International Trade Law News

Published by Jacobson Burton Kelley PLLC

Labels: Cuba, OFAC, Sanctions; Iran, Sanctions; Syria

Labels: Export Controls, OFAC, Sanctions; Iran

By Doug Jacobson, Jacobson Burton PLLC

Here are answers to some of the frequently asked questions we have been receiving from US and non-US companies following the July 14, 2015 announcement of the Joint Comprehensive Plan of Action (JCPOA) between the P5+1 countries and Iran on Iran's nuclear program.

What would you advise companies now wanting to trade with Iran? 

Answer: The key piece of advice I have been providing to clients following the July 14, 2015 JCPOA announcement is to have realistic expectations, to understand the limited scope of the US sanctions relief contained in the JCPOA, the major hurdles in the way of its implementation, and to avoid media reports that contain general information only. We should not expect to see any US sanctions relief for several months, and most likely not until mid 2016. Sales and marketing staff should work very closely with their in-house and outside compliance resources to determine what is permissible and what is not. In the meantime, and for the next few months, the activity with Iran that was prohibited on July 13, 2015, the day before the announcement, remains prohibited today and until further notice from the Treasury Department's Office of Foreign Assets Control (OFAC). 

What misconceptions are out there that need to be corrected regarding sanctions on Iran? 

Answer: For most US-based companies, even if the JCPOA is approved by Congress and after several months is implemented in full, there will be little impact on US companies. The US agreed to lift only selected sanctions on Iran, such as secondary (extraterritorial) nuclear sanctions that restrict the activities of non-US persons with Iran. This means there will be relief only from sanctions on transactions outside the United States, not involving US persons or products sourced from the US. The US primary sanctions that prohibit most US goods from being exported to Iran and generally prohibit US persons from engaging in transactions with Iran will remain in effect until modified by the US Congress. In other words, once this agreement is implemented, which will not be until early 2016, US policy will be very similar to what it was in 2010, which is before the US secondary sanctions on Iran were first imposed. 

What mistakes do companies need to avoid in connection with potential business with Iran? 

Answer: Companies must avoid relying on rumors and unofficial information. They must make decisions based on specific guidance provided by the US Office of Foreign Assets Control, the Bureau of Industry and Security and other US regulatory agencies. Just because a competitor may be undertaking an activity in Iran or involving Iranian entities does not mean that it is compliant with US laws or the laws of other countries. The broad sanctions imposed on Iran by the EU and many other countries will also remain unchanged for the next several months and some countries, such as Canada, have indicated that they may choose to maintain the existing sanctions. 

On what sectors of the Iranian economy will the sanctions be lifted first and what sectors will take longer? 

Answer: For US based companies, the only significant changes to the current primary sanctions on Iran, once implemented in 2016, will be to allow for the sale and lease of commercial passenger aircraft and related parts to Iran for civilian end-use, upon receipt of a license from OFAC. In addition, OFAC will license non-US entities that are owned or controlled by a US person, such as a non-US subsidiary of a US company, to engage in activities with Iran that are consistent with the JCPOA. It is not yet clear whether OFAC will issue a general license authorizing such transactions or if each company will need to obtain its own specific license. In addition, the US will again allow the importation into the US of Iranian-origin carpets and food, which were permitted from 2000 through 2010. The US secondary (extraterritorial) sanctions relief will affect the activities of non-US companies in many other sectors in Iran, including energy, metals, automotive and shipping, insurance and banking. 

Will the JCPOA impact the current US policy on exports of permitted medical and agricultural products to Iran?

Answer: No. As noted, there will be limited changes on the US primary sanctions on Iran. OFAC's licensing policy for food, medicine, medical devices and agricultural commodities will not change under the JCPOA. As a result, the exports of these items still require a general or specific license to be exported to Iran. It is possible, although not certain, that payments for authorized items through European or Asian banks may be easier as a result of the JCPOA but direct Iran-US banking transactions will remain prohibited. In addition, there are many ports in Iran that will remain off limits due to the port operators being on the SDN List. The sanctions relief in the JCPOA is not expected to change the current policy since those sanctions were imposed for non-nuclear reasons.

Labels: OFAC, Sanctions; Iran

Today the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) today announced that it will add fifteen parties to the Entity List. The parties, which are located in China, Hong Kong, Iran and Singapore, were added to the Entity List for their alleged roles in a procurement network involving products subject to the jurisdiction of the Export Administration Regulations and International Traffic in Arms Regulations.

The following eight parties will be added to the Entity List since it was determined that they have engaged in actions that could enhance Iran's military capability and because their conduct and deceptive practices pose a risk of ongoing violations of the Export Administration Regulations: 

• Corezing International
• Hia Soo Gan Benson
• Hossein Ahmad Larijani
• Lim Kow Seng
• Lim Yong Nam
• NEL Electronics Pte. Ltd.
• Paya Electronic Complex
• Wong Yuh Lan.

