February 8, 2023 | Policy Brief

U.S. and Allies Should Target Top Iranian Executives

February 8, 2023 | Policy Brief

U.S. and Allies Should Target Top Iranian Executives

The U.S. Treasury imposed sanctions last Friday on the board of directors of Paravar Pars, an Iran-based manufacturer of military drones. Designating board members and top executives, not just the company itself, helps limit the pool of individuals the Tehran regime can employ to run its network of front companies.

Treasury noted that it had previously sanctioned Paravar Pars for building drones for Iran’s Islamic Revolutionary Guard Corps (IRGC) and that “Iran is supplying UAVs for Russia’s combat operations to target critical infrastructure in Ukraine.” The new sanctions apply to the company’s eight board members, one of whom also serves as its chief executive officer.

This action follows Treasury’s January 23 designation of the IRGC Cooperative Foundation and five of its board members. The foundation — a conglomerate that manages the IRGC’s investments and holdings — is “a key economic pillar of the IRGC, which funds much of the regime’s brutal suppression,” according to Treasury.

The United Kingdom (UK) and European Union also announced sanctions on Iran-related persons and entities on January 23. Over the past few months, many targets have found themselves on the sanctions list of multiple Western countries. Notably, the UK designated the Basij Cooperative Foundation, marking the first time London has targeted a significant economic entity since becoming a party to the 2015 nuclear deal. The Basij Cooperative Foundation, like the IRGC Cooperative Foundation, is a key holding entity in the IRGC business empire, owning and controlling subsidiaries in key sectors of Iran’s economy. The United States and European Union both designated the Basij Cooperative Foundation previously.

The designation of board members is an escalatory move that increases the pressure on Tehran’s network of trusted managers. FDD’s review of IRGC-connected managers shows that the IRGC Cooperative Foundation’s designated board members have been involved in the IRGC’s business empire for a long time in other capacities. This finding strengthens the case for further designation of c-level executives and board members who have an established record of representing the IRGC.

To elevate the risk for Tehran’s managerial elite and make it harder for the regime to create front companies, Washington and its allies should consider across-the-board designation of boards of directors of sanctioned firms. The regime’s supply of capable and trustworthy managers is limited. Both of those attributes are essential for those who manage high-risk activities, such as money laundering and terror finance. Mass designation of IRGC-related managers may force the regime to rely on less capable and trustworthy alternatives, opening the door to infiltration and inefficiency.

To enhance the impact of sanctions, Washington should take the following five steps: expand the coordinated sanctions campaign to include key non-NATO allies, such as Australia, South Korea, and Japan; encourage allies to expand their designations beyond direct human rights violators to include all economic pillars of the regime; designate boards of directors and c-level executives of sanctioned companies; since the United States considers the IRGC a Foreign Terrorist Organization, Washington should designate managers in influential positions — the board of directors or c-level executive jobs — in the IRGC’s business empire for providing material and financial support to a terrorist entity; and to maximize the effect of sanctions, Treasury should instruct international companies and financial firms to treat family members of designated persons with enhanced due diligence so they cannot serve as fronts for designated persons to engage in prohibited activities.

Saeed Ghasseminejad is a senior advisor on Iran and financial economics at the Foundation for Defense of Democracies (FDD), where he contributes to FDD’s Iran Program and Center on Economic and Financial Power (CEFP). Follow Saeed on Twitter @SGhasseminejad. FDD is a Washington, DC-based, non-partisan research institute focusing on national security and foreign policy.


Iran Iran Politics and Economy Iran Sanctions Israel Sanctions and Illicit Finance