Questions, Answers and Misconceptions
The U.S. Economic Sanctions Against Iran
Exports to Iran
In general, unless licensed by OFAC (U.S. Department of Treasury), goods, services, or technology may NOT be exported, re-exported, sold or supplied, directly or indirectly, from the United States or by a U.S. person, wherever located, to Iran or the Government of Iran.
The Misconceptions About the Iranian Sanctions
Unfortunately, there is very little awareness about the U.S. sanctions against Iran in the greater Iranian community and Iranian media in the United States. For example, many individuals believe that the sanctions only prohibit exportation of sensitive technology to Iran. This lack of knowledge and understanding of the Iranian sanctions may indeed lead to unintentional violation(s) of the U.S. laws that can bring about serious civil and criminal penalties and other negative consequences. In fact, “Iranian Transactions Regulations”, the I.T.R. specifically, regulates transactions between “U.S. persons” and individuals inside of Iran.
Below are some of the questions and misconceptions in the Iranian community about the subject of what exactly is the depth and breathe of these sanctions on individuals who are considered “U.S. persons”? The Regulations are worded very broadly (presumably to allow flexibility in enforcement and future changes), but nevertheless are strictly enforced.
Questions & Misconceptions
1) I am not a U.S. citizen, so the sanctions do not apply to me, right?
MAYBE. The law specifically and unambiguously defines whose conduct is being regulated by these regulations.
“U.S. person” is defined as:
1. All U.S. citizens;
2. All U.S. permanent residents (green card holders);
3. All U.S. citizen or U.S. permanent residents located outside the United States;
4. All U.S. incorporated entities and their foreign branches;
5. All foreign subsidiaries owned and controlled by U.S. companies;
6. All persons or entities within the United States.
2) I am a “U.S. person” involved in import/export to Iran, but live outside the U.S. These laws don’t apply, right?
WRONG. The law specifically includes all U.S. persons wherever located. Furthermore, a U.S. person may NOT export from the U.S. any goods, technology or services, if the person knows or has reason to know such items are intended specifically for supply, transshipment or re-exportation to Iran.
3) Are U.S. government officials enforcing these violations?
The United States government is absolutely and strictly enforcing these laws. There are various Iranians and Iranian-Americans being prosecuted criminally and civilly at the present time. In fact, the U.S. Department of Justice sought and obtained an enhancement of criminal and civil penalties of Iran sanctions from the U.S. Congress in October of 2007 to a maximum of 20 years per violation. Civil penalties were enhanced to the greater of $250,000 per transaction or twice the amount of the transaction.
4) I am a “U.S. person” and live in the United States. My family owns certain real properties in Iran that we wish to sell. Any problems?
In general, most transactions related to Iran are prohibited by the Iranian Transactions Regulations (I.T.R.) unless licensed by the Office of Foreign Assets Control of the U.S. Department of Treasury. Sale of any personal or real property in Iran is prohibited unless a specific LICENSE is obtained prior to such a sale. This prohibition applies to any real property; whether acquired by gift, inherited property or acquired long before the enactment of Iran sanctions.
“U.S. persons, including foreign branches of U.S. depository institutions and trading companies, are prohibited from engaging in any transactions, including purchase, sale, transportation, swap, financing, or brokering transactions related to goods or services of Iranian origin or services owned or controlled by the Government of Iran.”
5) I am a “U.S. person” and have inherited certain properties due to death of a family member in Iran. Can I sell my interest in those properties in Iran?
NOT without a LICENSE issued by the U.S. Department of the Treasury.
NOTE: License needed is not a General blanket license, rather a Specific License for each occurrence, transaction, or circumstance. Once a particular license is issued, the license is conditioned on the particular facts and circumstances contained in the written representations made on the License Application.
6) Are there any activities that are exempt from licensing requirement?
YES
Exemptions: Codified exceptions to Regulatory or Statutory prohibitions where no license is needed.
1. Humanitarian Donations Exemption: Authorizes export of “articles, such as food, clothing, and medicine intended to be used to relieve human suffering.
