Warner Law Center represents individuals and companies before the Department of Treasury's Office of Foreign Asset Controls ("OFAC".) The legal team at Warner Law Center is experienced in sanction law and can provide legal counsel on how to comply with U.S. trade sanctions, to obtain specific licensure and interpretative guidance from OFAC, and with defending both U.S. and international clients in the course of an OFAC investigation.
Legal Guidance on Sanctions
Dr. Khosro Eslami of Warner Law Center has represented numerous individuals and companies in matters before OFAC, seeking to not only protect their rights in current legal matters, but to ensure that they become informed of what it takes to comply with U.S. trade sanctions. The legal services provided at Warner Law Center include:
- Counseling on export controls for companies seeking to export medical devices, medicine, and agricultural commodities to Iran under the Trade Sanctions Reform and Export Enhancement Act (TSRA)
- Obtaining specific licensure and guidance from OFAC relating to importation of services from Iran;
- Obtaining specific licensure from OFAC for charities sending money to Iran
- Defending both U.S. and international clients from OFAC investigations
- Obtaining interpretative guidance from OFAC on how to properly transfer funds between the U.S. and Iran
- Developing OFAC compliance programs for international businesses
- Having names removed from OFAC's Specially Designated Nationals (SDN) List
- Responding to administrative subpoenas issued during the course of an OFAC investigation;
- Procuring specific licenses to engage in transactions prohibited by OFAC
- Drafting voluntary self-disclosure letters regarding past violations
- Creating and launching OFAC compliance programs for international companies
Dr. Eslami is personally involved in every aspect of his clients' legal issues and has represented major US companies involved in developing Regional Centers, to obtain OFAC Licenses to conduct transactions with private citizens of Iran where these individuals invested $1,000,000 and $500,000 to obtain US legal permanent residency.
The Department of Treasury's Office of Foreign Asset Controls ("OFAC") administers and enforces economic and trade sanctions programs primarily against countries and groups of individuals, such as terrorists and narcotics traffickers. The sanctions can be either comprehensive or selective, using the blocking of assets and trade restrictions to accomplish foreign policy and national security goals of the Unites States.
OFAC acts under Presidential national emergency powers, as well as from a variety of U.S. federal laws regarding
embargoes and economic sanctions.
In enforcing economic sanctions, OFAC acts to prevent "prohibited transactions," which are described by OFAC as trade or financial transactions and other dealings in which U.S. persons may not engage unless authorized by OFAC or expressly exempted by statute. OFAC has the authority to grant exemptions to prohibitions on such transactions, either by issuing a general license for certain categories of transactions, or by specific licenses issued on a case-by-case basis.
OFAC places specific sanctions on the property of certain people from specific countries, including from Cote D'Ivoire, the Balkans, Belarus, the Congo, Iran, Iraq, Somalia, Burma (Myanmar), Liberia, Lebanon, and Zimbabwe.
OFAC publishes a list of individuals and companies owned or controlled by, or acting for or on behalf of, targeted countries. It also lists individuals, groups, and entities, such as terrorists and narcotics traffickers designated under programs that are not country-specific. Collectively, such individuals and companies are called "Specially Designated Nationals" or "SDNs." Their assets are blocked and U.S. persons are prohibited from dealing with them. Both the sanctions programs and the SDN List are constantly changing and companies that do business internationally, particularly in political 'hot spots' are well advised to constantly monitor OFAC developments.
OFAC's sanctions apply to all U.S. citizens and permanent residents wherever they are located in the world. It also applies to any person who is physically in the United States regardless of his citizenship. U.S. companies and all branches of U.S. organizations throughout the world remain subject to OFAC. Likewise, U.S. branches or offices (physically located in the U.S.) of foreign corporations are subject to OFAC. When dealing with Cuba, the reach of OFAC is even longer. Not only are corporations or companies actually located in the U.S. subject to the embargo but also included are foreign organized subsidiaries of U.S. corporations. In addition, many of the OFAC sanctions programs also prohibit "facilitating" i.e. assisting, a prohibited transaction.
Iranian Transactions Regulations
History of Sanctions
In 1979, Iranian government assets were blocked following seizure of the U.S. Embassy in Teheran and the taking of U.S. hostages. The assets freeze was eventually expanded to a full trade embargo.
In 1981, the Algiers Accords, brokered by the Algerian government between the
United States and
Iran to resolve the
Iran hostage crisis was signed by US and Iran. Among its chief provisions are the US would remove a freeze on Iranian assets and trade sanctions on Iran. Most Iranian assets in the United States became un-blocked, and the trade embargo was lifted.
In 1987, President Ronald Reagan imposed a new import embargo on Iranian goods & services. Over the years, modifications have been made & enforced by OFAC, and include direct imports as well as those coming through third countries.
In 1995, President Bill Clinton signed an executive order prohibiting U.S. involvement with petroleum development in Iran. In 1997, executive orders confirmed that virtually all trade and investment activities with Iran by U.S. persons, wherever located, are prohibited.
