Iran Sanctions — U.S. Sanctions on the Islamic Republic

The U.S. maintains one of the most complex and far-reaching sanctions programs in the world against Iran — targeting the country's nuclear program, missile development, support for terrorism, human rights abuses, and broader economic activity. Unlike most sanctions programs that rely on executive authority alone, Iran sanctions are deeply embedded in federal statute — with multiple overlapping laws creating a dense web of prohibitions, secondary sanctions, and enforcement mechanisms. The sanctions architecture has been built up over four decades, beginning with the Iran Hostage Crisis (1979) and expanding through the Iran Sanctions Act (ISA, 1996), the Comprehensive Iran Sanctions, Accountability, and Divestment Act (CISADA, 2010), the Iran Threat Reduction and Syria Human Rights Act (ITRSHRA, 2012), the Iran Freedom and Counter-Proliferation Act (IFCPA, 2012), and numerous executive orders under IEEPA. The Joint Comprehensive Plan of Action (JCPOA, 2015) temporarily eased some sanctions in exchange for Iran's nuclear commitments — but the Trump administration's withdrawal (2018) reimposed all statutory and executive sanctions under a "maximum pressure" campaign. Iran sanctions are administered by OFAC through the Iranian Transactions and Sanctions Regulations (31 C.F.R. Part 560). The sanctions are notable for their secondary sanctions dimension — targeting not just U.S. persons but foreign companies and financial institutions that do business with Iran, effectively leveraging the dominance of the U.S. dollar and financial system to enforce global compliance.

Current Law (2026)

Legal Authority

• 22 U.S.C. §§ 8501–8551 — Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (CISADA)
• 22 U.S.C. §§ 8701–8795 — Iran Threat Reduction and Syria Human Rights Act of 2012 (ITRSHRA)
• 50 U.S.C. § 1701 et seq. — International Emergency Economic Powers Act (IEEPA — presidential authority)
• Iran Sanctions Act of 1996 (ISA, as amended) — Sanctions on investment in Iran's petroleum sector
• 31 C.F.R. Part 560 — Iranian Transactions and Sanctions Regulations (OFAC)
• Executive Order 13846 (2018) — Reimposing sanctions lifted under the JCPOA

How It Works

For U.S. persons — citizens, permanent residents, entities organized under U.S. law, and anyone physically present in the U.S. — Iran sanctions are nearly comprehensive: virtually all transactions with Iran, the Government of Iran, Iranian financial institutions, and Iranian-origin goods are prohibited, including trade, investment, banking, insurance, and services. Limited exceptions cover humanitarian goods (food, medicine, medical devices, though even these require OFAC licensing or fall under general licenses with strict conditions), informational materials, and diplomatic activities. The secondary sanctions dimension is what makes Iran sanctions uniquely powerful: they target foreign persons who conduct significant transactions with Iran, allowing the U.S. to freeze U.S. assets of, cut off from the U.S. financial system, and bar U.S. business dealings with non-U.S. entities — European banks, Chinese companies, Dubai trading houses — that facilitate Iranian trade or finance. Because U.S. dollar access and U.S. financial market participation are essential to global commerce, foreign entities generally comply: the cost of losing U.S. financial system access far exceeds any benefit from Iranian business.

The JCPOA (2015) — agreed between Iran and the P5+1 (U.S., UK, France, Russia, China, Germany) — traded nuclear program restrictions (limited enrichment, reduced stockpile, enhanced IAEA inspections) for relief from nuclear-related sanctions. The first Trump administration withdrew from the JCPOA in 2018 and reimposed all previously lifted sanctions plus new restrictions under a "maximum pressure" campaign targeting Iran's oil exports, financial sector, and key industries; Iran responded by exceeding JCPOA nuclear limits, enriching uranium to 60%, and reducing IAEA access. Diplomatic efforts to revive or replace the agreement have not succeeded through 2026. OFAC enforces Iran sanctions through civil penalties up to the greater of $377,700 per violation (2026 IEEPA cap) or twice the transaction value, criminal referrals to DOJ (up to 20 years imprisonment and $1 million in fines for willful violations), and the Specially Designated Nationals (SDN) list — designating hundreds of Iranian government officials, companies, banks, and affiliated entities whose U.S. assets are frozen and with whom U.S. persons may not transact.

