By: Francesca Jaubert

The Department of the Treasury recently imposed new sanctions on businesses and individuals associated with different sectors of the Iranian economy with the goal of weakening the Iranian regime’s access to financial markets.[1] Nicknamed “Economic D-Day”, this sanctions program focuses on designating specific individuals to further “U.S. national security or foreign policy objectives.”[2] Financial sanctions include blocking of freezing the property of Specially Designated Nationals (SDN) that is subject to U.S. jurisdiction, prohibiting transactions between SDNs and U.S. entities, and restricting SDNs’ access to the U.S. financial system.[3] Import/export restrictions typically restrict the goods designated individuals are able to receive from the U.S., and the items the designated individuals are able to send to the U.S.[4]

Primary sanctions focus on blocking SDNs from interacting with the U.S. and those subject to the jurisdiction.[5] More recently, the U.S. has begun using sanctions dubbed “secondary sanctions”, which refer to the U.S. government requiring “a foreign person to choose between transacting with targeted persons or maintaining the ability to transact within the U.S. financial system.”[6] While secondary sanctions have quickly become a regular tool for U.S. foreign policy, the international community views these sanctions as “an attempt to extraterritorially enforce U.S. law” due to the lack of U.S. connection between the foreign party and the business they conduct with the SDN.[7]

On August 24, 2026, Treasury Secretary Scott Bessent announced the U.S. has increased the parties listed in sanctions programs related to the conflict in Iran.[8] As expected, some of these parties are entities and individuals directly affiliated with the Iranian government which are designated under Executive Order (“E.O.”) 13949.[9] However, some parties include companies from third-nations who simply continue doing business with Iran. [10] An example of these secondary sanctions include Portease Partners LLP, a customs broker from India designated under E.O. 13846 for “knowingly engag[ing] in a significant transaction for the purchase, acquisition, sale, transport, or marketing of petrochemical products from Iran.”[11] There was no U.S. nexus to this sale, but the Department of Treasury chose to impose secondary sanctions on Portease Partners anyway as punishment for conducting business with Iran-affiliated petroleum companies.

These secondary sanctions even target companies affiliated with entities associated with Iranian-origin products.[12] For instance, Clever Shipping, a commercial ship manager from Hong Kong manages Star Pione, a crude oil tanker that loaded Iranian petroleum an alleged six times between 2025 and 2026.[13] Due to the affiliation between Clever Shipping and Star Pione, the Treasury Department added Clever Shipping as a sanctioned entity under E.O. 13846 for having an interest in a company that “knowingly engaged in” a transaction involving “petroleum or petroleum products from Iran.”[14]

This new Economic D-Day program requires U.S. companies to screen customers, third-party affiliates, and new additions to their supply chains for any direct or indirect connection with the Iranian government.[15] These sanctions target non-U.S. entities who conduct business with Iran, while ultimately conducting enforcement via U.S. companies, who must increase their screening of third parties or risk penalties from various U.S. authorities.[16] International organizations like the European Union have coordinated their sanctions programs with the U.S. while continuing to expand their own sanctions programs in response to Iran’s nuclear activities, military actions, and human rights concerns.[17] The European Union’s participation in parallel sanctions efforts suggests a broader degree of international coordination than is often seen with extraterritorial sanctions regimes.[18]

Secretary Scott Bessent’s newest announcement on September 4, 2026 expanded the Economic D-Day program’s goals to include secondary sanctions on any foreign bank that continues to conduct business with Iran.[19] Notably, the Department of the Treasury found that Turkish bank, Golden Global Yatirim Bankasi Anonim Sirketi, transferred oil revenues to Iranian financial institutions proxies which enabled them to conduct business, including some entities previously sanctioned by the Department of the Treasury’s Office of Foreign Asset Control.[20] These sanctions spread across targeted markets of technology, aviation, shipping, banking, and digital assets to prevent Iran from receiving any kind of income which would assist in their continued war efforts.[21]

This Economic D-Day program from the Department of the Treasury limits the parties U.S. businesses can affiliate with, while justifying this decrease in international trade by stating it will help with the ongoing conflict in Iran. The expansion of the secondary sanctions increases compliance risks for companies operating in multiple industries due to the addition of foreign parties that are not owned by blocked Iranian parties.[22] These changes will likely have heightened adverse effects on businesses involved in digital assets, where, due to the nature of the product, businesses have less capacity to stop transactions with blocked entities.[23] More time is needed to see if these secondary sanctions will achieve their goal of hampering Iran.