This exemption does NOT extend to the transfer of money.
2. Personal Communications
Extends to any personal communication with parties in Iran or the Government of Iran and transactions incidental to such personal communications. Included are publications, films, posters, photographs, CD Roms, artworks, and news wire feeds.
3. Information & Informational Materials
This exemption extends to commercial information and is not limited to any particular formats or mediums.
This exemption extends to the information and informational materials fully created and in existence at the time of the transaction and does not extend to any artistic enhancements or alterations to the informational materials.
This exemption does not extend to consulting, marketing, or other services. In addition, software subject to the Export Administration Regulations is not covered by this exemption.
4. Travel
Transactions ordinarily incident to travel to or from Iran are exempt and authorized. Included are payment of living expenses and acquisition of goods and services for personal use and arrangement or facilitation of such travel including air, sea or land voyages.
General Licenses: The activities that the public can engage in without the need to apply for a Specific License. These activities would ordinarily be prohibited but for the General License authorized by OFAC.
Difference between an exemption & General License: OFAC has no regulatory authority to change the exemptions, while it maintains authority and discretion on the issuance and revocation of General Licenses.
An example of a General License:
Fund transfers to Iran for humanitarian relief of the 2003 earthquake in Bam, Iran.
1. Gifts
Exportation of gifts from the United States to Iran (merely taking gifts) and importation of Iranian-origin goods as gifts are authorized up to $100.
2. Accompanied Baggage
Baggage ordinary accompanied as incident to travel from the United States to Iran or from Iran to the United States are authorized. The accompanied baggage is limited to articles necessary for personal use incident to travel and not intended for use by any other person or for sale and not otherwise prohibited.
3. Household Goods and Personal Effects
From the U.S. to Iran: For relocating in Iran, taking (exporting) household and personal effects for family use are authorized if the articles have been actually used by said family members (not intended for use by others or for sale nor otherwise prohibited).
From Iran to the U.S.: Bringing (importing) Iranian-origin household and personal effects for personal or family use of persons arriving in the United States are authorized, if such articles have been actually used abroad by such person or by other family members. They must not be intended for any other person, nor for sale, and must not be otherwise prohibited.
7) Is the Use of “Havaleh” as Means of Transferring Money between the United States and Iran legal?
Havaleh is the common Farsi name of what is referred to by the U.S. Federal Agencies as “Hawala”. It is a form of Informal Value Transfer System (IVTS).
Example: Parties involved in a typical Havaleh transaction
A: U.S. person who wishes to send some money to an individual in Iran.
B: The intended recipient of the money in Iran.
C: Local Havaleh Broker, usually in the U.S.
D: Foreign Havaleh Broker, usually in Iran.
Goal of Havaleh
- A wishes to send money to B in Iran.
- A pays the money to C and provides the name and address of B in Iran.
- C contacts D who is his counterpart broker in Iran and instructs him to make payment to B.
- D pays money to B in Iran.
Both brokers in the U.S. and in Iran keep track of their internal accounting between themselves as to who owes whom how much and on whose customer’s account.
PLEASE NOTE:
Havaleh brokers are NOT U.S. depository institutions.
U.S. Federal Agents and Prosecutors have been aggressively prosecuting Havaleh cases involving I.T.R. violations. In doing so, the Prosecutors are not only seeking prosecution of brokers only but also the recipients of the transfers under IEEPA’s regulations.
Furthermore, since the recipients of Havaleh in the U.S. ordinarily have little or no role in the management of the Havaleh process, from the time the money is paid in Iran until the money is paid in the U.S., the subject funds may indeed be tainted by comingling with other monies that may be illegally obtained or illegally used.
NOTE: This document is explanatory only and does not have the force of law. The Statues, Executives Orders, and the Regulations contain the legally binding provisions governing the Iran sanctions. This document does not supplement, interpret, or modify these Statues, Executive Orders, or Regulations and is the product of author’s understanding of the law.