According to BIS these parties participated in a network that engaged in schemes to divert U.S.-origin items to Iran and/or to China by using shifting/circuitous routes and false or omitted information on shipping documentation in an attempt to conceal their activities. These parties are also alleged to have obtained ITAR-controlled antennas designed for use in military radars and aircraft, and exported them to Singapore and Hong Kong. The individuals named above were indicted today by the Justice Department for their alleged roles in conspiring to export U.S.-origin components to Iran that were later found in IEDs in Iraq.

The following seven parties will be added to the Entity List based on evidence that they aided and/or facilitated the activities of the procurement network.

• Action Global, Amaze International and OEM Hub Co., Ltd., all Hong Kong entities, allegedly served as front companies and are otherwise related to the other entities named today.

• Ms. Luo Jie, director of Corezing International, Action Global and Amaze International, is being added on the basis of information indicating that she was involved in the procurement and attempted procurement of U.S. power amplifiers intended for end-users in China, as well as in the diversion of various U.S.-origin goods through Hong Kong to Iran.

• Parto Systems Tehran, an Iranian freight forwarder, is being added based on information indicating that it was involved in the diversion of U.S.-origin items to Iran and is closely associated with Hossein Ahmad Larijani.

• Surftech Electronics, a Singapore corporation established by Hia Soo Gan Benson, is co-located with Corezing International and allegedly sought to purchase certain U.S.-origin items for shipment to Iran.

• Mr. Zhou Zhenyong, director of Corezing International, is being added based on information that he was specifically involved in the procurement and attempted procurement of U.S.-origin items, including U.S.-origin munitions items destined for end-users in China and/or Iran.

While a BIS license is required to export, reexport or transfer any item subject to the EAR to any of the persons listed above, BIS has established a policy of a presumption of denial for all license applications.

The BIS Entity List, found in Supplement Number 4 to Part 744 of the Export Administration Regulations, includes the names of businesses, research institutions, government organizations and individuals that have been identified as being involved in activities that merit additional scrutiny and licensing requirements.

The entries on the Entity List specify the license requirements and license review policy that are applicable to shipments to each listed entity. In some cases, a license will be required to ship items classified as EAR99 to the customer, even when a license would not normally be required. In other cases, all items subject to the Export Administration Regulations will require a license. The export license review policy also varies from entity to entity. In some cases, there is a presumption of approval or denial and, in other cases, the license will be reviewed by BIS on a case-by-case basis. Significant penalties can be imposed against parties that engage in transactions with parties on the Entity List without the appropriate license.

Update: The final rule associated with this announcement was published in the Federal Register on October 31, 2011 and is effective on that date.

Labels: Export Controls, Sanctions; Iran

The Treasury Department's Office of Foreign Assets Control (OFAC) recently made changes to the Iran and Sudan sanctions regulations that will have a favorable impact on U.S. exporters of food and nutritional products.

Specifically, OFAC issued a final rule amending the Iranian and Sudanese Transactions Regulations by adding a general license authorizing the exportation or reexportation of “food” products to the Governments of Iran or Northern Sudan, individuals or entities in Iran or Northern Sudan, or persons in third countries purchasing specifically for resale to any of the foregoing parties in Iran and Northern Sudan, and the conduct of related transactions. No military or law enforcement purchasers or importers are authorized.

A general license is preexisting legal authority to conduct a transaction and does not require the submission of any license application to OFAC in order to utilize the authority. As a result, U.S. exporters no longer need to obtain a specific license from OFAC to sell food products to authorized customers in Iran or Northern Sudan.

The term “food” is broadly defined in OFAC's regulations as “items that are intended to be consumed by and provide nutrition to humans or animals in Iran, including vitamins and minerals, food additives and supplements, and bottled drinking water, and seeds that germinate into items that are intended to be consumed by and provide nutrition to humans or animals in Iran.” The term “food” does not include alcoholic beverages, cigarettes, gum, or fertilizer. In addition, there are several types of food products that are specifically excluded from eligibility for this general license.

It is important to note that OFAC only authorizes the following payment options for exports made under these general licenses:

1. Payment of cash in advance (i.e., wire transfer);
2. Sales on open account, provided that the account receivable may not be transferred by the person extending the credit; or
3. Financing by third-country financial institutions that are neither U.S. persons nor Government of Iran entities. Such financing may be confirmed or advised by U.S. financial institutions.

Payments by letter of credit (L/C) issued by a bank in Iran or Northern Sudan still requires a specific license to be issued by OFAC. Therefore, if the only way to obtain payment for the products is a L/C issued by an Iranian bank the exporter/beneficiary will still have to apply to OFAC for a specific license.

As with all licensed transactions involving Iran or Northern Sudan, banks included on OFAC’s Specially Designated Nationals List (SDN List) may not be involved in the payment transaction, even if cash in advance or one of the three payment mechanisms listed above is used.

While these new general license will be a useful tool for U.S exporters, exports to Iran and Northern Sudan present a number of logistical and compliance issues. As a result, exporters must closely coordinate these transactions with their freight forwarders, banks and export compliance counsel in order to prevent delays.

