OFAC Do’s & Don’ts

Implementation day for the Joint Comprehensive Plan of Action (JCPOA) caused significant confusion regarding authorized business dealings with Iran by a United States person.  The JCPOA lifted most U.S. secondary sanctions on non-U.S. entities dealing with Iran.  However, the agreement had little effect on the U.S. primary sanctions on trade with Iran, the Iranian Transactions and Sanctions Regulations (ITSR).  Both U.S. persons and non-U.S. entities remain prohibited from dealing with persons on the Treasury Department’s Office of Foreign Asset Control’s (OFAC) Specifically Designated Nationals List (“SDN List”).  See 31 C.F.R. § 562.201 (2016).  Despite the ITSR’s prohibition on U.S. trade with Iran, certain exceptions to the ITSR do exist.  See, e.g., 31 C.F.R. § 560.530.

How do U.S. sanctions define a U.S. national?

The ITSR defines a “United States person” as a U.S. citizen, permanent resident alien, any person within American borders, or entity organized under U.S. law.  See 31 C.F.R. § 560.314 (2016).  Entities organized under U.S. law include partnerships, associations, corporations, or any other organization, group, or subgroup.  See 31 C.F.R. § 560.305.  Foreign branches of entities organized under U.S. law still qualify as a “United States person.”  31 C.F.R. § 560.314.

How do U.S. sanctions define facilitating trade or a transaction with Iran?

A United States person cannot “approve, finance, facilitate, or guarantee” a non-U.S. person’s transaction if the Iranian Transactions and Sanctions Regulations would prohibit the transaction within the United States or a United States person from performing the transaction.  See 31 C.F.R. § 560.208 (2016).  Non-U.S. entities with United States persons as employees should establish policies to exclude U.S. employees from participating in transactions with Iran.   A United States person’s involvement in a transaction with Iran would violate 31 C.F.R. § 560.208 by facilitating a transaction with Iran.

Can a United States person without an OFAC license still trade with Iran?

A United States person without an OFAC license cannot export or import goods, services, or technology to or from Iran.  See 31 C.F.R. § 560.201-204 (2016). Furthermore, a U.S. person cannot export U.S. goods to a third country with knowledge or reason to know that the goods are ultimately destined for Iran.  Id. § 560.205.  However, OFAC issues two types of licenses for trade with Iran: specific licenses and general licenses.  See 31 C.F.R. § 501.801.  OFAC only issues specific licenses to particular persons or entities after an application process.  Id.  General licenses are broader and authorize a United States person to engage in a particular type of transaction without the need to apply for a license.  Id.

OFAC has issued general licenses for the exportation of agricultural commodities, medicine, and medical supplies to Iran.  See 31 C.F.R. § 560.530 (2016).  Agricultural commodities mean products subject to, or would be subject to if located within the U.S., the EAR.  Id.  These products also must be meant for use in Iran as food, seeds for crops, fertilizers, and reproductive materials for food production.  Id.  Medicine must fit the definition of “drug” found in 21 U.S.C. 321(g).[i]  Id.  Medical device falls under the definition of “device” found in 21 U.S.C. 321(h).[ii]  Id.  All three general licenses prohibit exporting any of these goods to military or law enforcement entities.  See § 560.530(a).  OFAC authorizes a number of payment options for these exports: payment in advance, sales on an open account, letter of credit, or financing by a non-U.S., non-Iranian financial institution. See 31 C.F.R. § 560.532.  United States persons are also authorized to provide brokerage services on behalf of U.S. persons engaging in business involving these general licenses.  See 31 C.F.R. § 560.533.

