Implications of the New IRGC Sanctions

The U.S. Treasury designated Iran’s Islamic Revolutionary Guard Corps (IRGC) under Executive Order 13224 for its support for terrorism last Friday, pursuant to Congressional legislation. While the immediate legal implications are limited, the designation of the IRGC in its entirely sends a chilling message to companies doing business in Iran.

Since 2007, the IRGC has been under significant U.S. sanctions for its leading role in Iran’s nuclear and ballistic missile programs, but yet only one component of the IRGC, the external operations branch known as the Quds Force, had been sanctioned for terrorism. In the intervening years, Treasury also sanctioned the IRGC for systemic human rights abuses in 2011 and 2012. Treasury also sanctioned the Quds Force in 2011 for supporting the Assad regime’s brutality in Syria.

It has been illegal for U.S. persons to transact with the IRGC since 2007, and any Guard property that comes under the jurisdiction of the United States must be frozen. Additionally, foreign persons providing financial, technical, material, or other support to the IRGC could themselves be sanctioned and banned from doing business in the United States. Even as Washington lifted and suspended significant sanctions pursuant to the 2015 nuclear deal, U.S. sanctions on the IRGC remained intact.

The new designation under E.O. 13224 does not impose additional legal restrictions but communicates the U.S. assessment that the IRGC is a funder of global terrorism. As Treasury noted in its press release, “The IRGC has played a central role to Iran becoming the world’s foremost state sponsor of terror. Iran’s pursuit of power comes at the cost of regional stability.”

Given the Revolutionary Guard’s pervasive role in the Iranian economy, any company doing business with Iran runs the risk of violating this new designation. There are thousands of IRGC subsidiaries and affiliates in Iran, many majority-owned by the IRGC and thus off-limits even if not explicitly named on Treasury’s sanctions lists, and many more controlled by the Guard through minority ownership and seats on boards of directors. Working with any one of them would make foreign companies a partner to a terrorist group and thus expose them to legal risk.

Friday’s action did not add the IRGC to the State Department’s Foreign Terrorist Organization list. That label carries similar penalties to Treasury sanctions and includes criminal liability for providing material support to a designated organization. However, unlike the FTO designation, Executive Order 13224 enables Treasury to sanction individuals, companies, and financial institutions that support the IRGC, not just the organizations itself.

Looking ahead, designating the IRGC as a Foreign Terrorist Organization is a step the administration might consider if Iran’s aggression continues to escalate. The Revolutionary Guard certainly meets the legal definition for designation. After all, it is a foreign organization that engages in terrorism which threatens U.S. nationals and U.S. national security. In the past, the State Department has only designated non-governmental groups, not state or para-state organs. But if any organization merits an exception to this rule, it is the one at the forefront of the malign activities that earn Iran the status as the world’s leading state sponsor of terrorism.

Annie Fixler is a policy analyst at FDD’s Center on Sanctions and Illicit Finance. Follow her on Twitter @afixler.

Follow the the Foundation for Defense of Democracies on Twitter @FDD.