Labels: OFAC, Sanctions; Iran, Sanctions; Sudan

The State Department will finally publish in tomorrow’s Federal Register a formal notice regarding the sanctions imposed on seven non-U.S. companies announced on May 24, 2011 for engaging in activity that violated the Iran Sanctions Act of 1996 (ISA), as amended by the Comprehensive Iran Sanctions, Accountability and Divestment Act of 2010 (CISADA).

The sanctioned companies included in the May 24, 2011 announcement were: Associated Shipbroking, Petróleos de Venezuela S.A. (PDVSA); Petrochemical Commercial Company International (PCCI), Royal Oyster Group, Speedy Ship FZC, Tanker Pacific Management (Singapore) Pte. Ltd. and Ofer Brothers Group.

This Notice provides a list of the specific sanctions imposed on each of the named companies. In addition, the Notice specifies, in relation to each sanctioned entity, whether the penalties apply "with respect to [the named company] and not to any subsidiary, affiliate, or shareholder thereof unless separately identified", or alternatively specify that the penalties "also apply with respect to any person in which [the named company] has an interest of fifty percent or more." The two prior Federal Register notices announcing ISA sanctions did not contain this language. This new language is useful to clear up confusion among commercial counterparties, and especially among financial institutions, dealing with affiliates of designated persons.

An important aspect of the formal notice is that the State Department eliminated the sanctions on Israel’s Ofer Brothers Group and replaced them with Allvale Maritime Inc. (based in Liberia) and Société Anonyme Monégasque D’Administration Maritime Et Aérienne (SAMAMA) (based in Monaco), companies that are owned by the Ofer Brothers Group.

A State Department official today admitted that it sanctioned the wrong entity in its May 24th announcement, stating:

"In issuing this clarification, our intent was to sanction the specific entities in the Sammy Ofer shipping organization that were responsible for providing a tanker to Iran. The use of the name ‘Ofer Brothers Group,’ a commonly used trade name, caused confusion for some banks and companies that were trying to comply with U.S. sanctions. The complex nature of the conglomerate's business structure necessitated that we take the time to look closely at these companies in order to ensure that we were identifying the precise legal names of the entities directly responsible for the sanctionable transaction."

The sanctions imposed on PDVSA, Associated Shipbroking, PCCI, Royal Oyster Group, Speedy Ship FZC, and Tanker Pacific Management (Singapore) Pte. Ltd. remain unchanged from the original notice.

Depending on the sanctioned company, these sanctions include a prohibition on: U.S. financial institutions from making loans or providing credits totaling more than $10 million in any 12-month period, obtaining U.S. government contracts, from receiving financing from the Export-Import Bank of the U.S. and from being a part to U.S. export licenses. Crude oil exports from PDVSA to the U.S. are not affected by these sanctions.

To date, the Treasury Department's Office of Foreign Assets Control (OFAC) has not yet provided guidance to financial institutions on how to interpret and apply the prohibition on loans or credits over $10 million in any 12-month period, which has been imposed on five different sanctioned companies since October 2010.

In addition, the Commerce Department's Bureau of Industry and Security (BIS) has not made any public statement on how it intends to implement the export sanctions on PDVSA and other companies. Under ISA export sanctions, the U.S. Government may not issue any specific license and shall not grant any other specific permission or authority to export any goods or technology to the sanctioned companies.

In another interesting development, Tanker Pacific Management (Singapore) Pte. Ltd. (TPM) today issued a press release stating that the ISA sanctions were a result of PM’s role in managing the 2010 sale of the tanker Raffles Park to Coral Light Asset Corp (Panama), an company nominated by the buyers. The statement indicates that due diligence carried out by TPM at the time of the sale included checking OFAC’s SDN List and the buyers did not appear on the list and the company’s due diligence uncovered no evidence that the buyers had any links to Iran. TPM noted that it was later informed by the U.S. Government that the buyers acted as front companies for the Islamic Republic of Iran Shipping Lines (IRISL). The statement also indicates that had TPM been aware that “the buyers were acting on behalf of Iranian interests, this sale would never have gone ahead.”

To address this issue and improve the company’s internal compliance procedures, TPM announced that it has implemented the following enhanced due diligence measures:

• comprehensive risk assessment: we will continue our ongoing comprehensive risk assessment to identify and mitigate areas of potential risk;
• enhanced counterparty screening procedures: we have instituted new procedures including additional pre-transaction due diligence and independent third party screening to assess the profile of potential counterparties more effectively;
• compliance manager: we have recruited a dedicated compliance manager;
• mandatory training programs: we are putting in place robust training programs for all relevant personnel;
• regular compliance procedure reviews: we will conduct ongoing compliance reviews to update our procedures, reflecting changing business operations and evolving legal requirements.

These additional measures serve as a useful guide to other companies on the need to performing additional due diligence on prospective buyers and helping to ensure compliance with ISA/CISADA and other U.S. sanctions programs.