Pursuant to JCPOA commitments, OFAC recently issued general licenses allowing imports of Iranian-origin carpets and foodstuffs by U.S. persons.  See 31 C.F.R. § 560.534(a) (2016).  Authorized carpets are classified under chapter 57 or heading 9706.00.0060 of the Harmonized Tariff Schedule of the United States.  See 19 U.S.C.S. § 1202 (LexisNexis 2016).  Authorized foodstuffs are classified under chapters 2-23 of the Harmonized Tariff Schedule of the United States.  Id.  United States depository institutions can transfer funds to the benefit of Iran for transactions underlying this general license.  See 31 C.F.R. § 560.516.  Payment for these imports cannot involve the debit or credit of an Iranian account.  Id.  U.S. depository institutions cannot directly advise, negotiate, issue, or confirm a letter of credit with an Iranian financial institution or the Government of Iran.  See 31 C.F.R. § 560.535(a).  The general license authorizes U.S. depository institutions to issue, advise, negotiate, or confirm letters of credit to pay for Iranian-origin goods with a third-country bank.  Id. § 560.535(b).

General License I authorizes United States persons to engage in negotiations and transactions incident the negotiations for the export of commercial aircraft, related parts, and services to Iran.  See U.S. Dep’t of Treasury, Frequently Asked Questions Relating to the Lifting of Certain U.S. Sanctions Under the Joint Comprehensive Plan of Action (JCPOA) on Implementation Day 30 (2016), available at https://www.treasury.gov/resource-center/sanctions/Programs/Documents/jcpoa_faqs.pdf.  The negotiated contract remains contingent on whether the United States person obtains a specific license from OFAC.  General License I authorizes the negotiating parties to employ a Nondisclosure Agreement in regards to the contract.  Id. at 31.  However, a breach by an Iranian party would require specific licenses for legal fees.

OFAC General License H now allows non-U.S. entities owned or controlled by U.S. persons to engage in Iran-related business.  See U.S. Dep’t of Treasury, General License H: Authorizing Certain Transactions Relating to Foreign Entities Owned or Controlled by a United States Person, 1 (2016), available at https://www.treasury.gov/resource-center/sanctions/Programs/Documents/iran_glh.pdf.  A United States person owns or controls a non-U.S. entity if a United States person owns an equity share greater than or equal to 50 percent, hold a majority of seats on the board of directors, or controls the entity’s actions, personnel or policies.  Id.  U.S. employees of non-U.S. entities cannot participate in Iran-related operations.  See 31 C.F.R. § 560.208.  A non-U.S. entity owned or controlled by a United States person differs from a United States person’s foreign branch.  See 31 C.F.R. § 560.314.  A non-U.S. entity is organized under the laws of a different country. Id.

General License H allows a United States person that owns or controls a non-U.S. entity to engage in activities prohibited by the ITSR to establish or alter operating policies related to the non-U.S. entity doing business in Iran.  See U.S. Dep’t of Treasury, Frequently Asked Questions Relating to the Lifting of Certain U.S. Sanctions Under the Joint Comprehensive Plan of Action (JCPOA) on Implementation Day 31 (2016), available at https://www.treasury.gov/resource-center/sanctions/Programs/Documents/jcpoa_faqs.pdf.  This provision allows U.S. persons that are board members or senior management of the U.S. principal or the non-U.S. subsidiary to participate in the policy alterations.  Id. at 33.  The license also allows U.S. persons, including outside counsel and consultants, to provide training on the new operating policies.  Id.  However, these employees cannot participate in the ongoing Iran-related operations or decision making. The United States person can also use an automated business support system that passively transfers data between the U.S. principal and all of its non-U.S. subsidiaries.  Id. at 34.

At first glance, the ITSR and the exceptions to the ITSR prevent a United States person from engaging in any dealings with Iran without a license.  However, a general license allows all U.S. persons to engage in a particular business in Iran without applying for an OFAC-issued license.  Current OFAC general licenses allow U.S. persons to export agricultural commodities, medicine, and medical supplies to Iran.  Current OFAC general licenses now authorize U.S. persons to import carpets and foodstuff of Iranian-origin.  OFAC also has general licenses authorizing U.S. persons to negotiate contingent contracts for commercial airplanes, ­­and the foreign subsidiaries of U.S. persons to engage in business with Iran.  Trade with persons on the SDN List remains strictly prohibited for U.S. and foreign entities.


