OFAC Extends E.O. 13902 to Iran’s Automotive and Rail Sectors

Part 1 of a three-part series on OFAC’s application of E.O. 13902 to Iran’s automotive and rail sectors.

Quick take: On October 1, 2026, the Office of Foreign Assets Control (OFAC) determined that section 1(a)(i) of Executive Order 13902 applies to the automotive and rail sectors of the Iranian economy. The determination took effect the same day, with no wind-down period. Any person — Iranian or not — found to operate in either sector can now be designated and blocked, and foreign banks that finance those sectors face secondary sanctions. OFAC paired the determination with designations of Iran Khodro, SAIPA, Iran’s national railway, and auto-parts suppliers in four countries. Automotive and rail are the thirteenth and fourteenth sectors brought under E.O. 13902.

Read the determination: Determination Pursuant to Section 1(a)(i) of Executive Order 13902 — Automotive and Rail Sectors of the Iranian Economy (Oct. 1, 2026). See also OFAC’s Recent Actions notice and Treasury’s press release.

Determination Snapshot

What OFAC Did on October 1

OFAC added 31 parties to the SDN List and amended FAQ 831. Twenty-two were designated under E.O. 13902. They include Iran Khodro Company, SAIPA, and five affiliated automakers and motorcycle producers; the Islamic Republic of Iran Railway Company and two other rail operators; the heavy-equipment maker HEPCO and its Shanghai subsidiary; and five Hong Kong shell companies that served Iran’s shadow banking system. They also include five auto-parts suppliers in Indonesia, the UAE, Türkiye, and Hong Kong. Treasury describes the automotive sector as Iran’s largest outside oil and gas, with Iran Khodro and SAIPA holding more than 90 percent of the domestic market.

The foreign suppliers deserve a second look. OFAC designated them for “operating in the automotive sector of the Iranian economy,” not for supplying it under section 1(a)(ii). Section 1(a)(ii) requires a knowing, significant transaction; section 1(a)(i) has no significance threshold at all. By treating a parts exporter abroad as itself operating in the sector, OFAC signaled that the sector does not stop at Iran’s border.

How an E.O. 13902 Sector Determination Works

E.O. 13902, issued January 10, 2020, blocks any person determined to operate in the construction, mining, manufacturing, or textiles sectors of the Iranian economy, “or any other sector of the Iranian economy as may be determined.” That clause is the engine of the order. A one-page determination converts an entire industry into a designation criterion. The order also reaches anyone who knowingly engages in a significant transaction involving significant goods or services used in connection with a determined sector, anyone who materially assists a blocked person, and anyone owned or controlled by one. Section 2 exposes foreign financial institutions that knowingly facilitate significant financial transactions for a determined sector to the loss of their U.S. correspondent accounts. The Secretary’s authority runs to OFAC’s Director under 31 C.F.R. § 560.802.

The Pattern Set by the Aviation Determination

On August 24, 2026, OFAC determined that E.O. 13902 applies to the aviation, digital asset, gold, shipping, and technology sectors, launching what Treasury calls Operation Economic Outcast. Fifteen days later, OFAC designated the 27 remaining active Iranian airlines for operating in the aviation sector and suspended Iran-related aviation authorizations, including General License J-1. Determination first, sector-wide designations within weeks: that is the pattern, and companies in Iran’s automotive and rail supply chains should assume it will repeat. The October 1 designations covered the two dominant automakers and the national railway; the rest of each sector is the obvious next tranche.

No Wind-Down Period, and No Definitions Yet

The determination states that it “shall take effect on October 1, 2026,” and OFAC issued no general license with it. That departs from the October 2020 financial-sector determination, which came with a 45-day wind-down period. A non-U.S. company with open contracts in either sector is exposed today.

OFAC has also not defined either sector. FAQ 831, although marked as updated on October 1, still defines only the construction, mining, manufacturing, textiles, and financial sectors. OFAC’s financial-sector definition shows how broadly it reads a sector: it reaches providers of goods, services, or technology to the sector and their affiliates. Until definitions arrive, assume the automotive and rail sectors include assembly, component manufacture, parts supply, distribution, after-sales service, rolling-stock and infrastructure supply, and the financing of each.

Who Is Affected

• Iranian automakers, component manufacturers, motorcycle producers, and rail operators. Operating in the sector is now itself a basis for designation.
• Non-Iranian suppliers, distributors, and service providers. Dealers for Iranian-built vehicles, suppliers of rolling stock and rail equipment, and logistics providers using Iranian rail corridors sit where the designated parts exporters sat.
• Foreign banks. Trade finance, letters of credit, and payment processing for either sector are candidate “significant financial transactions” under section 2.
• Anyone dealing with the new designees. Entities owned 50 percent or more by blocked persons are themselves blocked.

For U.S. persons, little changed: state-owned Iranian enterprises were already blocked as the Government of Iran, and vehicle assembly in Iran already fell within the manufacturing sector. The determination’s practical weight falls on non-U.S. persons, and that is where Treasury aimed it.

Three Takeaways

1. Effective immediately, no wind-down. Exposure began October 1, 2026, without the cushion OFAC gave the financial sector in 2020.
2. The sector reaches abroad. Foreign parts exporters were designated as “operating in” Iran’s automotive sector, with no significance finding required.
3. Expect more designations soon. The aviation determination was followed within weeks by designations of every remaining Iranian airline.

Frequently Asked Questions

What did OFAC do on October 1, 2026 under Executive Order 13902?

OFAC determined that section 1(a)(i) of E.O. 13902 applies to the automotive and rail sectors of the Iranian economy, effective October 1, 2026. In the same action it designated Iran Khodro, SAIPA and affiliated automakers, Iran’s national railway and two other rail companies, five foreign auto-parts suppliers, HEPCO, and five Hong Kong shell companies, and amended FAQ 831. Any person determined to operate in either sector may now be designated and blocked.

Which sectors of the Iranian economy are now covered by E.O. 13902?

Fourteen. Construction, mining, manufacturing, and textiles were named in the order on January 10, 2020. The financial sector was added on October 8, 2020; the petroleum and petrochemical sectors on October 11, 2024; aviation, digital asset, gold, shipping, and technology on August 24, 2026; and automotive and rail on October 1, 2026.

Is there a wind-down period for the automotive and rail sector determinations?

No. The determination took effect on October 1, 2026, and OFAC issued no general license or wind-down guidance with it. The October 2020 financial-sector determination, by contrast, came with a 45-day wind-down period.

Does the automotive sector determination apply to companies outside Iran?

Yes. On October 1, 2026, OFAC designated suppliers in Indonesia, the United Arab Emirates, Türkiye, and Hong Kong for operating in the automotive sector of the Iranian economy based on parts they supplied into Iran. Non-Iranian companies that supply or distribute for Iran’s automotive or rail sectors face designation risk, and the banks that finance them face secondary sanctions.

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