In 2008, U-Turn transfers (the loophole used by
Iranian banks to avoid
U.S. sanctions for their
US dollar based transactions) were revoked. U.S. depository institutions are no longer allowed to process transfers involving Iran, even when they originate and end with non-Iranian foreign banks.
In 2010, imports of certain foods foodstuffs and carpets of Iranian origin were banned. Also, that year, the Comprehensive Iran Sanctions Accountability and Investment Act listed under Section 103 the goods and services that are exceptions to these regulations.
In 2011, the National Defense Authorization Act for Fiscal Year 2012 was signed into law, requiring the President to block property and interest in property subject to U.S. jurisdiction of all Iranian financial institutions, including the Central Bank of Iran.
On July 1, 2010, President Barack Obama signed into law the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010. The law expands the range of sanctions that may be imposed pursuant to the Iran Sanctions Act of 1996.
In 2012, the President signed Executive Order 13606 to block entry of those who have used information technology to assist the Iranian government in acts of human rights abuses. This is aimed at network disruption, monitoring, and tracking, which includes acts aided and abetted by entities in Iran and Syria. These orders have largely been codified by the US Treasury Department in the Iranian Transactions Regulations. 31 C.F.R.
Iran Sanctions Regulations and OFAC Legal Sources
The Iranian Transactions and Sanctions Regulations, 31 C.F.R. Part 560 (the "ITSR"), generally prohibit the importation into the United States of any goods or services of Iranian origin or owned or controlled by the Government of Iran. ITSR, §560.201. The ITSR also generally prohibit the exportation, reexportation, sale, or supply of any goods, technology, or services, directly or indirectly, from the United States or by a U.S. person, wherever located, to Iran or the Government of Iran. ITSR, §560.204. Additionally, the ITSR generally prohibit U.S. persons, wherever located, from engaging in any transaction or dealing in or related to goods or services of Iranian origin or owned or controlled by the Government of Iran; or goods, technology, or services for exportation, reexportation, sale or supply, directly or indirectly, to Iran or the Government of Iran. ITSR, §560.206(a). This prohibition includes but is not limited to purchasing, selling, transporting, swapping, brokering, approving, financing, facilitating, or guaranteeing. ITSR, §560.206(b). The ITSR define the term U.S. person to mean any United States citizen, permanent resident alien, entity organized under the laws of the United States (including foreign branches), or any person in the United States. ITSR, §560.314.
The ITSR generally authorizes the transfer of a noncommercial, personal remittance to or from Iran or for or on behalf of an individual ordinarily resident in Iran, other than an individual whose property and interests in property are blocked pursuant to section 560.211 of the ITSR, provided that the transfer is processed by a United States depository institution or a United States registered broker or dealer in securities and not by any other U.S. person; does not involve debiting or crediting an Iranian account; and is not by, to, or through the Government of Iran, as defined in section 560.304 of the ITSR. ITSR. §560.550.
Further, the ITSR authorize United States depository institutions or registered brokers or dealers to process transfers of funds to or from Iran, or for the direct or indirect benefit of persons in Iran or the Government of Iran, if the transfer arises from, and is ordinarily incident and necessary to give effect to, an underlying transaction that has been authorized by a specific or general license, such as section 560.550 of the ITSR, and does not involve debiting or crediting an Iranian account. ITSR, §560.516.
Questions and Answers Related to OFAC Iran Sanctions
What do Sanctions prohibit?
The ACT is very broad and it may be applicable to a broad range of situations. The Regulations prohibit: the exportation, re-exportation, sale, or supply, directly or indirectly, from the United States, or by a United States person wherever located, of any goods, technology, or services to Iran or the Government of Iran."
What are "Services"?
The term services refer to the performance of something useful for a fee. For example, the execution on behalf of others of money transfers from the United States to Iran is a "service" under the terms of the Embargo; or if you do a new invest such as purchasing an apartment unit in Iran you may run afoul of the Embargo regulations.
Who do they apply to?
The regulations apply to a United States person is any US citizen, permanent resident alien, entity (companies, non-profit groups, government agencies, etc.) organized under the laws of the United States (including foreign branches), or any person in the United States, wherever located.
What is "blocking?"
Another word for it is "freezing." It is simply a way of controlling targeted property. Title to the blocked property remains with the target, but the exercise of powers and privileges normally associated with ownership is prohibited without authorization from OFAC. Blocking immediately imposes an across-the-board prohibition against transfers or dealings of any kind with regard to the property.
What is the Purpose of the Act?
The obvious purpose of the order is to isolate Iran from trade with the United States.
What are consequences of violating the Act?
Criminal penalties for violations of the Iranian Transactions Regulations may result in a fine up to $1,000,000, and natural persons may be imprisoned for up to 20 years. Civil penalties, which are not to exceed the greater of $250,000 or an amount that is twice the amount of the transaction that is the basis of the violation with respect to which the penalty is imposed may also be imposed administratively.
Any US person prosecuted?
US government has successfully prosecuted cases involving these violations. The two cases on point are United Statesof America v. Mazyar Ghavidel, and
United States v. Mohammad Reza Ehsan.