[i] 21 U.S.C. 321(g)(1): (1) The term “drug” means (A) articles recognized in the official United States Pharmacopoeia, official Homoeopathic Pharmacopoeia of the United States, or official National Formulary, or any supplement to any of them; and (B) articles intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease in man or other animals; and (C) articles (other than food) intended to affect the structure or any function of the body of man or other animals; and (D) articles intended for use as a component of any article specified in clause (A), (B), or (C). A food or dietary supplement for which a claim, subject to sections 343(r)(1)(B) and 343(r)(3) of this title or sections 343(r)(1)(B) and 343(r)(5)(D) of this title, is made in accordance with the requirements of section 343(r) of this title is not a drug solely because the label or the labeling contains such a claim. A food, dietary ingredient, or dietary supplement for which a truthful and not misleading statement is made in accordance with section 343(r)(6) of this title is not a drug under clause (C) solely because the label or the labeling contains such a statement.

[ii] 21 U.S.C. 321(h): The term “device” (except when used in paragraph (n) of this section and in sections 331(i), 343(f), 352(c), and 362(c) of this title) means an instrument, apparatus, implement, machine, contrivance, implant, in vitro reagent, or other similar or related article, including any component, part, or accessory, which is:

(1) recognized in the official National Formulary, or the United States Pharmacopeia, or any supplement to them,

(2) intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease, in man or other animals, or

(3) intended to affect the structure or any function of the body of man or other animals, and which does not achieve its primary intended purposes through chemical action within or on the body of man or other animals and which is not dependent upon being metabolized for the achievement of its primary intended purposes.

By: Jon Gronbeck

OFAC FAQ

A PRIMER ON OFAC, THE JCPOA & CHANGES IN U.S.-IRAN SANCTIONS

 

What is OFAC?

The Office of Foreign Assets Control (OFAC) is a subsection of the United States Department of the Treasury. OFAC administers and enforces U.S. sanctions based on U.S. foreign policy and national security objectives.  OFAC aims to prevent “prohibited transactions,” which means trade or financial transactions U.S persons are not allowed to engage in without prior authorization.  For more information on OFAC, please see OFAC’s Home Page.

 

What is the JCPOA and how did it affect U.S. sanctions on Iran?

The Joint Comprehensive Plan of Action (JCPOA) is a multilateral agreement, commonly known as the “Iran nuclear deal” that removed various sanctions on Iranian entities.  The JCPOA lifted U.S. secondary sanctions on non-U.S. entities doing business with Iran. However, the JCPOA had little effect on U.S. primary sanctions restricting trade with Iran under the Iranian Transactions and Sanctions Regulations (ITSR). Several important general licenses were issued after the implementation day of the JCPOA and they can be found in OFAC’s JCPOA Guidance.

 

What is the SDN List?

The Specially Designated Nationals (SDN) List names various people, entities, organizations, and vessels, which U.S. persons are prohibited from doing business with. Under no circumstance should a U.S. person engage in any transactions or dealings with persons or entities on this list.

 

Are there any other lists that I should be concerned with and how can I find or search these lists?

Yes, other lists that name sanctioned people, entities, organization, and vessels are called the Non-SDN Iran Sanctions Act List, E.O. 13599 List, and the Foreign Sanction Evaders List.

To search these lists, please use OFAC’s Sanctions List Search feature Here.

 

What is the difference between a General License and a Specific License?

OFAC only issues specific licenses to particular persons or entities after an application process. General licenses are broader and authorize a U.S. person to engage in a particular type of transaction without the need to apply for a license.

 

What general licenses have been granted by OFAC as it relates to U.S.-Iran trade?

OFAC has issued general licenses for the exportation to Iran of certain agriculture products, medicine, and medical supplies. These general licenses do not allow any export of these goods to military or law enforcement entities in Iran.