The last page of the Federal Register notice contains a complete list of companies that have been sanctioned under the Iran Sanctions Act. The complete list is as follows:

• Allvale Maritime Inc.
• Associated Shipbroking (a.k.a. SAM)
• Belarusneft (see 76 Fed. Reg. 18821, April 5, 2011);
• Naftiran Intertrade Company (see 75 Fed. Reg. 62916, Oct. 13, 2010).
• Petrochemical Commercial Company International (a.k.a. PCCI)
• Petróleos de Venezuela S.A.
• Royal Oyster Group
• Société Anonyme Monégasque D’Administration Maritime Et Aérienne (a.k.a. S.A.M.A.M.A., a.k.a. SAMAMA)
• Speedy Ship (a.k.a. SPD)
• Tanker Pacific Management (Singapore) Pte. Ltd.

 More information on the Iran Sanctions Act sanctions announced on  May 24, 2011 can be found here.

Labels: Sanctions; Iran

There has been a flurry of sanctions activity under the Iran Sanctions Act, as amended by the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (CISADA).

Yesterday President Obama issued an Executive Order that authorizes OFAC to implement ISA and CISADA related sanctions on parties and individuals that have been determined by the Secretary of State to have violated ISA/CISADA.

Today OFAC announced several sets of ISA/CISADA sanctions on a number of companies. Because ISA and CISADA authorize a wide variety of sanctions to be imposed, the sanctions that are imposed under ISA/CISADA can vary from entity to entity.

ISA/CISADA sanctioned parties are now designated on OFAC's SDN List as [ISA].

As for the specific sanctions, OFAC has added the following three shipping companies to the SDN List for providing shipping services in violation of CISADA:

• ASSOCIATED SHIPBROKING (a.k.a. ASSOCIATED SHIPBROKING S.A.M.; a.k.a. "SAM"), Gildo Pastor Center - Block C 4.20, 7 rue du Gabian, Fontvieille MC 98000, Monaco [ISA]

• ROYAL OYSTER GROUP, ROG Corporate Office, Royal Oyster General Trading LLC, P.O. Box 34299, Dubai, United Arab Emirates [ISA]

• SPEEDY SHIP FZC (a.k.a. SEPAHAN OIL COMPANY; a.k.a. "SPD"), Room 206, 2nd Floor, Building W5B, Dubai Airport Free Zone, P.O. Box 54916, Dubai, United Arab Emirates [ISA]

OFAC also added PETROCHEMICAL COMMERCIAL COMPANY INTERNATIONAL (PCCI) to the SDN List for CISADA violations, but that company was already on the SDN List due to other Iran-related sanctions.

In the event that any U.S. accounts need to be blocked as a result of these designations, the procedures in the Iran Financial Sanctions Regulations (31 CFR Part 561) need to be followed.

In addition, for the first time OFAC is implementing targeted sanctions under CISADA on the following two companies located in Singapore and Israel:

• Ofer Brothers Group, Ramat Aviv Tower, 40 Einstein St., P.O.B #11, Tel Aviv, 69102 Israel; MATAM Haifa, 9, Andre Saharov St., P.O.B #5090, Haifa, 31905 Israel

• Tanker Pacific Ship Management (a.k.a Tanker Pacific), Headquarters (Singapore), Tanker Pacific Management (Singapore) Pte Ltd, 1 Temasek Avenue, #38-01,Millenia Tower, Singapore 039192

U.S. financial institutions are now prohibited from making loans or providing credits totaling more than $10,000,000 in any 12-month period to these two companies unless the activity is associated with the relief of human suffering and the loans or credits are provided for such activities. However, it is important to note that these companies are not being added to the SDN List and there is no need to block any property or funds in U.S. accounts.

Finally, today the U.S. imposed sanctions on the Venezuelan state-owned oil company PDVSA for shipping refined petroleum to Iran. However, the sanctions are limited in scope and prohibit PDVSA from competing for U.S. government procurement contracts, from getting financing from the Export-Import Bank of the U.S. and from obtaining U.S. export licenses. Crude oil exports by PDVSA to the U.S. are not affected.

This new “mix and match” sanctions approach under ISA/CISADA will make it difficult for banks and companies to monitor the type of activity that is permissible or not.

Labels: Sanctions; Iran

Yesterday the U.S. imposed sanctions on a number of entities and indviduals under the Iran, North Korea and Syria Nonproliferation Act (INKSNA).

