel and two companies that are reportedly involved in the shipment of Iranian commodities for Sepehr Energy Jahan Nama Pars (Sepehr Energy). Sepehr Energy plays a leading role in Iran’s Armed Forces General Staff (AFGS) commercial activities.
Bonyan Danesh Shargh Private Company (Bonyan Danesh Shargh) produces UAVs, quadcopters, engines and electronic and digital parts, and is based in Iran. It has reportedly been involved in discussions regarding the SEZ Alabuga UAV facility in Russia.
Pouya Air was previously designated pursuant to E.O. 13224 and has been re-designated to E.O. 13382 for its transshipment of Iranian military UAVs to Russia. Additional designation of an entity pursuant to a separate authority does not change the SDN status of an entity.
This wave of designations emphasizes the ongoing efforts of the US to tackle sources of support for Iran’s UAV program. The US government’s use of a mix of authorities to achieve its goals is evidenced by the fact that these actions were taken pursuant to three executive orders associated with sanctions programs targeting different areas (terrorist financing, WMD proliferation and the Russian economy). Companies must remain vigilant and continue to closely scrutinize their compliance diligence processes to ensure adherence as the sanctions programs evolve.
As updates occur in the programs and relevant guidance, companies should ensure those updates are reflected in their compliance policies and procedures. With these latest designations in particular, US and non-US financial institutions and companies in the UAV-manufacturing supply chain (including those providing support services such as shipping) should carefully examine transactions for red flags that may indicate the involvement of or a benefit to SDNs and otherwise sanctioned parties to assess their US sanctions exposure.
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