The agricultural license applies to products that are covered by the U.S. Export Administration Regulations (EAR). Agriculture products exported to Iran must be meant for use in Iran as food for humans (including vitamins and minerals) and animals, seeds for crops, fertilizers and organic fertilizers, and reproductive materials for food production.

If you are interested in engaging in business under the medical supplies general license, you should consult the list of approved products for export available Here.

If you are interested in engaging in business under the medicine general license, you should examine the definition of “medicine” in the U.S. regulations. The definitions for “medical device” and “medicine” are found in the U.S. Federal Food, Drug, and Cosmetic Act. Some items under this license also may be covered by the EAR, and would be marked as “EAR99.” The current list of Bureau of Industry and Security (BIS) EAR99 medical devices is available Here.

Finally, OFAC also issued general licenses allowing persons to bring into the United States Iranian-origin carpets, textile floor coverings and carpets used as wall hangings, and Iranian-origin food items intended for human consumption. For more information on these general licenses, please see the Department of the Treasury’s website Here.

 

How would my company obtain a specific license?

The USIRCC can inform you about the license application process required under U.S. laws and regulations. For your specific transactional needs, the USIRCC maintains a legal referral database, and can provide referrals to specialized sanctions or OFAC attorneys. For further guidance, please contact us at info@USIRCC.org.

 

Where can I learn more about U.S. sanctions as it relates to U.S.-Iran trade?

The USIRCC regularly provides guidance to businesses and individuals interested in learning more about the status of U.S.-Iran trade relations. In addition, you can visit OFAC’s resource center Here. You may also find updated answers relating to the JCPOA and Iran-related sanctions questions Here.

Iran Deal Reaches One Year Milestone

PRESS RELEASE

By Mohsen Farshneshani

Washington, DC – July 14, 2016 marked the first anniversary of the signing of the Joint Comprehensive Plan of Action (JCPOA) between the P5+1 and Iran. The United States-Iran Chamber of Commerce applauds the show of diplomacy and progress made in the past year. Despite some setbacks upon reaching this historic conclusion, much progress has been made in restoring commercial relations.

The JCPOA was signed with provisions to allow Iran to purchase commercial airplanes from the United States, in part due to Iran’s unsafe and aging fleet, which was impacted by sanctions. The proposed multi-billion dollar Boeing deal to sell commercial passenger airplanes to Iran benefits both American businesses and the Iranian people, while solidifying the lasting legacy of the JCPOA. However, this deal is being threatened by the passage of H.Amdt. 1262-1263 to H.R. 5485. On this day, we urge members of the U.S. Senate to put a stop to efforts to undermine the JCPOA, which impede U.S. economic competitiveness and influence abroad.

With its strong focus on American economic security through trade diplomacy, the Chamber provides guidance to U.S. companies seeking to leverage market opportunities within the Iranian economy, and regularly consults with members of Congress, businesses, and trade associations. Iran is home to nearly 80 million people with a median age of 28. This, coupled with a highly educated population and wide-ranging economic potential, has made Iran a fertile landscape for today’s global market. The JCPOA offers a new realm of market opportunities for American companies, and helps to harmonize business relationships in the international economic system.

The United States-Iran Chamber of Commerce was established with the aim of informing and advising American and Iranian entities to ensure they are working within the proper legal and regulatory framework. The founders of the Chamber are business leaders and former diplomats with a profound understanding of U.S.-Iran trade relations. This Chamber operates and is registered as a nonprofit organization in Washington, DC.

Who Are We Sanctioning? America or Iran?

 

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By Reza Marashi

In the aftermath of a historic nuclear deal, U.S.-Iran relations are in flux. Washington and Tehran communicate more directly and frequently today than at any time since 1979 – but this fact alone does not guarantee that all remaining points of contention will be resolved. With political and cultural ties improving incrementally, the sparsity of economic ties between Washington and Tehran stand out. As the rest of the world’s economies reinvigorate trade relationships with Iran, a litany of unilateral American sanctions prevents U.S. businesses from pursuing similar opportunities. The cost of sanctions to the American economy is often overlooked, yet continues to grow.

