The United States has already begun increasing pressure on Iran over its regional activities. On May 15, the U.S. Treasury Department issued sanctions on the governor of the Iran's central bank, Valiollah Seif, and labeled him a specially designated global terrorist under Executive Order 13224. These sanctions target Seif, along with three other individuals and the Iraq-based Al Bilad Islamic Bank, for allegedly financing Lebanese militant group Hezbollah on the behalf of the Islamic Revolutionary Guard Corps' (IRGC) Quds Force, which is responsible for all of the group's activities outside Iran.
These latest sanctions are the second set to come since the White House's withdrawal from the Joint Comprehensive Plan of Action (JCPOA), or Iran nuclear deal, on May 8. On May 10, the United States sanctioned six individuals and three companies for funneling money through Emirati banks for the Quds Force. The Trump administration clearly intends to continue aggressively uncovering networks that the IRGC uses to fund its operations and transfer money from Iran to overseas bank accounts.
The IRGC and the Quds Force are the backbone of the Islamic Republic's defensive regional presence and its asymmetric defense stance against Saudi Arabia, Israel and the United States. In addition to the Quds Force's extraterritorial actions, the IRGC's aerospace and cyberspace units cover Iran's ballistic missile and cybersecurity capabilities, while the corps' navy — not the regular Iranian navy — is responsible for the Persian Gulf waters inside the Strait of Hormuz. The United States has demanded that Iran halt all actions related to these IRGC groups. So it's no surprise that the recent sanctions (along with any aggressive new ones that have not yet been announced) focus so heavily on the group, especially since the United States in October 2017 expanded its list of terrorist groups beyond just the Quds Force to the IRGC at large.
Despite U.S. efforts, the new sanctions are not going to have much of an impact. While Washington can sanction many of the individual banks and people who move money for the Quds Force, it simply can't shut down all of Iran's alternative means of receiving support. Moreover, sanctions on individuals are fairly toothless in practice. Seif and other sanctioned individuals, for example, will no longer have the ability to travel to the United States, but as long as they remain in Iran, they will be immune to U.S. asset freezes and travel bans.
Ironically, the United States' targeting of Seif plays well politically for Iran's conservative and hardline political factions. Iran has been mired in a currency crisis since September 2017, when it took 3,900 Iranian rials to equal $1. Since then, the rial has set record low after record low, bottoming out on the black market near 7,000 rials to $1. The collapsing currency value forced Iran to unify its market exchange rate with the official exchange rate and crack down on foreign exchange traders — and Seif has been the face of the financial crisis. Over five dozen members of Iran's parliament have called for his resignation or for Iranian President Hassan Rouhani to fire him. Now that Seif is sanctioned, Iran may move to replace him with a figurehead that more closely aligns with Iran's so-called resistance economy, which seeks to insulate Iran from the impact of international sanctions and international economic engagement.
For now, U.S. sanctions on Seif do not extend to the Iran's central bank, but those are coming. Starting Aug. 7, the United States will sanction individuals and companies who sell or purchase U.S. dollar banknotes coming from the Iran's central bank. And starting Nov. 5, the United States will sanction those who engage in most transactions with the bank — unless their parent country gets a waiver — as well as those who provide financial messaging services for certain transactions with entities (likely including those with the National Iranian Oil Company and National Iranian Tanker Company) that have been sanctioned under the Comprehensive Iran Sanctions, Accountability and Divestment Act of 2010.
