On June 7, 2019, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned Iran’s largest petrochemical holding group, Persian Gulf Petrochemical Industries Company (PGPIC). In addition to PGPIC, OFAC placed 39 PGPIC subsidiaries and foreign-based sales agents on its Specially Designated Nationals (SDN) List. According to OFAC, PGPIC was sanctioned for having provided, or attempted to provide, financial, material, technological or other support for, or goods or services to or in support of, Khatam al-Anbiya, another Iranian entity on the SDN List.
PGPIC and its subsidiary companies hold 40 percent of Iran’s total petrochemical production capacity and are responsible for 50 percent of Iran’s total petrochemical exports. OFAC stated that PGPIC has awarded major engineering, procurement and construction contracts to Khatam al-Anbiya, generating hundreds of millions of dollars for the Islamic Revolutionary Guard Corps (IRGC). In a press release, OFAC highlighted that in 2018 Iran’s Ministry of Petroleum “awarded the IRGC’s Khatam al-Anbiya ten projects in oil and petrochemical industries worth the equivalent of 22 billion dollars, a value four times the official budget of the IRGC. In late 2016, Iran’s Minister of Petroleum asked the IRGC’s Khatam al-Anbiya to increase its investment and presence across Iran’s oil and petrochemical industries.” Treasury Secretary Steven Mnuchin stated, “By targeting this network we intend to deny funding to key elements of Iran’s petrochemical sector that provide support to the IRGC.”
As a result of this action, all property and interests in property of these entities that are in the United States or in the possession or control of U.S. persons must be blocked and reported to OFAC. Because U.S. persons are generally prohibited from dealing with entities on the SDN List, persons who engage in certain transactions with the designated PGPIC entities may themselves be exposed to designation. OFAC has indicated that any foreign financial institution that knowingly facilitates a significant financial transaction or provides significant financial services for these entities could be subject to U.S. correspondent account sanctions or payable-through account sanctions.