By Erich Ferrari
Aug 05, 2010, Washington, D.C. – We have received numerous questions from the Iranian American community in connection with the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (CISADA). Some pertain to the Iranian Transaction Regulations (ITR) and some to how CISADA will impact the ITR. I will try to directly answer some of these questions below.
Q. Will the importation of rugs or carpets from Iran still be allowed?
A. The hard and fast answer to this is no. The importation ban in the CISADA is very broad. All importations of goods, services, and technologies from Iran into the U.S. are banned, unless they are specifically exempted under the ITR. However, OFAC may maintain the current general license for the importation of carpets/rugs once they amend the ITR to reflect the mandates of CISADA.
Q. Does the current U.S. sanctions regime affect those who travel to Iran to visit family, friends and/or to sightsee?
A. No. There are currently no prohibitions on the travel to Iran for any purposes. CISADA does not add any prohibitions on travel to Iran or on transactions incident to that travel.
Q. Does the ITR prohibit individuals from attending to their personal financial transactions in the U.S. such as paying bills on-line from Iran?
A. This is a gray area; however, the answer here would depend specifically on the facts of the situation. For example, if you are paying your electric bill for your house in the U.S. while you are in Iran, an argument could be made that there is no export of goods, services, or technology to a person in Iran, because the services are remaining in the U.S. On the other hand, there could be scenarios in which you engage in a personal transaction in the U.S., but the benefit of the transaction involves some export of a service to Iran. In those scenarios there could possibly be a violation. In scenarios such as these, it makes sense to request interpretative guidance from OFAC, or at a minimum to contact the OFAC compliance hotline (1-800-540-6322).
Q. Does the ITR affect those who have assets in Iran (such as property) that they would like to liquidate?
A. This again is a gray area. Since there is no import or export taking place it would seem that there is no prohibited activity, however, there are a number of activities which might take place as part of that liquidation which could violate the ITR. For example, if you wish to sell your property to a party in Iran and that party must obtain a loan from a bank in order to purchase that that property from you, then you may be engaging in the facilitation of an activity otherwise prohibited by the ITR. This is due to of the broad nature of the facilitation definition contained in the ITR which prohibits carrying out any act which would allow an otherwise prohibited activity to occur.
Q. Does the ITR prohibit individuals from sending money to family in Iran?
A. This yet again is another area in which the facts of the situation will determine the answer. The export of goods, services, and technology are prohibited. In addition, the facilitation of transactions which would otherwise be prohibited are prohibited as well. As such, the transfer of money is not necessarily prohibited; although it should be noted that U.S. depository institutions are prohibited from maintaining accounts at Iranian banks. However, there are scenarios where the sending of money to a family member in Iran could constitute a violation of the ITR. For example, if a U.S. Person were to send money to Iran for the purpose of purchasing spark plugs from a U.S. vendor, that transaction would be considered facilitation and would be prohibited.
Q. Does the ITR affect those who provide professional services such as accounting or legal work for businesses and individuals located in Iran?
A. There are currently certain professional services which are authorized under the ITR pursuant to a general license. For example, many legal activities, particularly those dealing with US attorneys ability to counsel Iranian parties about compliance with U.S. laws, are permitted. CISADA does not allow for the exportation of any professional services. However, it remains to be seen whether or not OFAC will maintain the general license for certain professional services to be exported to Iran.
Q. How about those individuals who find work opportunities to work with international institutions, non-governmental organizations and charities in Iran?
A. CISADA does provide an exemption for the export of goods, services, and technology to Iran which are necessary to support the activities of non-governmental organizations pertaining to the promotion of democracy.
Q. How does the law affect Iranian Americans who own property in Iran, or who receive income in Iran?
A. It may or may not affect them anymore than the ITR already does. It will all depend on the specific facts pertaining to each case. For example, if an individual is obtaining income from rental property in Iran, they may already be deemed to engaging in the prohibited export of services to Iran. As such, CISADA would not affect them anymore then they are already prohibited from engage in such activities.
Q. What do IA executives whose companies do business with Iran need to be aware of?
A. There are a number of considerations Iranian American executives need to be cognizant of. First and one many are likely already becoming aware of is the unwillingness of banks, both foreign and domestic, to be part of any transaction, no matter authorized or not, dealing with Iran. Due to the aggressive nature of OFAC’s enforcement of the ITR over the past eighteen (18 months) and the new prohibitions contained in CISADA, it is no wonder banks are shying away from any type of transaction dealing with Iran. Second, is the effect that dealing with Iran can have on those companies and individuals seeking U.S. Government procurement contracts. CISADA requires that individuals or entities seeking to obtain U.S. Government procurement contracts certify that they do not engage in transactions with Iran, regardless of whether those transactions are authorized or not. Finally, depending upon the state in which these businesses are located, Iranian American executives will want to be wary of state divestment laws that might affect their organization’s activities.
CISADA is broad and will further narrow the limitations on transacting in Iran already established by the ITR. However, until OFAC amends the ITR to reflect the mandates of CISADA, it remains unclear how dramatic these changes will be. As always, the most important thing for the Iranian American community is to remain aware of the U.S. economic sanctions laws relating to Iran and how to address potential issues that may come up in their day to day life. Before engaging in any transaction with Iran make sure to seek out the advice of an attorney who is familiar with the Iran sanctions and who has experience in dealing with matters before OFAC. The consequences of violating the ITR are too severe to fail to take such steps.
Eric Ferrari is a Partner in the Washington, DC office of McNabb Ferrari, P.C. and a member of the Iranian American Bar Association-Washington, DC Chapter. Erich is an internationally recognized expert in OFAC litigation and U.S. economic sanctions programs; he publishes on related issues and blogs at www.sanctionlaw.com. Nothing in this article should be construed as legal advice as every case is different. If you are impacted by any topic discussed in this article you should consult with an attorney who has expertise in OFAC. If you would like more information about the contents of Erich’s article, call him at 202-351-6161 or email email@example.com.