Treasury’s Office of Foreign Asset Control (OFAC) has issued final rules to implement provisions of the Comprehensive Iran Sanctions Accountability and Divestment Act.  The Iranian Financial Sanctions Regulations (IFSR) are intended to isolate sanctioned Iranian government programs from financial institutions and to penalize any institutions that provide financial services to them.  If Treasury finds that a foreign financial institution (FFI) has knowingly engaged in a prohibited activity, Treasury may restrict or prohibit the FFI and domestic financial institutions (DFIs) from opening or maintaining a correspondent account or payable-through account for the sanctioned FFI in the U.S.  Additionally, DFIs and the entities they control are prohibited from transactions benefiting Iran’s Revolutionary Guard.  Violations of the new law are punishable as violations of the Bank Secrecy Act and International Emergency Economic Powers Act, resulting in significant legal and reputational risk in this high-profile arena and increasing the importance of thorough due diligence in correspondent account relationships.

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