The sanctioned entities are:

• Belarusian entities – Belarusian Optical Mechanical Association and BelTechExport;
• Chinese entities and individuals – Mr. Karl Lee, Dalian Sunny Industries, Dalian Zhongbang Chemical Industries Company, and Xian Junyun Electronic
• Iranian entities and individuals – Milad Jafari, Defense Industries Organization, Islamic Republic of Iran Shipping Lines (IRISL), Islamic Revolutionary Guard Corps Qods Force, SAD Import-Export Company, and Shahid Bakeri Industries Group
• North Korean entity – Tangun Trading
• Syrian entities – Industrial Establishment of Defense and Scientific Studies and Research Center
• Venezuelan entity – Venezuela Military Industries Company

Sanctions were imposed on these entities as provided in the INKSNA because there was credible information indicating that they had transferred to or acquired from Iran, North Korea, or Syria equipment and technology listed on multilateral export control lists (Australia Group, Chemical Weapons Convention, Missile Technology Control Regime, Nuclear Suppliers Group, Wassenaar Arrangement) or otherwise having the potential to make a material contribution to WMD or cruise or ballistic missile systems.

The sanctions apply to the specific entities above and will be in effect for two years. The sanctions do not apply to these entities’ respective countries or governments.

The sanctions that will be imposed on the entities and individuals listed above consist of the following:

• No department or agency of the U.S. Government may procure, or enter into any contract for the procurement of, any goods, services or technology from these entities;
• No department or agency of the U.S. Government may provide any assistance to these entities and they shall not be eligible to participate in any assistance program of the U.S. Government;
• U.S. Government sales of any item on the U.S. munitions list (USML) to any of these entities are prohibited, and sales of any defense articles, defense services or design and construction services controlled under the Arms Export Control Act are terminated; and
• New licenses will be denied and any existing licenses suspended, for transfer to these entities of items controlled under the Export Administration Act of 1979 or Export Administration Regulations.

Labels: North Korea, Sanctions; Iran, Sanctions; Syria

Yesterday, the U.S. Department of State announced that the U.S. will impose sanctions on Belarusneft, a state-owned Belarusian energy company, under the Iran Sanctions Act (ISA) of 1996 as amended by the Comprehensive Iran Sanctions, Accountability, and Divestment Act (CISADA) of 2010, for its involvement in the Iranian petroleum sector. According to the State Department, Belarusneft entered into a $500 million contract with the NaftIran Intertrade Company in 2007 for the development of the Jofeir oilfield in Iran.

The sanctions that will be imposed on Belarusneft include:

1. Denial of U.S. Export-Import Bank assistance in approving, guaranteeing, insuring, extending credit, or participating in the extension of credit regarding the export of any goods or services to Belarusneft;

2. Denial of U.S. government licenses or other approvals required to export or reexport goods or services to Belarusneft;

3. Prohibition of loans or credits to Belarusneft by U.S. financial institution totaling more than $10 million in any twelve-month period, unless the loans or credits are provided to relieve human suffering; and

4. Prohibition on the U.S. Government procuring, or entering into any contract for the procurement of, any goods or services from Belarusneft.

Because Belarusneft is a subsidiary of Belneftekhim and was already to subject to OFAC sanctions, the sanctions imposed under the ISA and CISADA are not likely to impact most U.S. companies. However, as a State Department spokesman indicated, this announcement "sends a message to our partners in Europe as well that this is a company that we've decided to sanction. And I'm sure they have access or would seek access into European markets." 

Because several members of Congress have expressed concern over the Obama Administration's implementation of CISADA, the State Department is likely to announce further Iran-related sanctions in the coming months.

For example, in response to the State Department's announcement Representative Ileana Ros-Lehtinen (R-FL), Chair of the House Foreign Affairs Committee, said that that "the conspicuous absence of any sanctions on Russian and Chinese companies, despite their longstanding involvement in Iran, is deeply troubling." She also noted that in addition "to going after the low-hanging fruit like Belarusneft, the State Department must impose sanctions against energy giants that continue to do business with Iran.”

Labels: Sanctions; Iran, State Department

Last week the U.S. Department of the Treasury Office of Foreign Assets Control (OFAC) announced the addition to the List of Specially Designated Nationals (SDN List) 24 shipping companies affiliated with the Islamic Republic of Iran Shipping Lines (IRISL) and two entities that are subordinates of Iran’s Aerospace Industries Organization (AIO) because of their alleged role in proliferation activities.

The following entities were added to the SDN List pursuant to the authority of Executive Order 13382, which is aimed at freezing the assets of proliferators of weapons of mass destruction and their supporters:

• Four Hong Kong based shipping companies – Starry Shine International Limited, Ideal Success Investments Limited, Top Glacier Company Limited, and Top Prestige Trading Limited – for being owned and managed by Ahmad Sarkandi and Ghasem Nabipour, two individuals designated by Treasury in October 2010 for acting for or on behalf of IRISL.

• Sixteen shipping companies, each based at the same address in Hong Kong, for being owned or controlled by IRISL or affiliated entities. In late 2009, these sixteen companies became the owners of a series of vessels, each of which is already identified on OFAC's SDN List, that were previously owned by the four Hong Kong companies listed above.

• Four shipping companies in the Isle of Man that that share the same address with eight previously-designated shipping companies wholly-owned by IRISL, for being owned or controlled by IRISL or IRISL front companies.

