As has been widely reported, the U.S. policy of “maximum pressure” towards Iran has returned. On February 4, 2025, the Trump administration (the “Administration”) issued a national security memorandum (the “Memorandum”) directing members of the new Administration’s cabinet and other economic advisors to review various aspects of the United States’ foreign policy toward Iran, and directs the Administration to “impose maximum pressure on the Iranian regime to end its nuclear threat, curtail its ballistic missile program, and stop its support for terrorist groups.”
This strategy includes increased sanctions and scrutiny on the shipping industry with the goal of eliminating the revenue that Iran receives from its oil exports, and the directives in the Memorandum suggest that the Administration will continue to take a “whole of government” approach towards imposing pressure on Iran and that, among other things, financial institution due diligence programs will also face increased scrutiny.
While some of the directives in the Memorandum simply direct various components of the Administration to apply “robust” and “continuous” enforcement of existing sanctions authorities, existing guidance will be subject to review to avoid providing Iran any degree of economic or financial relief. For example, the Treasury Department is directed to issue “updated guidance to all relevant business sectors including shipping, insurance, and port operators” as to the risks of knowingly violating U.S. sanctions with respect to Iran or any Iranian terror proxy; and to “evaluate beneficial ownership thresholds” and whether financial institutions should adopt “Know Your Customer’s Customer” standards for any Iran-related transactions in order to enhance prevention of sanctions evasion.
The State Department is subject to similar directives. The Memorandum instructs the State Department to, among other things, “drive Iran’s export of oil to zero, including exports of Iranian crude to China” to “take immediate steps, in coordination with other agencies, to ensure that the Iraqi financial system is not utilized by Iran for sanctions evasion or circumvention, and that the Gulf countries are not used as sanctions evasion transshipment points” and to “modify or rescind sanctions waivers. . . including those related to Iran’s Chabahar port project.”
The Memorandum also includes directives to the Secretary of Commerce to prioritize export control enforcement against Iran; and to the Attorney General to, among other things, “pursue all available legal steps to impound illicit Iranian oil cargoes” and to take other steps to employ its authorities to “investigate, disrupt and prosecute any financial and logistical networks, operatives or front groups sponsored by Iran or any Iranian terror proxy.”
On February 6, 2025, the Department of Treasury’s Office of Foreign Assets Control (OFAC) announced the imposition of sanctions on an international shipping network for facilitating the shipment of millions of barrels of Iranian crude oil. The designations included entities, vessels, and individuals from China, India, and the UAE.
Individuals and entities in or adjacent to the shipping industry should ensure that their sanctions and export control policies and procedures are robust and ready to react and adapt to the invigorated enforcement environment.
