U.S. Bans Citizens, Entities from Paying Iran Hormuz Strait Fees

The U.S. Treasury Department's Office of Foreign Assets Control (OFAC) issued an interpretive document on April 28 prohibiting U.S. persons and entities from paying Hormuz Strait security transit fees to Iran, according to the OFAC statement. The ban applies to U.S. individuals, U.S. financial institutions, and foreign entities owned or controlled by U.S. persons, which are forbidden from making such payments directly or indirectly to the Iranian government or the Iranian Islamic Revolutionary Guard Corps (IRGC).

Scope of U.S. Sanctions

OFAC stated that U.S. persons and entities cannot pay Hormuz Strait security transit fees to Iran in any form. The prohibition extends to indirect payments as well as direct transfers. The Iranian government and IRGC remain subject to U.S. sanctions imposed on grounds of nuclear non-proliferation and counterterrorism.

Sanctions Risk for Foreign Entities

OFAC warned that non-U.S. persons or entities paying Hormuz Strait security transit fees to Iran face significant sanctions risk. Foreign financial institutions and other non-U.S. persons or entities that engage in certain transactions with sanctioned Iranian targets or participate in activities involving them may face sanctions exposure. Transactions involving certain Iranian economic sectors also expose foreign persons or entities to sanctions risk, according to the OFAC guidance.