OFAC Alters Iran Sanctions Regulations
October 25, 2012, Washington, D.C. – On October 22, 2012, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued an important revision of Iranian Transactions Regulations (31 CFR Part 560), the main body of U.S. sanctions laws pertaining to Iran. The revision does not reflect a loosening of the existing sanctions, but rather a granting of specific exemptions, known as general licenses, which are relevant to the Iranian American community.
According to a communication received by PAAIA from the Department of Treasury spokesman, John Sullivan, the Administration “issued several General Licenses that will bolster U.S.-Iran people to people ties and facilitate transactions related to exports of items such as food and medicine to the Iranian people. These new General Licenses will provide a standing authorization for activities that previously required a case-by-case review by OFAC.”
Under the revised regulations, renamed the Iranian Transactions and Sanctions Regulations (ITSR), certain activities are now authorized by a general license that formerly required a specific license. Examples include: a general license to export certain “basic medical supplies” to Iran as well as general licenses related to some immigrant and nonimmigrant visa categories.
In addition, certain property sales in Iran by U.S. persons are now permissible without the need to obtain a specific license. Under these new regulations, U.S. persons can engage in “transactions necessarily and ordinarily incident to the sale of physical property in Iran” that was acquired before the individual became a U.S. person or inherited from persons in Iran. These transactions include (but are not restricted to) hiring people in Iran to perform services essential for real property sale (for example, a lawyer, real estate broker, or funds agent). According to attorney Erich C. Ferrari, an expert on U.S. trade sanctions administered by the OFAC, this is a major change for Iranian Americans and may expedite sales of real property.
PAAIA welcomes OFAC’s decision to issue general licenses for some features of the ITSR. The changes should alleviate some of the bureaucratic burdens Iranian Americans who inherit property in Iran currently face. In addition, the changes may increase the exportation of some needed medicine and medical supplies to Iran and ease the transfer of funds for certain visa categories. However, some experts have voiced caution that, while the general licenses may ease certain bureaucratic burdens, they do not eliminate the logistical problems associated with transferring funds to and from Iran and may make the issue more complicated.
“Under the new regulations, the definition of an Iranian financial institution now includes money service businesses, foreign exchange merchants, etc. The property of all Iranian financial institutions including saraafis, regardless of whether or not their names appear in the Federal Register or on OFAC’s SDN list, is blocked. This prevents U.S. persons from directly dealing with an Iranian saraafi to facilitate any transfer and only U.S. depository institutions or U.S. registered brokers or dealers in securities are allowed to process any funds transfers to or from Iran,” explains Ferrari. “Since it is highly unlikely that any U.S. bank would ever engage or deal with a saraafi in a third country to facilitate these transfers the new prohibitions could cause significant problems for those seeking to send money to or from Iran, who up until this point were able to deal directly with saraafis so long as the underlying transaction was authorized.”
A detailed analysis of the new regulations by Erich Ferrari can be found here.
Click here to view the top 5 ways the ITSR will affect the Iranian American community.
Additional details on the general licenses can be found in the Iranian Transactions and Sanctions Regulations (ITSR) and on the Office of Foreign Asset Control’s (OFAC) website.