In a recent report, I worked with two colleagues to examine these costs, and the results were astounding. Using an econometric “gravity model,” we assessed the trade that America lost as a result of sanctions on Iran since 1995. Based on the U.S. government’s statistics on the number of job opportunities that $1 billion of foreign trade produces, our report also assessed the number of job opportunities lost in the U.S. due to the Iran sanctions. Finally, our report estimated the states in the U.S. where these job opportunities likely were lost.

Unsurprisingly, the United States is by far the biggest loser of all sanctions enforcing nations. From 1995 to 2012, the U.S. sacrificed a whopping $134.7 to $175.3 billion in potential export revenue to Iran – greater than the losses of all other countries combined. This is surprisingly high, particularly compared to the non-existing debate about the cost of sanctions. Over the past four years, this number has continued to rise.

Congress has passed most sanctions on Iran with no more than a handful of nay votes. In 2011, the Senate even passed sanctions against Iran’s Central Bank 100-0, in spite of objections from the Obama administration about the potential havoc these sanctions could cause in the oil markets. Concerningly, none of the lawmakers’ debates raised the cost of sanctions to the U.S. economy. The absence of such discussion was concerning mindful of the ongoing efforts to reduce the U.S. unemployment rate – an objective directly undermined by the thousands of job opportunities lost due to the Iran sanctions.

These estimates reflect the loss solely from export industries, and do not include the detrimental economic effects of other externalities of Iran-targeted sanctions, such as higher global oil prices. Moreover, since Iran’s imports would be higher in the absence of sanctions, and sanctions have depressed Iranian GDP, the economic costs to sanctions-enforcing nations are greater due to lost exports. Consequently, the full cost to the U.S. economy is likely even higher than the report indicates.

The dollar loss of foregone export revenue represents only part of the cost of sanctions enforcement. There is also a human element, measured in terms of jobs needed to support higher export levels. On average, the lost export revenues translate into between 51,043 and 66,436 lost job opportunities each year. In 2008, the number reached as high as 214,657-279,389 lost job opportunities. Texas and California are likely the biggest losers in terms of lost employment, due to their size as well as the attractiveness of their industries to Iran’s economy.

The structure of Iranian imports also provides important insight into lost trade between the U.S. and Iran. To understand future potential losses (or gains), it is instructive to study the Iranian government’s stated areas of economic emphasis, which include, among others: energy-intensive industries; power generation; telecommunications; automobiles; aviation and shipping; roads and railways; banking and insurance; and mining. Taking both U.S. and Iran perspectives into account, a diverse range of sectors stand out as likely areas of future trade – or future losses, depending on whether remaining U.S. sanctions are lifted.

The cost of sanctions to the U.S. economy must be recognized as America deliberates how to proceed in its trade relations with Iran. Any debate that does not acknowledge such costs will be incomplete at best, and misleading at worst. The nuclear deal has proven that diplomacy can accomplish in two years what decades of sanctions could not. Looking ahead, decision-makers in Washington must ask themselves if the cost of sanctions to the U.S. economy is worth bearing, where other diplomatic options exist.

Reza Marashi has been the Research Director of NIAC since 2010

Update on Iran’s Re-Entry into the Global Economy

Delisting of Entities on the U.S. Sanctions Lists

January 16, 2016, marked the Implementation Day for the Joint Comprehensive Plan of Action (“JCPOA”) – known in Iran as Barnamey-e Jame Eghdam-e Moshtarek (“BARJAM”). On Implementation Day, the International Atomic Energy Agency (“IAEA”) verified that Iran implemented key nuclear-related commitments set forth in the JCPOA, and the U.S. Secretary of State confirmed the IAEA’s verification. As a result of Iran meeting its JCPOA commitments, as part of the lifting of nuclear-related sanctions, the United States Government removed over 400 individuals and entities listed in the following:

  • the Specially Designated Nationals (“SDN”) List;
  • the Foreign Sanctions Evaders (“FSE”) List; and
  • the Non-SDN Iranian Sanctions Act (“NS-ISA”) List.

