On 25th October, the US Treasury and State Department made a joint announcement about a mechanism that they say will help the international community perform enhanced due diligence on humanitarian trade to ensure that funds associated with permissible trade in support of the Iranian people are not diverted by the Iranian regime to develop ballistic missiles, support terrorism, or finance other malign activities. They say that they will establish a process to help ensure that participating governments and financial institutions commit to conducting enhanced due diligence to mitigate the higher risks associated with Iran-related transactions. It will require foreign governments and financial institutions that choose to participate in the mechanism to conduct enhanced due diligence and provide to Treasury a substantial and unprecedented amount of information, with appropriate disclosure and use restrictions, on a monthly basis. The mechanism includes a number of safeguards to prevent any sanctionable dealings with persons that have been designated in connection with Iran’s support for terrorism or WMD proliferation. The mechanism is designed solely for the purpose of commercial exports of agricultural commodities, food, medicine, and medical devices to Iran. In 2013, OFAC had issued guidance on the sale of food, agricultural commodities, medicine, and medical devices by non-US Persons to Iran. However, the US government says it has seen the Iranian regime abuse the goodwill of the international community, including by using so-called humanitarian trade to evade sanctions and fund its malign activity. The new mechanism will enable foreign governments and foreign financial institutions to seek written confirmation from the US Treasury that the proposed financial channel will not be exposed to US sanctions in exchange for foreign governments and financial institutions committing to provide to Treasury robust information on the use of this mechanism on a monthly basis – and if foreign governments or financial institutions detect any potential abuse of this mechanism by Iranian customers, or the involvement of designated individuals or entities, they will be required to immediately restrict any suspicious transactions and provide relevant information to the US Treasury.
The new guidance is available at –
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