How It Affects You

If you're a U.S. business or individual with any connection to Iran: The prohibitions are near-comprehensive — virtually all transactions with Iran, the Government of Iran, Iranian financial institutions, and Iranian-origin goods are barred under 31 C.F.R. Part 560. The scope includes trade, investment, banking, insurance, services, and even indirect transactions routed through third countries. Civil penalties can reach the greater of $377,700 per violation (2026 IEEPA cap) or twice the transaction value; criminal penalties for willful violations reach up to 20 years in prison and $1 million in fines. The risk extends beyond direct Iran business: supply chain exposure, investments in companies with Iran operations, and financial transactions through intermediaries who have Iran relationships can all create liability. Conduct SDN list screening (OFAC's Specially Designated Nationals list at home.treasury.gov/policy-issues/financial-sanctions/sdn-list) and broader entity screening against OFAC's consolidated sanctions list before any transaction touching the Middle East. Limited OFAC general licenses exist for specific categories: certain humanitarian goods (food, medicine, medical devices), personal communications software, and informational materials — but even these have conditions.

If you're Iranian American sending money to family in Iran: This is one of the most complicated personal finance situations in U.S. sanctions law. OFAC General License D-2 and related authorizations permit certain personal remittances, but the channels for actually sending money to Iran are severely limited because most international banks refuse to process Iranian transactions regardless of whether a general license applies. Services like Wise, PayPal, and major U.S. banks do not process Iran transfers. Some specialized hawala-type money transfer operators operate in legal gray areas; using unlicensed money transmission services carries its own legal risks. Humanitarian transactions — food, medicine, family remittances — are generally authorized under OFAC general licenses, but you must use a financial intermediary willing to process the transaction. The OFAC license process (apply at ofac.treas.gov) can authorize specific transactions not covered by general licenses; processing takes weeks to months.

If you're a non-U.S. company doing business globally: Iran's secondary sanctions are what make this program unusual — they target foreign companies and banks that conduct significant transactions with Iran's energy sector, financial sector, or other designated industries. If your company processes transactions for Iran's Central Bank, buys Iranian oil, or provides services to sanctioned Iranian entities, the U.S. can designate your company on the SDN list, freeze U.S. assets, and cut off your access to the U.S. financial system and U.S. counterparties. Because the U.S. dollar is the global reserve currency and access to U.S. banks is essential for international trade, most major global companies and banks comply with Iran sanctions regardless of where they're domiciled. Shell companies, front companies, and trade intermediaries used to route Iranian oil or funds face aggressive designation actions — the SDN list includes hundreds of non-U.S. entities used to evade sanctions.

If you're a compliance officer, trade attorney, or financial institution professional: Iran represents the highest-risk OFAC sanctions program — comprehensive primary sanctions plus powerful secondary sanctions with active enforcement. Key compliance elements: real-time SDN and OFAC consolidated list screening for all transactions and counterparties; enhanced due diligence on transactions involving UAE, Turkey, China, Iraq, and other Iran-adjacent jurisdictions where evasion networks operate; correspondent banking screening for embedded Iran connections; and robust "know your customer" processes for beneficial ownership. OFAC enforcement actions against financial institutions for Iran sanctions violations have resulted in penalties ranging from tens of millions to billions of dollars (BNP Paribas — $8.9 billion in 2014). OFAC's Voluntary Self-Disclosure (VSD) program provides meaningful penalty mitigation — a timely, complete VSD can reduce civil penalties by 50% and is a strong mitigating factor in enforcement decisions. Maintain detailed records of sanctions screening results, rejected transactions, and compliance investigations.

State Variations

Iran sanctions are exclusively federal — but state divestment laws supplement them:

• Approximately 25 states have enacted Iran divestment laws requiring state pension funds and investment portfolios to divest from companies doing significant business with Iran's energy sector
• CISADA preempts conflicting state sanctions but expressly authorizes state divestment measures that meet certain criteria
• State-level enforcement plays no direct role — OFAC is the sole federal enforcer

Implementing Regulations

• 31 CFR Part 535 — Iranian Assets Control Regulations: the oldest layer of Iran sanctions, dating to the 1979 Hostage Crisis. On November 14, 1979, President Carter invoked IEEPA to block all Iranian government property in the U.S. financial system. Part 535 contains the regulatory implementation of the Algiers Accords (January 19, 1981) — the agreement that ended the 444-day hostage crisis. Key historical provisions still in effect:

  • § 535.201 — Blocking of Iranian government property: all property of the Government of Iran and Iranian entities held in U.S. possession or control was blocked as of November 14, 1979; the prohibition remains in place for assets not specifically released under the Accords
  • § 535.210 — Escrow direction: the Federal Reserve Bank of New York (as U.S. fiscal agent) was directed to establish escrow accounts for transfer of Iranian assets; the Accords required the U.S. to transfer approximately $7.955 billion in Iranian government assets from U.S. banks to an Algerian intermediary bank, then to Iran — a transfer effected through the New York Fed
  • § 535.211 — New York Fed transfer authority: directed the Fed to transfer Iranian assets to the Bank of England and then to accounts designated for the Iran-U.S. Claims Tribunal; this provision operationalized the most complex international asset transfer in U.S. history
  • § 535.212 — Overseas branches: directed all overseas branches of U.S. banks to transfer Iranian property to the New York Fed for inclusion in the escrow; U.S. banks overseas (principally European branches) held substantial Iranian government deposits that had to be repatriated as part of the settlement
  • § 535.208 — Evasion prohibition: covers any transaction that has the effect of evading or avoiding the blocking orders, effective November 14, 1979 (8:10 a.m. Eastern time — the exact hour of Carter's executive order)

  The Iran-U.S. Claims Tribunal (established by the Accords, seated in The Hague) continues to adjudicate pre-1981 claims by U.S. nationals against Iran and Iranian nationals against the U.S. arising from the 1979 nationalization and the sanctions. Part 535's escrow provisions remain relevant to ongoing claims. Iranian government assets in excess of the original transfer still technically remain subject to the 1979 blocking order to the extent not specifically released or returned.

• 31 CFR Part 560 — Iranian Transactions and Sanctions Regulations: OFAC's comprehensive modern Iran trade embargo, updated continuously since the 1996 Iran Sanctions Act. Covers all U.S. person transactions with Iran, the Government of Iran, and Iranian-origin goods and services; petroleum sanctions; secondary sanctions triggers; humanitarian exceptions (food, medicine, medical devices, agricultural commodities); specific license application process; 119 sections

• 31 CFR Part 561 — Iranian Financial Sanctions Regulations: OFAC's secondary sanctions framework targeting foreign financial institutions that transact with Iranian banks — the mechanism for cutting third-country banks off from the U.S. dollar-clearing system. Key provisions:

  • § 561.201 — CISADA-based sanctions: foreign financial institutions that knowingly conduct or facilitate significant financial transactions with Iranian banks designated under Executive Order 13382 or sanctioned under the Iran Sanctions Act may be cut off from correspondent and payable-through accounts at U.S. financial institutions — effectively losing dollar-clearing access globally
  • § 561.202 — U.S.-owned foreign entities: prohibits U.S.-owned or -controlled foreign subsidiaries from conducting transactions with the Government of Iran or any person subject to Iran sanctions, closing the gap that allowed foreign subsidiaries of U.S. banks to serve Iranian clients
  • § 561.203 — NDAA-based sanctions: foreign banks that knowingly facilitate significant transactions for Iranian banks in connection with Iran's nuclear program, ballistic missile activities, or support for terrorism face the same loss of U.S. correspondent account access — broader in scope than CISADA because it covers nuclear/missile/terror-linked activity regardless of whether the Iranian counterparty is a designated financial institution
  • § 561.204 — Petroleum sanctions: foreign financial institutions that knowingly conduct significant transactions for the purchase of Iranian petroleum or petroleum products, or that process revenues of the National Iranian Oil Company, risk sanctions — this is the mechanism that pressured countries to reduce Iranian oil imports in exchange for temporary waivers
  • § 561.205 — Metals sanctions: covers significant transactions involving Iranian precious metals, graphite, aluminum, steel, coal, and software for industrial processes — added to close evasion channels as Iran shifted oil revenues into commodity trades
  • § 561.220 — Evasion prohibition: any transaction structured to evade Part 561 secondary sanctions — including layering through shell companies or third-country intermediaries — is itself prohibited and subject to sanctions

  Part 561's secondary sanctions do not require a U.S. nexus to the underlying transaction — a German bank transacting with an Iranian bank in euros can trigger U.S. sanctions if the activity is "significant." OFAC interprets "significance" by totality of circumstances: dollar volume, number of transactions, Iranian counterparty's SDN status, and evasion indicators. The practical effect is that most major non-U.S. banks self-sanction by exiting Iran business entirely to protect their dollar-clearing relationships.