• Shahid Ahmad Kazemi Industries Group, a subordinate to AIO that is responsible for the development and production of surface-to-air missiles. It is suspected of soliciting foreign technology for Iran’s missile programs and participating in North Korea's missile-related programs. North Korea has provided significant assistance to Iran in its development of ballistic missiles and missile technology.

• M. Babaie Industries, also linked to Iran’s WMD proliferation efforts and suspected of soliciting foreign technology for Iran’s missile programs, was designated for being owned or controlled by, or acting for or on behalf of AIO.

In September 2008 the U.S. added IRISL and its fleet of vessels to the SDN List because of its role in supplying Iran’s weapon programs. In an effort to evade these sanctions IRISL started renaming the vessels and changing their ownership. The Wisconsin Project on Nuclear Arms Control's Iran Watch program has issued a report describing IRISL's renaming efforts and containing a chart showing the old and new name and owner of IRISL's vessels.

Labels: OFAC, Sanctions; Iran

CNBC is running a series entitled "Forbidden Zone: Investing in Iran" that discusses business in Iran.

Yesterday's first report discussed the wide availability of American products available in Iran's Kish Island, despite U.S. sanctions.

Today's report discusses some U.S. companies that are still operating legally in Iran via non-U.S. subsidiaries or through specific licenses issued by OFAC. The report includes an interview with Stuart Levey, Undersecretary of Treasury for Terrorism and Financial Intelligence, who oversees the Treasury Department's sanctions efforts.

Labels: Sanctions; Iran

The AWA Foreign Trade Academy is holding two one-day programs on U.S. export controls and sanctions on January 17 and 18, in Frankfurt, Germany.

The first day of the program will focus on what European companies need to know about ITAR and U.S. defense trade controls.

The second day of the program will feature information on U.S. dual-use export/reexport controls and economic sanctions programs and their impact on European companies, including information on recent export controls and sanctions developments from BIS and OFAC.

Further information on these programs, including the agenda for each day, speaker bios and registration information, can be found below.
AWA ITAR-Export Controls Programs

Labels: BIS, ITAR, OFAC, Sanctions; Iran

This weekend the Treasury Department unveiled a redesigned website. While that is not exactly news, the redesign process has changed the way that the website's files are structured, leading to some significant changes in the web address (URL) of commonly used websites, including the Office of Foreign Assets Control (OFAC) and the Specially Designated Nationals (SDN) List. As a result of these changes, it will be necessary for exporters, financial institutions and others that refer to the OFAC website to update their bookmarks and links to common OFAC resources.

Access to OFAC's main website and related information now appears in the "Resource Center" tab at the top of the page. After scrolling to "Resource Center" click "Financial Sanctions" on the drop down menu. This will take you the main OFAC website here:

Direct links to the SDN List and other OFAC resources can be accessed from this page.

Here is a list of the new URLs for common OFAC resources:


SDN List: http://www.treasury.gov/resource-center/sanctions/SDN-List/Pages/default.aspx

Information on OFAC's Sanctions Programs: http://www.treasury.gov/resource-center/sanctions/Programs/Pages/Programs.aspx

Civil Penalties and Enforcement Information: http://www.treasury.gov/resource-center/sanctions/CivPen/Pages/civpen-index2.aspx

As a result of these changes, it will be necessary for BIS to update the link to the SDN List that is included on the agency's "List to Check" page.

Note that the links to information on OFAC's Iran sanctions program are not correct and currently lead to information on sanctions imposed on the Democratic Republic of the Congo. Treasury's web development team should be updating the Iran-related links soon.

Update: OFAC has now corrected the links and other information on the Iran sanctions program page.

Labels: OFAC, Sanctions; Iran

The Department of the Treasury's Office of Foreign Assets Control (OFAC) published a final rule in today's Federal Register amending the Iranian Transactions Regulations (ITR) to prohibit the importation into the U.S. of foodstuffs and carpets of Iranian origin starting tomorrow, September 29, 2010.

As we previously reported, this final rule is required to implement the import prohibitions contained in section 103 of the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 that was enacted by Congress on July 1, 2010.

Prior U.S. law authorized the importation into the U.S. of foodstuffs from Iran that are classified under chapters 2-23 of the Harmonized Tariff Schedule of the United States (HTS) (such as pistachios and non-beluga caviar). In addition, the importation of carpets and other textile floor coverings of Iranian origin that are classified under chapter 57 or heading 9706.00.0060 of the HTS were also authorized.

However, as a result of the change to the ITRs issued today any Iranian food or carpets must be entered by U.S. Customs and Border Protection by midnight tonight. OFAC has stated that the agency will not issue any specific licenses authorizing any imports after that date, even if the goods were in transit or were at the port.

Efforts to import Iranian origin foodstuffs and carpets on or after September 29, 2010 can lead to significant civil and criminal penalties. For example, civil penalties of up to $250,000 or twice the amount of the transaction that is the basis of the violation can be imposed administratively. Criminal penalties of up to $1,000,000 in fines and imprisonment for up to 20 years can be imposed for willful violations of the Iranian Transaction Regulations.

