OFAC Codifies Iraq Stabilization and Insurgency Sanctions Regulations

OFAC is issuing these regulations in order to further implement five Executive Orders¹ which block property and interests in property in the U.S. of the former Iraqi Regime; persons who threaten stabilization efforts in Iraq, etc.; and which protect Iraqi petroleum and petroleum products from litigation, among other things.

OFAC has also issued a final rule removing the former Iraqi Sanctions Regulations from 31 CFR Part 575.

Transactions/Persons Blocked Under New Regulations

New 31 CFR 576.201(a) specifically prohibits the following:

“(a) All property and interests in property that are in the United States, that hereafter come within the United States, or that are or hereafter come within the possession or control of U.S. persons, including their overseas branches, of the former Iraqi regime or its state bodies, corporations, or agencies, or of the following persons are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in:

(1) Persons listed in the Annex to Executive Order 13315 of August 28, 2003, as amended by Executive Order 13350 of July 29, 2004; and

(2) Persons determined by the Secretary of the Treasury, in consultation with the Secretary of State,

(i) To be senior officials of the former Iraqi regime or their immediate family members; or

(ii) To be owned or controlled by, or acting or purporting to act for or on behalf of, directly or indirectly, any of the persons whose property and interests in property are blocked pursuant to paragraphs (a)(1) or (a)(2) of this section; and

(3) Persons determined by the Secretary of the Treasury, in consultation with the Secretary of State and the Secretary of Defense,

(i) To have committed, or to pose a significant risk of committing, an act or acts of violence that have the purpose or effect of:

(A) Threatening the peace or stability of Iraq or the Government of Iraq; or

(B) Undermining efforts to promote economic reconstruction and political reform in Iraq or to provide humanitarian assistance to the Iraqi people;

(ii) To have materially assisted, sponsored, or provided financial, material, logistical, or technical support for, or goods or services in support of, such an act or acts of violence or any person whose property and interests in property are blocked pursuant to paragraph (a)(3) of this section; or (iii) To be owned or controlled by, or to have acted or purported to act for or on behalf of, directly or indirectly, any person whose property and interests in property are blocked pursuant to paragraph (a)(3) of this section.”

(OFAC notes that the names of blocked persons are published on OFAC’s Specially Designated Nationals and Blocked Persons List.)

In addition, new 31 CFR 576.412 states that the property and interests in property of an entity which owns, directly or indirectly, a 50 percent or greater interest of an entity whose property and interests in property are blocked pursuant to 15 CFR 576.201(a) are also blocked, regardless of whether the entity itself is designated pursuant to 31 CFR 576.201(a).

Protection for Iraqi Petroleum, Development Fund, Etc.

New 31 CFR 576.206(a) grants protection to the Development Fund for Iraq, Iraqi petroleum and petroleum products, and the Central Bank of Iraq, as follows:

“(a) Unless licensed or otherwise authorized pursuant to this part, and except as provided in paragraph (b) of this section, any attachment, judgment, decree, lien, execution, garnishment, or other judicial process on or after the effective date is prohibited, and shall be deemed null and void, with respect to the following:

(1) The Development Fund for Iraq;

(2) All Iraqi petroleum and petroleum products, and interests therein, but only until title passes to the initial purchaser, and proceeds, obligations, or any financial instruments of any nature whatsoever arising from or related to the sale or marketing thereof, and interests therein, in which any foreign country or a national thereof has any interest, that are in the U.S., that hereafter come within the U.S., or that are or hereafter come within the possession or control of U.S. persons; and

(3) Any accounts, assets, investments, or any other property of any kind owned by, belonging to, or held by the Central Bank of Iraq, or held, maintained, or otherwise

controlled by any financial institution of any kind in the name of, on behalf of, or otherwise for the Central Bank of Iraq.”

Former Iraqi Sanctions Regulations Removed

OFAC has also issued a final rule, effective September 13, 2010, which removes the Iraqi Sanctions Regulations from the CFR pursuant to EO 13350, which terminated the national emergency declared with respect to Iraq in EO 12722, and revoked that and subsequent Executive orders, pursuant to the removal of the regime of Saddam Hussein and other developments.

(See ITT’s Online Archives or 08/04/04, 08/09/04, 08/10/04, and 08/19/04 news, 04080420, 04080930, 04081030, and 04081915, for BP summaries of EO 13350.)

¹OFAC’s regulations codify the following EOs:

1. EO 13303 of May 2003, which, among other things, protects from litigation the Development Fund for Iraq, Iraqi petroleum, and proceeds from its sales;
2. EO 13315 of August 2003, which, among other things, blocks all property and interests in property in the U.S. or in the possession or control of U.S. persons, including any overseas branch, of the former Iraqi regime; its state bodies, corporations, or agencies; etc.;
3. EO 13364 of November 2004, which, among other things, further modified the scope of the national emergency that was declared in Executive Order 13303, expanded in Executive Order 13315, and modified in Executive Order 13350.
4. EO 13350 of July 2004, which terminated the national emergency that had been declared in Executive Order 12722 with respect to Iraq, and revoked that Order, Executive Order 12724, and subsequent Orders that were based on the national emergency. EO 13350 also continued certain prohibitions with regard to transactions involving blocked property, among other things; and
5. EO 13438 of July 2007, which, among other things, blocks all property and interests in property in the U.S. of certain persons who threaten stabilization efforts in Iraq in order to take additional steps with respect to the national emergency declared in EO 13303 and expanded in EO 13315.

(See OFAC’s final rule for the complete Iraq Stabilization and Insurgency Sanctions Regulations.)

OFAC contact - Assistant Director for Compliance, Outreach & Implementation (202) 622-2490

(FR Pub 09/13/10)

OFAC’s final rule removing the former Iraqi Sanctions Regulations is available here.