How to avoid violations?
The Regulations provide only two ways to avoid the prohibitions on dealing with Iran: coverage under a general license authorizing certain categories of transactions and issuance of a specific license. The Regulations state that prohibited transactions "which are not authorized by general license may be effected only under specific licenses." 31 C.F.R.
How to get a License?
General licenses authorizing certain types of transactions with Iran are set forth in subpart E of the Regulations. The general licenses under the ITSR are self-executing. A person does not need to apply for a general license because the Regulations themselves authorize the covered transactions. Exportation of goods or technology is not covered by any general license.
A specific license is a document issued by US Treasury Department, upon application, authorizing a particular transaction to a particular person or entity 31 C.F.R. You need to get a license, if you engage the services of a professional vendor in Iran. There is no formal process of appeal from a denial of a license application. Numerous issues often must be coordinated with the U.S. Department of State and other government agencies, such as the "U.S. Department of Commerce."
Do you need a license to bring money from Iran?
You generally do not need an OFAC license to transfer personal funds from Iran to the United States if it is for family members or yourself.
However, as a U.S. person you certainly need a license to liquidate property and/or engage in transactions in Iran for example, to purchase or sell real property. You generally do not need a license to transfer money to yourself or your children, relatives, for personal use unless the funds are held in a blocked sanctioned bank. The important point is that the involvement of a solo individual or entity in the transaction, which is on the OFAC's SDN list, can cause your money to become blocked by the recipient bank. Pleading for the release of seized funds can be a challenge and the bank may even return the money to the sender of funds and the process of retrieving funds may take several months.
There are many situations that you do not need to submit a license application to OFAC however, you may notify OFAC that you are in compliance with all applicable laws. In other words, you make certain that the transfer is lawful – for example, no SDNs are involved in the transfer, and the funds are a non-commercial family remittance, and the transfer is intended for a personal use. In other situations, in which for example, a U.S. person is bringing his/her own funds to the U.S., or if a person in the U.S. is receiving family remittances from non-family individuals in Iran, or a private person in Iran is sending money to US to invest in a US enterprise for investment or to obtain US legal residency one should always seek written guidance from OFAC on foregoing matters.
Exceptions to the Prohibitions and Authorized Transactions
There are some exceptions in transfer of goods, services, and conduct of transactions that do not require a special OFAC license. 31 C.F.R. § 501.801(a). The following transaction falls within the authorizations of sections 560.550 and 560.516 of the ITSR. The general licenses under the ITSR are self-executing; if a client's transaction falls within the authorization(s), it is not necessary to obtain OFAC's permission to engage in the transaction:
- Gifts valued at $100 or less
- Information & Informational Materials.
- Some Household Goods & Personal Effects of Persons Arriving in the U.S.
- Standard Travel Goods in Baggage Accompanying the Traveler.
- Payment of maintenance and living expenses and acquisition of goods or services for personal use are permitted.
- Donations intended to Relieve Human Suffering such as: Food, Medicine, Clothing, and Gifts worth less than $100.
- Services provided in the United States by an Iranian national already resident in the United States.
- The receipt or transmission of postal, telegraphic, telephonic or other personal communications that does not involve the transfer of anything of value between the United States and Iran is permitted.
- Transactions in third countries involving goods that were legally acquired by U.S. persons before May 7, 1995. Such goods can be sold, disposed of or stored, as long as they do not involve the import of Iranian goods into the U.S.
- While U.S. persons may continue to charge fees and accrue interest on existing Iranian loans, a specific license must be obtained to reschedule or otherwise extend the maturities of existing loans.
- Payments for licensed sales of agricultural commodities, medicine and medical devices, which reference an appropriate OFAC license not involving a debit or credit to an account of an Iranian entity.
- U.S. depository institutions are permitted to handle some funds or transfers through third-country bank to or from Iran, including: noncommercial family remittance; exports or imports involving information and informational materials; travel-related remittances; payments for allowable donation shipments; and transactions authorized by OFAC through a specific or general license.
- Some Letters of Credit and other financing arrangements involving trade contracts in force as of May 6, 1995.
- Some bank transactions regarding exempt transactions such as accounts involving donations, informational material or travel-related remittances.
- Under a general license issued by OFAC,
- (Effective August 22, 2006) Official business transactions with Iran by U.S. persons working for some international organizations, such as: the United Nations; the World Bank; the International Monetary Fund; the International Atomic Energy Agency; the International Labor Organization or the World Health Organization.
- (Effective September 10, 2013) OFAC issued two general licenses. General License E authorizes the exportation of services and funds transfers by nongovernmental organizations in support of certain not-for-profit humanitarian activities. General License F authorizes the importation and exportation of certain services in support of professional and amateur sporting activities and exchanges involving the United States and Iran.
Disclaimer: The foregoing provides only general information and not legal advice on solving specific transaction issues or detailed regulations and procedures for OFAC compliance. Please be reminded OFAC sanctions programs change continuously. For updates on current regulations and OFAC's SDN list please contact Warner Law Center.