Labels: Sanctions; Iran

Citing news reports outlining apparent violations of the recently enacted Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (CISADA), U.S. Reps. Mark Kirk (R-Ill.) and Ron Klein (D-Fla.) recently sent a letter to President Obama asking the Administration to immediately enforce the law.

The letter noted that "Although we are encouraged by recent reports of international companies voluntarily exiting the Iranian energy market, it appears that a number of firms -- such as Russia's LUKOIL -- continue to supply Tehran with refined petroleum products." The letter indicates that LUKOIL has a significant business presence in the U.S. and concludes by stating that no "company should be allowed to skirt the Iran Sanctions Act. Therefore, we ask you to enforce the law and hold companies like LUKOIL accountable without delay."

A copy of the Kirk/Klein letter to President Obama can be found here.

Representative Kirk is the Republican nominee for President Obama's former Senate seat in Illinois.

Labels: Sanctions; Iran

OFAC's Iranian Transactions Regulations currently contain a general license authorizing the importation into the U.S. of foodstuffs from Iran that are classified under chapters 2-23 of the Harmonized Tariff Schedule of the United States (HTS) (such as pistachios and non-beluga caviar (which is prohibited by other aspects of law). In addition, the importation of carpets and other textile floor coverings of Iranian origin that are classified under chapter 57 or heading 9706.00.0060 of the HTS are also authorized.

However, due to the additional Iran sanctions recently passed by Congress, OFAC will soon issued a regulation amending the Iranian Transaction Regulations to eliminate the general license and such imports will be no longer permitted starting on September 29, 2010. OFAC has also indicated that any authorized Iranian products must be imported by September 28, 2010 and it will not issue any specific licenses authorizing any imports after that date. As a result, importers must move quickly to ensure that any pending orders are entered for consumption by their customs brokers by September 28, 2010.

Attempts to import Iranian origin foodstuffs and carpets after September 28th can lead to significant civil and criminal penalties. For example, civil penalties of up to $250,000 or twice the amount of the transaction that is the basis of the violation can be imposed administratively. Criminal penalties of up to $1,000,000 in fines and imprisonment for up to 20 years can be imposed for willful violations of the Iranian Transaction Regulations.

Guidance Regarding Import Prohibitions Imposed by the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010

On July 1, 2010, the President signed into law the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (the “Act”), which, among other things, prohibits the importation of Iranian-origin goods and services into the United States, effective 90 days after the Act’s date of enactment. No exception to this prohibition may be made for the commercial importation of Iranian-origin goods described in section 560.534(a) of the Iranian Transactions Regulations (31 C.F.R. Part 560). The Office of Foreign Assets Control cannot authorize by general or specific license the commercial importation of such Iranian-origin goods (which include certain foodstuffs and carpets) on or after September 29, 2010. Consequently, the general license in section 560.534 of the ITR will be eliminated by September 29, 2010, and any such goods for commercial importation into the United States must be entered for consumption before that date.

Labels: Sanctions; Iran

Congressman Howard L. Berman (D-CA), Chairman of the House Foreign Affairs Committee, and Congresswoman Ileana Ros-Lehtinen (R-FL), the Ranking Republican Member of the Committee, today announced that they have initiated a bipartisan Working Group on Iran Sanction Implementation.

The purpose of the working group is to help ensure that U.S. and international sanctions on Iran are fully implemented, effectively enforced and, ultimately, have the intended effect of bringing about Iran’s termination of all activities contributing to its pursuit of a nuclear weapons capability.

The bipartisan Working Group on Iran Sanctions Implementation will meet on a regular basis with Obama Administration officials, foreign ambassadors and outside experts to oversee and verify enforcement of Iran sanctions implementation.

The House Foreign Affairs Committee will hold a hearing this fall on Iran sanctions implementation. Last Thursday, July 29, 2010, the House Committee on Oversight and Government Reform held a similar hearing entitled, "Implementation of Iran Sanctions" The hearing examined the implementation of Iran sanctions, including efforts to discourage companies from doing business with Iran as long as Iran continues to work on developing nuclear weapons and supports terrorism.
 

Labels: Sanctions; Iran

The U.S. Department of the Treasury today added 21 entities to the Specially Designated Nationals List that were determined by the U.S. to be owned or controlled by the Government of Iran.

These 21 entities, which included including banks, insurance firms, mining concerns, investment firms and technology companies, are located in Japan, Germany, Italy, Belarus, Luxembourg and Iran.

According to the Treasury Department, "today's identifications will mitigate the risk that such entities pose to legitimate transactions." This is because OFAC's Iranian Transactions Regulations (31 CFR Part 560) prohibit transactions between U.S. persons and the Government of Iran.

The complete list of entities identified today as owned or controlled by the Government of Iran can be found here.

Labels: Sanctions; Iran

The Government of Japan today enacted new sanctions on Iran. A summary of the new sanctions can be found here. 

Registration is now open for SIA's Fall ITAR Conference to be held in Washington, DC on November 15 and 16, 2010.

