On April 18, 2024, the Departments of Commerce and the Treasury announced combined export control restrictions and economic sanctions against Iran for its attack on Israel on April 13, 2024. These actions are intended “to degrade and disrupt key aspects of Iran’s malign activity, including its UAV [Unmanned Aerial Vehicles] program and the revenue the regime generates to support its terrorism” and to further restrict Iran’s access to commercial grade microelectronics. This latest round of export controls on Iran also seeks to restrict items manufactured outside the United States that are produced using U.S. technology.

BIS Export Controls

The Department of Commerce’s Bureau of Industry and Security (BIS) imposed new export controls in a Final Rule to restrict Iran’s access to technologies, such as basic commercial grade microelectronics. The new controls expand the scope of two foreign direct product rules (FDPs) — the Russia/Belarus/Temporarily occupied Crimea region of Ukraine FDP rule and the Iran FDP rule under which certain foreign-made items located outside of the United States may be subject to the Export Administration Regulations (EAR). This rule became effective on April 18, 2024.

This final rule builds on BIS’s February 2023 action that targeted Iran’s involvement in supplying UAVs in support of Russia’s war in Ukraine. See Thompson Hine Update of February 27, 2023 for additional details. This new rule also expands the list of items included in Supplement No. 7 to Part 746 of the EAR to include additional items. This list now includes the entirety of the “Common High Priority List” (CHPL), a list prepared in coordination with the European Union, Japan and the United Kingdom, that identifies items used in Russian weapons development by Harmonized Tariff Schedule (HTS)-6 Codes. The CHPL List includes electronic components such as integrated circuits and radio frequency (RF) transceiver modules, items essential for the manufacturing and testing of electronic components, and computer numerically controlled machine tools. See Thompson Hine Updates of March 5, 2024 and September 26, 2023 for further details on these high priority items.

The 39 additional HTS- 6 Code entries are: 845710, 845811, 845891, 845961, 846693, 847180, 848210, 848220, 848230, 848250, 848610, 848620, 848640, 850440, 851769, 852589, 852990, 853400, 853669, 853690, 854110, 854121, 854129, 854130, 854149, 854151, 854159, 854160, 854320, 880730, 901310, 901380, 901420, 901480, 902750, 903020, 903032, 903039, and 903082. All items subject to the EAR that are classified under the newly added 39 HTS-6 entries already require a license for export, reexport, or transfer (in-country) to Russia and Belarus. In addition, Commerce Control List (CCL) and U.S.-origin EAR99 items classified under these HTS-6 entries are already prohibited for export or reexport to Iran. However, by adding these items to Supplement No. 7 to Part 746, BIS jurisdiction over foreign produced items in these categories will now be expanded, which will in turn expands license requirements for Russia, Belarus and Iran. Such foreign produced restrictions are intended to further undermine the ability of Iran and Russia to support the production of missiles, drones, and other military items for use against Israel and Ukraine. Now foreign produced items that are the direct product of U.S.-origin technology and classified under these HTS codes will be subject to the EAR and prohibited for export to Iran or Russia/Belarus/Crimea.

OFAC Sanctions

The Department of the Treasury’s Office of Foreign Assets Control (OFAC) imposed sanctions on Iran in response to its attack on Israel by designating and placing on the Specially Designated Nationals (SDN) List 16 individuals and two entities enabling Iran’s UAV production and who reportedly work on behalf of Iran’s Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF), its UAV production arm, and other Iranian manufacturers of UAVs and UAV engines. OFAC also designated five companies in multiple jurisdictions providing component materials for Iranian steel production, and three subsidiaries of an Iranian automaker that continue to support the IRGC and other entities designated pursuant to OFAC’s counterterrorism authorities. Additional detail and identifying information on these individuals and entities is available here. A Treasury Department press release providing additional background on these entities and persons is available here

As a result of these OFAC actions, all property and interests in property of the persons and entities placed on OFAC’s SDN List 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 general or specific license issued by OFAC, or 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.