US Imposes Sectoral Sanctions on Iran Car and Rail Industries Without Wind-Down

On October 1, the US Department of the Treasury's Office of Foreign Assets Control (OFAC) determined that section 1(a)(i) of Executive Order 13902 applies to the automotive and rail sectors of the Iranian economy, according to Business Upturn. The sectoral determination took effect immediately with no wind-down period, making any entity operating within those industries subject to potential designation and exposing foreign banks financing them to secondary sanctions.

Concurrently, OFAC designated Iran's two largest vehicle manufacturers, Iran Khodro and SAIPA, along with subsidiaries including Iran Khodro Diesel, Pars Khodro, Zamyad, and Niroo Motor companies. Three railway entities were also sanctioned: the Islamic Republic of Iran Railway Company, Raja Passenger Trains, and Railway Transportation Company. The Treasury stated that Iran has increasingly utilized rail transportation to move oil and maintain regional trade under an American maritime blockade.

The enforcement action also designated foreign suppliers involved in Iran's automotive and industrial supply chains. Named targets include Integrated Auto Parts LLC in the United Arab Emirates, Troy Trading in Türkiye, PT Golden Motorcycle International in Indonesia, and Hong Kong-based Hessenberg Co. and Tanex Global Trading. Iran's Heavy Equipment Production Company (HEPCO) was designated together with its China-based subsidiary, HEPCO Shanghai.

Additionally, OFAC and the Financial Crimes Enforcement Network (FinCEN) jointly designated the Russia-linked A7 Network, identifying it as a shadow banking operation utilized by Iran to circumvent sanctions.