Commercial vessels navigating the Strait of Hormuz that engage with the IRGC Persian Gulf Strait Authority (PGSA) are now subject to new U.S. sanctions with repercussions for third-party financial institutions.
OFAC Conditions
This decision by the Office of Foreign Assets Control (OFAC) entails that shipowners, insurers and banks could face secondary sanctions if they transact with the PGSA or facilitate related payments.
Vessels must submit requested information to receive “permission” from the PGSA to transit through the Strait of Hormuz. The funds from these illegitimate tolls are funnelled to the IRGC, a designated Foreign Terrorist Organisation.
The inclusion of PGSA in the Specially Designated Nationals and Blocked Persons List is aimed at dissuading vessel owners and financial institutions from paying tolls to the PGSA.
“The Iranian military’s latest attempt to extort global maritime trade is proof that Economic Fury has left the regime desperate for cash,” according to Scott Bessent, the Secretary of the Treasury.
OFAC previously issued a warning indicating that any payments associated with these arrangements expose parties to potential sanctions, encompassing direct payments as well as indirect methods such as digital assets, barter transactions, and in-kind transfers.
Discussions on Hormuz
Ongoing discussions between Washington and Tehran aim to find broader resolutions, including proposals for safeguarding navigation through the strait without any tolling system, yet discussions remain deadlocked.
GCC states reject any tolling system yet some GCC states, including Qatar, are open to a short-term tolling system to clear mines whilst rejecting any long term tolling system.
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