• 31 CFR Part 562 — Iranian Sector and Human Rights Abuses Sanctions Regulations: OFAC's sector-based sanctions framework targeting specific Iranian industrial sectors and individuals responsible for human rights abuses. Enacted under Executive Order 13846 (reimposed Iran sanctions after JCPOA withdrawal in 2018), Part 562 extends sanctions beyond nuclear-linked activity to cover Iran's metals, mining, manufacturing, textile, and financial sectors, as well as individuals involved in human rights violations against Iranian citizens. Key provisions:

  • § 562.201 — Prohibited transactions: all transactions prohibited pursuant to E.O. 13846 are prohibited, including transactions involving persons whose property interests are blocked under the Order; the prohibition is self-executing — OFAC SDN designations under E.O. 13846 are immediately effective without further rulemaking
  • § 562.202–562.203 — Blocked property treatment: prohibited transfers are void; blocked funds must be held in interest-bearing accounts at commercially reasonable rates; property may not be transferred, paid, exported, withdrawn, or dealt in without an OFAC license
  • §§ 562.312–562.316 — Sector definitions: the regulations define each sanctioned sector with precision — the aluminum sector covers mining, refining, smelting, alloying, casting, and rolling; the copper sector covers mining, smelting, and fabricating; the iron and steel sector covers ore extraction through finished products; the textile sector covers apparel manufacturing and fiber production for export to Iran; definitions are drafted broadly to prevent circumvention through partial-process transactions
  • § 562.401–562.409 — Interpretive provisions: guidance on when a transaction "involves" a blocked person (including 50%-or-more ownership rules for entities), when services to a blocked Iranian entity are covered, and how the 50%-plus rule aggregates indirect ownership chains; OFAC's interpretive notes here track its SDN 50% rule published in guidance
  • § 562.507 — Humanitarian exceptions: U.S. and foreign persons may provide food, medicine, medical devices, and agricultural commodities to Iran without a specific license — the humanitarian carve-out applies to transactions with the Government of Iran itself (not just private parties), recognizing that the civilian population should not be cut off from essentials; NGOs providing disaster relief and international organizations may operate under general licenses

  Part 562 is distinct from Part 560 (the general Iran embargo) in two ways: it targets specific sectors rather than all transactions with Iran, and it adds a human rights dimension — persons designated under 562's E.O. 13846 authority for serious human rights abuses against Iranian citizens (including officials of the Islamic Revolutionary Guard Corps, officials responsible for protest crackdowns, and technology providers enabling surveillance of dissidents) are subject to the same asset-blocking and transaction-prohibition regime as sanctioned nuclear proliferators. The 2022 Iran protests and 2023 repression following Mahsa Amini's death prompted a significant wave of new designations under Part 562's human rights prong.

  Recent rulemakings: 84 FR 38549 (August 2019) — initial publication of Part 562 following E.O. 13846; 87 FR 78477 (December 2022) — amendments expanding interpretive guidance and adding provisions for digital assets.

• 15 CFR Part 746 — Embargoes and Other Special Controls (BIS) — Iran (§ 746.7): the Bureau of Industry and Security's EAR-based export controls for Iran, operating alongside OFAC's comprehensive financial embargo. Key provisions of § 746.7:

  • § 746.7(a) — Relationship to OFAC: OFAC administers the comprehensive Iran trade and investment embargo under Part 560 (Iranian Transactions and Sanctions Regulations); BIS § 746.7 incorporates OFAC's prohibitions by reference — if a transaction is prohibited under OFAC's Part 560, it is also prohibited under the EAR, and vice versa for EAR items going to Iran; the BIS and OFAC frameworks work in tandem so that a transaction must clear both regulatory systems
  • § 746.7(b) — License exceptions: the License Exceptions available for Iran under the EAR are extremely limited; most standard exceptions (ENC, STA, GBS, SDE) do not apply; the narrow exceptions that do apply include GFT (gift parcels of food, clothing, and personal hygiene items sent by individuals to individuals in Iran) and limited categories of items related to personal communications and Internet freedom — implemented to support Iranian civil society and journalists
  • BIS's Iran controls extend to deemed exports (transferring technology to Iranian nationals in the U.S.) and deemed reexports (transferring U.S.-origin technology from a third country to an Iranian national); Iranian nationals working in U.S. university labs or technology companies on controlled research may require BIS authorization — a compliance complexity that affects research institutions

