July 25, 2013, Washington, D.C. – The Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced today that it is updating the Iranian Transactions and Sanctions Regulations to add additional items to the basic medical supplies list referenced in the general license originally issued on October 22, 2012 for the export of basic medical supplies to Iran.
OFAC has also released new guidance on the sale of food, agricultural commodities, medicine, and medical devices by non-U.S. persons to Iran. The clarifying guidance makes clear that foreign financial institutions may process transactions for the purchase of humanitarian goods.
In a statement explaining the changes, David S. Cohen, Undersecretary for Terrorism and Financial Intelligence, underscored their humanitarian motive, stating that “Even as we continue to implement and enforce our rigorous sanctions regime against Iran, we are committed to safeguarding legitimate humanitarian trade.”
Those familiar with transactions between the U.S. and Iran expressed ambivalence about the impact of the changes. “While I applaud the administration’s effort to authorize a wider variety of medical devices for shipment to Iran, the overarching problem still remains the difficulty to remit payments for such goods,” Erich Ferrari, an internationally recognized lawyer in OFAC litigation, explained to PAAIA. “As of today, there is no safe, transparent, and reliable way to do make such payments. Moreover, that problem is not just exclusive to exports of medical devices to Iran, but also extends to difficulties the Iranian American community has faced in seeking to carry out other types of authorized activity with Iran, such as divestment related activities involving transferring of wealth from Iran to the U.S.”
Furthermore, Ferrari added that OFAC’s new guidance also does not address the risk that foreign financial institutions with banking licenses in U.S. states might face from state regulators over dealings with Iran. “That is another major concern of foreign financial institutions who have shied away from processing such transactions,” he said.
While U.S. sanctions allow for exports of humanitarian goods (food, medicine, etc.) and for personal and family remittances, U.S. and international efforts, as well as Iranian mismanagement and alleged illicit activities, have caused some banks to shy away from making shipments of non-prohibited items to Iran. This has contributed to the rise of the underground economy by pushing legitimate personal and family remittance transactions toward illicit transfer methods through the use of Hawalas and Saraafs.
In April 2013, PAAIA sent a letter to the Obama administration urging the president to implement recommendations to establish clear channels for humanitarian trade and family remittances to and from Iran. The recommendations would not remove or loosen existing sanctions and would help stem the rise of illicit financial transfer methods, since the transactions would be licensed and subject to strict government oversight.
PAAIA commends the Obama Administration for expanding the list of medical supplies authorized for export to Iran, and welcomes its attention to ensure that exemptions from U.S. sanctions are understood by foreign pharmaceutical companies and financial institutions. We will continue to engage the administration on facilitating humanitarian trade to Iran and ensuring that personnel and family remittances to and from Iran are conducted in a transparent and safe manner.
Click here to read more about the recommendations and send your own letter to the president.
Click here to read the press release from the Department of the Treasury.