The above Lists are overseen and published by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”). SDNs are individuals and companies owned or controlled by, or acting for or on behalf of, targeted countries, and also lists non-country-specific individuals, groups, and entities. SDN assets are blocked and U.S. persons are generally prohibited from dealing with SDNs. FSEs are foreign individuals and entities determined to have violated, attempted to violate, conspired to violate, or caused a violation of U.S. sanctions on Iran, as well as foreign persons who have facilitated deceptive transactions for or on behalf of persons subject to U.S. sanctions. Transactions by U.S. persons or within the United States involving FSEs are prohibited. As of Implementation Day, sanctions imposed on all persons named on the NS-ISA List were terminated, and that list is now empty.

Following Implementation Day, noteworthy delisted entities include, among others:

  • the Central Bank of Iran and most Iranian financial institutions;
  • a number of American, Asian, and European shipping and trading companies;
  • almost all of the aircrafts and vessels that belong to Iran Air, Iran Shipping Lines, and the National Iranian Tanker Company;  
  • Iran’s Ministry of Energy and its Ministry of Petroleum; and
  • major Iranian energy companies and their foreign affiliates, including the National Iranian Oil Company (“NIOC”), and Naftiran Intertrade Company (“NICO”).

The names of the approximate 400 delisted individuals and entities are set out in Attachment 3 to Annex II of the JCPOA. Nevertheless, more than 200 Iranian or Iran-related individuals and entities continue to remain on the SDN list.

Simultaneous with delisting of Iranian aircrafts from the SDN list, OFAC established a favorable licensing policy regime through which U.S. persons may request specific authorization to engage in transactions for the sale, export, lease, or transfer of commercial passenger aircraft and related parts and services to Iran. OFAC’s licensing policy also applies to associated services including the supply of parts, warranty service, brokering, insurance and financing, as well as the involvement of individual U.S. persons in the transaction.

In addition, non-U.S. persons are no longer subject to sanctions for investing in Iran’s oil, gas, or petrochemical sectors, provided that transactions do not involve persons on the SDN list. In addition, U.S.-owned or controlled foreign entities are now permitted to engage in transactions that would otherwise be prohibited if engaged in by a U.S. person.

With the removal of over 400 individuals and entities from the SDN, FSE, and NS-ISA Lists, particularly the Central Bank of Iran, Iran Air, and the National Iranian Oil Company, the global marketplace can expect changes to emerge within the spectrum of transactional options available with respect to Iran, particularly its civilian aerospace and natural resource sectors.

 

The views expressed in this article are solely those of the author; they do not necessarily represent the position of the Department of Labor or of any other agency.

Emad Maghsoudi is a 2016 Juris Doctor candidate at Fordham University School of Law, and holds an MA in Management from Harvard University. Emad served as an International Trade Analyst for the U.S. Department of Labor.

 

Understanding US Trade Embargo with Iran

Despite the implementation of the Joint Comprehensive Plan of Action (“JCPOA”) – the nuclear accord between the United States, other major world powers, and Iran – U.S. persons remain broadly prohibited from engaging in most transactions with Iran or Iranian parties.  Nonetheless, the JCPOA did herald certain new license authorizations that permit U.S. persons to engage in specific trade-related activities with Iran.  It will be important for U.S. persons – defined to include U.S. citizens, permanent resident aliens, entities organized under the laws of the United States (as well as their foreign branches), and persons physically located within the United States – seeking to engage in trade-related activities with Iran – to ensure their compliance with U.S. sanctions regulations, including by consulting legal counsel as necessary.