 

[1] See Press Release, White House, Operation Economic Outcast: Total Isolation of the Iranian Regime (Aug. 24, 2026) [hereinafter Operation Economic Outcast], https://www.whitehouse.gov/releases/2026/08/operation-economic-outcast-total-isolation-of-the-iranian-regime/ [https://perma.cc/7GMZ-PVEL].

[2] See Edward J.Collins-Chase, Cong. Rsch. Serv., R47829, Sanctions Primer: How the United States Uses Restrictive Mechanisms to Advance Foreign Policy or National Security Objectives 1(2023); see Scott Bessent, Scott Bessent: An Economic D-Day is Coming for Iran, Fin. Times (Aug. 23, 2026), https://www.ft.com/content/cb865200-1a06-40be-86a3-10ee2bb05804 (on file with the American University Business Law Review).

[3] See Collins-Chase, supra note 2, at 4, 12.

[4] See id. at 6.

[5] See id. at 10.

[6] See id.

[7] Id.

[8] See Operation Economic Outcast, supra note 1.

[9] See Exec. Order No. 13949, 85 Fed. Reg. 60043, 60043 (Sep. 23, 2020); see Press Release, U.S. Dep’t of State, Off. of the Spokesman, United States Implements Operation Economic Outcast with Sanctions Targeting Iran’s Military Activities and Procurements, and Petroleum & Petrochemical Product Traders (Aug. 24, 2026) [hereinafter Dep’t State Fact Sheet], https://www.state.gov/releases/office-of-the-spokesperson/2026/08/united-states-implements-operation-economic-outcast-with-sanctions-targeting-irans-military-activities-and-procurements-and-petroleum-and-petrochemical-product-traders-fact-sheet/ [https://perma.cc/3LH8-XP4M].

[10] See Dep’t State Fact Sheet, supra note 9.

[11] See id.; see Exec. Order No. 13846, 83 Fed. Reg. 38939, 38942 (Aug. 6, 2018).

[12] See Dep’t State Fact Sheet, supra note 9 (describing different entities that are now designated due to both direct and indirect links to Iranian commerce).

[13] Id.

[14] See id.; see Exec. Order No. 13846, 83 Fed. Reg. 38939, 38942 (Aug. 6, 2018).

[15] See Jonathan Cross & Yash Dattani, Treasury Launches “Operation Economic Outcast” and Expands Sanctions Pressure on Iran, Herbert Smith Freehills Kramer (Aug. 28, 2026), https://www.hsfkramer.com/notes/sanctions/2026-posts/treasury-launches-operation-economic-outcast-and-expands-sanctions-pressure-on-iran (on file with the American University Business Law Review).

[16] See id. (describing how new sanctions “create additional avenues for sanctions exposure beyond the traditional Iranian oil, petroleum and financial sectors.”).

[17] See Eur. Comm’n, Statement in Context of G20 Finance Ministers and Central Bank Governors Meetings on 31 August and 1 September, in Asheville, US  (Aug. 31, 2026) [hereinafter EU Statement], https://ec.europa.eu/commission/presscorner/detail/en/statement_26_1777 [https://perma.cc/9DMS-GVDD]. See generally, Council of the Eur. Union, EU Sanctions Against Iran, Consilium: Latest Explainers (July 28, 2026), https://www.consilium.europa.eu/en/policies/sanctions-against-iran/ (on file with the American University Business Law Review) (explaining the current position of the European Union towards Iran).

[18]  See EU Statement, supra note 17.

[19] See Press Release, U,S. Dep’t of the Treasury, Treasury Severs Iranian Regime’s Financial Lifelines in Türkiye (Sep. 4, 2026),  https://home.treasury.gov/news/press-releases/sb0622 [https://perma.cc/T3NC-5V73].

[20] See id.

[21] See Press Release, U.S. Dep’t of State, Off. of the Spokesman, U.S. Sanctions Dismantle Iranian Regime’s Revenue Streams (Sep. 4, 2026), https://www.state.gov/releases/office-of-the-spokesperson/2026/09/u-s-sanctions-dismantle-the-iranian-regimes-revenue-streams/ [https://perma.cc/89ER-TTK4].

[22] See Cross & Dattani, supra note 15 (“Companies with exposure . . . should continue to monitor Treasury and OFAC developments closely and assess whether enhancements to existing sanctions compliance programs may be warranted.”).

[23] See, e.g., Van Loon v. Dep’t of the Treasury, 122 F.4th 549, 544–55 (5th Cir. 2024) (explaining how smart contracts and pools are utilized to obscure transactions by mixing cryptocurrencies owned by different individuals).