Spurred by the recent destruction of a U.S. drone by Iranian forces and alleged attacks on tankers in the Persian Gulf, President Trump issued a new executive order (EO) on June 24, 2019, calling for additional sanctions on Iran. The as yet unnumbered EO specifically targets the senior leadership of the Iranian regime and blocks the property of Iran’s Supreme Leader Ayatollah Ali Khamanei, the Supreme Leader’s Office, and other senior officials, and aims to prevent their access to the international financial system. The EO also authorizes blocking the property of anyone who is determined to have “materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of” any of the individuals or entities whose property is blocked pursuant to the EO.

In addition, the EO authorizes the Secretary of the Treasury to impose sanctions on foreign financial institutions upon determining that such an institution “knowingly conducted or facilitated any significant transaction for or on behalf of” any of the persons blocked under the new EO. Such sanctions would include restrictions on opening or maintaining correspondent or payable-through accounts in the United States. While this additional provision creates another barrier to transactions between the international financial system and Iran, it is unlikely to have substantial impact beyond those already in place under existing measures.

Given the volume of existing sanctions on Iran and its government, this new round of sanctions seems to be largely symbolic. However, it does appear to have increased tensions between the two countries and narrowed the diplomatic options. We will continue to monitor the situation and report as events unfold.