The Foreign Sanctions Evaders (FSE) List is a sanctions list published by the Office of Foreign Asset Control (OFAC). It includes individuals, businesses, and other entities that have violated or aided in violating U.S. sanctions against Iran and Syria.
U.S. individuals and businesses are prohibited from transacting with entities on the FSE List, and the penalties for doing so can be severe. Banks, money services businesses, cryptocurrency exchanges, and others should routinely screen customers against the FSE List to reduce the risk of sanctions non-compliance.
Sanctions Against Iran and Syria
Syria and Iran have been subject to U.S. sanctions for many years. Businesses have attempted to evade the sanctions, and the FSE List was created to give the Justice Department the means to penalize evaders, regardless of their location.
Syrian sanctions date back to the late 1970s, with updates by Executive Order in 2004 and 2011. U.S. businesses are prohibited from investing in or exporting services to Syria and conducting any transactions involving Syrian petroleum and petroleum products. There are also specific sanctions targeting senior Syrian government officials.
There are some exceptions to Syrian sanctions for activities that benefit the Syrian people and cultural heritage, but businesses should avoid transacting with Syrian entities unless there is a relevant OFAC Syria General License or a specific license to cover the transaction.
Iran is also subject to a broad range of sanctions to restrict exports and access to the U.S. financial system. Additionally, there are targeted sanctions for organizations and individuals involved in terrorism and human rights abuses. Parts of the Iranian economy are subject to sectoral sanctions, including the energy, shipbuilding, and automotive industries.
Executive Order 13608 and the Foreign Sanctions Evaders List
In 2012, the U.S. government determined it needed a way to combat the evasion of Syria and Iran sanctions by non-U.S. entities. It could impose penalties on U.S. citizens, but foreign persons routinely breached the sanctions and undermined their effectiveness.
Executive Order 13608, “Prohibiting Certain Transactions with and Suspending Entry into the United States of Foreign Sanctions Evaders with Respect to Iran and Syria,” gave the Justice Department and OFAC the ability to publicly identify and impose sanctions on foreign individuals who violate or attempt to violate U.S. sanctions targeting Syria and Iran. Sanctions can also be applied to non-U.S. persons who deceptively facilitate transactions on behalf of entities subject to sanctions.
The Foreign Sanctions Evaders List, introduced by OFAC in 2014, collates the identities of entities subject to sanctions made under the authority of the Foreign Sanctions Evaders Executive Order.
Can Businesses Work With FSE-listed Entities?
U.S. businesses cannot transact with individuals or businesses on the FSE list. They are prohibited from,
“all transactions or dealings, whether direct or indirect, involving such person, including any exporting, reexporting, importing, selling, purchasing, transporting, swapping, brokering, approving, financing, facilitating, or guaranteeing, in or related to (i) any goods, services, or technology in or intended for the United States, or (ii) any goods, services, or technology provided by or to United States persons.”
Any provision of financial services is prohibited, and all wire transfers involving a listed individual must be refused and reported to OFAC.
FSE sanctions don’t block property ownership or existing bank accounts, but they do restrict related activities. U.S. businesses can’t provide services related to property owned by someone on the list and cannot operate an existing account without explicit permission from OFAC.
Do FSE Sanctions Only Apply to Syria and Iran-Related Transactions?
No, U.S. businesses are prohibited from conducting any relevant transactions with listed entities. The goal is to deprive sanctions evaders of access to the U.S. financial system, regardless of their location or the nature of their business.
The FSE List and the SDN List
The Specially Designated Nationals (SDN) List includes individuals and entities seen as threats to U.S. interests, prohibiting any transactions with them by U.S. persons. On the other hand, the Foreign Sanctions Evaders (FSE) List specifically targets those violating U.S. sanctions on Iran and Syria. However, despite their different focuses, there’s overlap: some entities may appear on both lists due to activities that breach U.S. sanctions law.
Sanctions Screening for FSE-listed Individuals and Businesses
Businesses risk severe penalties and reputational damage if they transact with entities on the FSE List. Banks, money service businesses and other financial businesses should screen new and existing customers against the FSE and other OFAC and international sanctions lists. For additional information, view our blog on OFAC screening requirements and best practices for compliance.
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