U.S. OFAC Warning: Sanctions Risk of Paying Iran's "Strait of Hormuz Transit Fee" in the Form of Digital Assets

On May 2, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued a warning noting Iran’s threats to shipping and its demand that vessels pay a “transit fee” for safe passage through the international waters of the Strait of Hormuz. These fees may be paid via fiat currency, digital assets, offset agreements, informal exchanges, or other in-kind forms—including ostensible charitable donations to the Iranian Red Crescent, Bonyad Mostazafan Foundation, or Iranian embassy accounts. OFAC’s alert reminds U.S. and non-U.S. persons that paying such fees or seeking passage assurances carries sanctions risks, regardless of the payment method. Under U.S. sanctions rules: - U.S. persons and their owned/controlled foreign entities are generally barred from transacting with the Iranian government (including providing or receiving services) unless exempted or authorized. - U.S. persons may not engage with the Islamic Revolutionary Guard Corps (IRGC)—a designated foreign terrorist organization subject to multiple sanctions lists. - U.S. persons are typically prohibited from dealing with Iranian digital asset exchanges, which are sanctioned Iranian financial institutions. Non-U.S. persons face sanctions risks for unauthorized transactions with the Iranian government or IRGC, including: - Secondary sanctions on affiliated financial institutions, restricting their access to the U.S. financial system. - Potential sanctions for supporting the sanctioned Iranian financial system via dealings with Iranian digital asset exchanges. - Civil or criminal liability if their transactions cause U.S. entities (e.g., insurers, reinsurers, financial institutions) to violate sanctions.