  The significance of § 746.7 is the "deemed export" and "deemed reexport" implications: even a conversation or technical training in the United States that discloses controlled technology to an Iranian national can constitute a regulated export requiring BIS authorization. U.S. universities and high-technology employers conduct sanctions screening of Iranian-national employees and researchers for this reason. The Russia/Belarus equivalent (§ 746.8, added in 2022) became the most significant section of Part 746 after the Ukraine invasion, covering comprehensive controls on virtually all technology to Russia and Belarus that extended far beyond pre-2022 Russia export controls. Recent rulemakings: 88 FR 37171 (2023) — significant amendments including Russia/Belarus expansions; 76 FR 77117 (2011) — Iran Internet freedom exception added.

• 22 CFR Part 126.1 — ITAR prohibited destinations including Iran (State Department/DDTC)

Pending Legislation

Iran sanctions legislation is a perennial feature of Congress. See OFAC Sanctions & IEEPA for broader sanctions legislative activity in the 119th Congress. See also Arms Export Control Act for restrictions on defense articles and Export Controls for dual-use technology controls that complement Iran sanctions.

Recent Developments

Iran sanctions remain at maximum intensity following the JCPOA withdrawal. The U.S. has continued to designate Iranian entities, individuals, and third-country facilitators on the SDN list. Iran's nuclear program has advanced significantly — enrichment to 60% (near weapons-grade) and a growing stockpile raise concerns about breakout capability. Diplomatic efforts to negotiate a new nuclear agreement have stalled. The Iran-backed Hamas attack on Israel (October 2023) and the broader regional conflict intensified pressure for additional sanctions targeting Iran's missile program and regional proxy networks. Enforcement actions against sanctions evasion — particularly Iranian oil shipments to China through intermediary networks — have increased.

• Trump maximum pressure 2.0 and nuclear negotiations (2025-2026): The Trump administration reinstituted "maximum pressure" on Iran immediately after taking office — reversing Biden-era sanctions relief that had been provided to facilitate release of U.S. hostages. Treasury designated additional Iranian entities and individuals. Simultaneously, the Trump administration pursued back-channel negotiations with Iran, reportedly offering a framework deal that would halt Iran's enrichment program in exchange for sanctions relief. Iran's enrichment stockpile of 60%-enriched uranium had grown to levels that could support multiple weapons if further enriched to weapons grade.
• Israel military strikes on Iran (October 2024): Israel conducted large-scale military strikes against Iranian air defense systems and missile production facilities in October 2024, following Iran's April 2024 direct missile and drone attack on Israel. The exchange represented the first direct military confrontation between Iran and Israel. U.S. sanctions enforcement of Iranian oil revenues and weapons financing — connected to broader nonproliferation policy objectives — was cited by both Israel and the U.S. as a factor limiting Iran's ability to replenish missile stockpiles used in the attacks.
• Iran oil sanctions enforcement against China: Iranian crude oil exports have increased significantly since 2022 despite U.S. sanctions, primarily flowing to China through intermediary "shadow fleet" tankers and Malaysian transhipment hubs. The Treasury and State Departments have sanctioned dozens of entities facilitating Iranian oil sales, including Chinese refineries and shipping companies. However, the scale of Chinese purchases has limited enforcement effectiveness — sanctioning major Chinese state-owned enterprises would risk broader economic and diplomatic confrontation that the U.S. has been reluctant to escalate.
• Houthi sanctions and Red Sea conflict: The Trump administration redesignated the Houthis as a Foreign Terrorist Organization in January 2025 (the Biden administration had removed the designation). The U.S. conducted military strikes against Houthi targets in Yemen. Iran's support for the Houthis — including weapons and financing sanctioned under the Iran sanctions framework — made the Houthi conflict an extension of the broader maximum pressure campaign against Iranian proxy networks. Red Sea shipping disruptions caused by Houthi attacks on commercial vessels affected global supply chains and insurance rates.