Danish and Japanese companies deny violating U.S. sanctions on Iran.

Reuters: Iran feels sanctions heat at UAE ports.

Texas resident arrested for attempting to export night vision sights to Russia. Further details on this unusual case can be found here and here.

Educational Testing Service (ETS) announced last week that resumed registrations in Iran for its TOEFL® and GRE® tests. The brief suspension was the indirect result of tighter U.N. Security Council restrictions on financial transactions involving Iran, which resulted in ETS's banking arrangements being discontinued. Students wishing to take the tests may register through Iran's National Organization of Educational Testing, or with credit/debit cards issued by banks that are not prohibited under U.N. or U.S. sanctions. ETS has permission from the Office of Foreign Assets Control (OFAC) of the U.S. Department of the Treasury to conduct its testing business in Iran.

Bangkok Post: Thailand is in the process of implementing a dual-use export control regime. 

FCPA Professor: The FCPA's Long Tentacles (discusses impact of FCPA investigations on mergers and acquisitions).

The U,K.'s Financial Services Authority today fined members of the Royal Bank of Scotland Group £5.6m for failing to have adequate systems and controls in place to prevent breaches of UK financial sanctions.

Labels: Export Controls, FCPA, Sanctions; Iran

Miscellaneous Tariff Bill - The House of Representatives is expected to consider the Miscellaneous Tariff Bill (now known as the U.S. Manufacturing Enhancement Act) (HR 4380) today. The bill will be considered under the suspension of the rules provision, which means that the bill may not be amended and requires a two-thirds vote for passage. The National Association of Manufacturers has sent a Key Vote letter to House members urging passage of the bill.

AM Update: After 40 minutes of debate this morning, the final vote on HR 4380 was postponed due to request for recorded vote. Under the suspension rules, any request for the yeas and nays results in a postponement of the final vote.

PM Update: In a surprise move the House passed the Miscellaneous Tariff Bill (HR 4380) this afternoon by a vote of 378 to 43. AP story here. NAM statement on passage here.

Iran Sanctions - The Washington Post reports that Iran's ability to ship vital goods has been significantly curtailed due to the insurance and other sanctions contained in the recently enacted Comprehensive Iran Sanctions, Accountability, and Divestment Act (CISADA) of 2010 (H.R. 2194).

North Korea Sanctions - While no details have been released, Secretary Gates and Secretary Clinton announced today that the U.S. will impose additional sanctions on North Korea. The sanctions are likely aimed at disrupting North Korea's weapons and contraband trade and targeting the finances of the Pyongyang regime.

Update: The State Department announced that the additional sanctions will include:

• Further State and Treasury designations of North Korean entities and individuals supporting proliferation, subjecting them to an asset freeze; 
• New efforts with key governments to stop North Korean trading companies engaged in illicit activities from operating in those countries and prevent their banks from facilitating these companies’ illicit transactions; 
• Expanding cooperation to prevent the travel of individuals designated under the Security Council resolutions, as well as other key North Korea proliferators; 
• Greater emphasis on North Korea’s repeated abuse of its diplomatic privileges in order to engage in activities banned by the Security Council, and expanding cooperation with countries so that they will not choose to purchase banned items from North Korea or to sell North Korea proliferation-related goods.

Export Controls/Diversion Hearing - The House Foreign Affairs Committee's Subcommittee on Terrorism, Nonproliferation and Trade will hold a hearing tomorrow on "Transshipment and Diversion: Are U.S. Trading Partners Doing Enough to Prevent the Spread of Dangerous Technologies?"  The witnesses include Assistant Secretary for Export Administration Kevin Wolf and Vann H. Van Diepen, Acting Assistant Secretary at the State Department's Bureau of International Security and Nonproliferation.
  
Foreign Manufacturers Legal Accountability Act of 2010 - The House Committee on Energy and Commerce reported favorably an amended version of H.R. 4678 by a vote of 31 to 22. The bill requires foreign manufacturers of certain products imported into the U.S. to establish registered agents to accept service of process. While the amendments passed today addressed a number of industry concerns with the bill, the bill is likely to be opposed by a number of trade associations. The full text of the amended version of the bill can be found here.

Conflict Minerals Disclosure and Certification - Section 1502 of the the financial reform bill (H.R. 4173) signed into law by President Obama today included a provision aimed at trying to reduce the use of conflict minerals mined in the Democratic Republic of the Congo. The provision states that the SEC must issue regulations requiring publicly traded companies to disclose annually whether conflict minerals are necessary to the functionality or production of their product and to certify that the measures taken by the company to verify the source of those minerals is not the Democratic Republic of the Congo or adjoining countries. The provision defines "conflict minerals" as columbite-tantalite (coltan), cassiterite, gold, wolframite, or their derivatives. This provision will impact a wide range of publicly traded manufacturing companies, including those using Congolese tantulum to produce electronics products, and those using tin and gold.

Labels: North Korea, Sanctions; Iran, State Department