For nearly three decades, the United States has imposed a comprehensive trade and investment embargo with Iran with only limited and narrowly construed exceptions.  This trade embargo is codified at 31 C.F.R. Part 560, where it is otherwise known as the Iranian Transactions and Sanctions Regulations (“ITSR”).  The ITSR imposes broad prohibitions on the import into the U.S. of Iranian-origin goods and services; the export and re-export to Iran of U.S.-origin goods, technology, and services; U.S. person facilitation of transactions by a foreign person with Iran if such transactions would be prohibited if engaged in by a U.S. person; and all trade-related dealings or transactions by U.S. persons with Iran or Iranian parties.  The purpose of these sanctions prohibitions is to restrict U.S. economic activity with Iran.

However, the ITSR does contain certain exemptions and license authorizations and exceptions.  These include license authorizations for the export and sale of certain agricultural commodities, medicines, and medical supplies to Iran, as well as for the provision to Iran of certain hardware, software, and services incident to personal communications (such as smartphones and tablets).  A full list of such exemptions,  license authorizations and exceptions can be found at 31 C.F.R. § 560.210; Subpart E of 31 C.F.R. Part 560; and on the U.S. Department of the Treasury’s Iran Sanctions webpage.

While the JCPOA did not terminate the broad prohibitions of the ITSR, it did authorize certain additional trade-related activities with Iran.  Pursuant to the JCPOA, the Office of Foreign Assets Control (OFAC) issued a general license authorization (codified at 31 C.F.R. § 560.534) for the importation into the United States of Iranian-origin carpets and certain foodstuffs.  This means that U.S. persons can now engage in the importation of Iranian-origin carpets and certain foodstuffs into the United States without first obtaining specific license authorization from OFAC – provided that U.S. parties comply in full with the terms of 31 C.F.R. § 560.534 and other applicable U.S. law.

Further, OFAC issued a Statement of Licensing Policy (“SLP”) for U.S. and non-U.S. persons to request specific license authorizations to engage in transactions for the sale of commercial passenger aircraft and related parts and services to Iran under certain restrictive conditions.  OFAC’s issuance of a SLP is intended to signals that U.S. persons are entitled to submit specific license applications and OFAC will review such applications with a presumption in the applicant’s favor.  Nonetheless, U.S. persons are required to receive specific license authorization before engaging in any transactions that would be covered under the terms of the SLP.

Finally, OFAC issued General License H, authorizing U.S.-owned or –controlled foreign entities – as defined at 31 C.F.R. § 560.215(b) – to engage in transactions, directly or indirectly, with Iran or Iranian parties that would otherwise be prohibited under 31 C.F.R. § 560.215, which addresses prohibitions on foreign entities owned or controlled by U.S. persons.  Some have interpreted this provision as authorizing U.S. persons to engage in certain activities with Iran that had otherwise previously been prohibited.  With one limited exception, this is not the case.  General License H is intended to permit foreign entities that meet the definition of U.S.-owned or –controlled to engage in trade-related dealings with Iran.  However, U.S. persons at those entities are not permitted to engage in or otherwise facilitate transactions with Iran or Iranian persons, as U.S. persons remain prohibited from such transactions under the ITSR.

The JCPOA opened certain limited avenues for trade with Iran or Iranian persons, but the broad prohibitions of the ITSR remain in place.  U.S. persons considering engaging in trade-related activities with Iran should consult legal counsel prior to undertaking any proposed dealings and strive to deepen their understanding of legal implications in this context.  Violations of the ITSR can be met with serious civil and criminal penalties, and U.S. authorities have imposed such penalties on violating parties in the past.

* The contents of this communication are not and should not be regarded as constituting legal advice.  As noted above, U.S. and other persons should discuss any proposed activities involving Iran with legal counsel to ensure compliance with U.S. law.

Tyler Cullis is the Legal Fellow and Policy Associate at NIAC. He provides legislative and advocacy outreach, research and writing, and legal analysis. A law graduate of the Boston University School of Law, he specialized in the U.S. sanctions on Iran and the Iran nuclear issue. Tyler tweets at @TylerCullis.