The Trump administration announced yesterday that it would designate Iran’s Islamic Revolutionary Guard Corps (IRGC) as a Foreign Terrorist Organization (FTO), effective April 15. An FTO designation mandates severe criminal penalties for all who provide “material support” to terrorists themselves and the designated group. Thus, depending on the administration’s follow-on actions, this designation will likely create another layer of hazards for any foreign firm active in Iran or doing business with Iran, since the IRGC controls an estimated 20-40 percent of the economy.
U.S. law defines “terrorism” as “premeditated, politically motivated violence perpetrated against noncombatant targets by subnational groups or clandestine agents.” To be designated as an FTO under U.S. law, a foreign organization must engage in terrorism or terrorist activities that “threatens the security of United States nationals or the national security of the United States.”
The U.S. first designated Iran as a State Sponsor of Terrorism in 1984. The State Department’s latest annual report on terrorism concluded that the IRGC’s Quds Force is the “primary mechanism” Iran employs to provide “support to terrorist organizations, provide cover for associated covert operations, and create instability in the Middle East.” Direct IRGC attacks or attempted attacks on the United States include the 1996 Khobar Towers bombing that resulted in the deaths of 19 service members in Saudi Arabia and the 2011 attempted assassination in Washington, DC of the Saudi ambassador to the United States.
While the IRGC clearly meets the criteria for designation as an FTO, it is already under U.S. sanctions because of Treasury and State Department designations related to its facilitation of terrorism, proliferation activities, and human rights violations.
The IRGC’s further designation as an FTO will likely have a substantial impact, however, because it entails greatly enhanced criminal penalties for anyone that provides “material support” to the IRGC, either in general or to its specific personnel. U.S. law defines material support to include “any property, tangible or intangible, or service, including currency or monetary instruments or financial securities, financial services.” The Department of Justice has jurisdiction over FTO-related criminal liabilities, so the IRGC designation also has the effect of mobilizing another powerful agency as part of the maximum pressure campaign against Iran.
The penalty for providing material support to a terrorist organization is imprisonment for 20 years to life, if death results from the commission of the offense. There are also explicit extraterritorial jurisdiction provisions in the law – meaning that certain violators outside of the U.S. may be subject to extradition and prosecution.
The designation of the IRGC as an FTO also represents a deliberate effort to increase the risks for foreign companies that invest in or do business with Iran, where the IRGC controls large swaths of the Iranian economy. Last year, the under secretary of the Treasury for terrorism and financial intelligence, Sigal Mandelker, warned private sector firms, “You may think your clients and counter parties are legitimate, but they may be in fact part of the Iranian regime’s deceptive schemes to fund terrorism and human rights abuses.” From now on, compliance failures could potentially trigger prosecution by U.S. authorities.
To follow up on yesterday’s designation of the IRGC and the precedent established with the designation of an agency of a foreign government, relevant U.S. law enforcement agencies within the administration should provide comprehensive guidance detailing their expectations for precautionary measures that individuals and companies should take to avoid prosecution under these new standards.
If the administration did so in a strict manner, it could effectively render off-limits to foreign firms all those swathes of the Iranian economy under control of the IRGC.
Matthew Zweig is a senior fellow at the Foundation for Defense of Democracies (FDD), where he also contributes to FDD’s Center on Economic and Financial Power (CEFP). Follow FDD on Twitter @FDD and @FDD_CEFP. FDD is a Washington, DC-based, nonpartisan research institute focusing on national security and foreign policy.