Frequently Asked Questions about the Iran Sanctions
February 9, 2016
By Tina Monshipour Foster and Caitlin Steinke, Law Firm of Tina Foster
The Iran sanctions generally prohibit US persons from importing from, exporting to, or transacting with Iran. This article identifies some of the major prohibited transactions, as well as some exemptions. This article does not provide an exhaustive list of the transactions that are prohibited or permitted under the Iran sanctions.
Who are US persons?
“US persons” includes
- All US citizens and legal permanent residents, no matter where they are located
- All individuals and entities within the United States
- All US-incorporated entities and foreign branches
- Non-US entities that are owned or controlled by a US person.
What Iranian goods can I bring into the United States?
There are five categories of goods of Iranian origin that can be imported into the United States:
- Gifts valued at $100 or less
- Information and informational materials
- Household and personal effects, of persons arriving in the United States, that were actually used abroad by the importer or by other family members arriving from the same foreign household, that are not intended for any other person or for sale, and that are not otherwise prohibited from importation
- Accompanied baggage for personal use that is normally incident to travel
- Iranian-origin carpets and foodstuffs
Can I bring Iranian movies into the United States, or send American magazines to Iran?
Yes. Information and informational materials may be imported from, and exported to, Iran. This includes publications, films, posters, phonograph records, photographs, microfilms, microfiche, tapes, compact disks, CD ROMs, certain artwork, and certain news wire feeds. In order to qualify as “information and information materials,” the materials must be fully created and in existence before they are imported or exported.
What should my business be aware of before importing Iranian pistachios?
The Joint Comprehensive Plan of Action (JCPOA), also known as the Iran Nuclear Deal, allows US persons to engage in the importation of Iranian-origin foodstuffs, including pistachios and caviar. While US persons will be permitted to import Iranian foodstuffs into the United States without requesting specific authorization from OFAC, such goods will still be subject to all other laws and regulations governing goods imported into the United States (such as those administered by the Departments of Agriculture or Commerce, the Food and Drug Administration, and Customs and Border Protection). Additionally, the importation of Iranian foodstuffs cannot involve debiting or crediting an Iranian bank account. Therefore, while the general license permits US persons to purchase such goods from Iran, it does not make it easy to do so. US individuals and organizations should consult with an attorney familiar with US-Iran sanctions law before engaging in any proposed transaction, as criminal and civil penalties may still be imposed for violations of OFAC sanctions that are not properly authorized by this license.
Can I donate food to Iran?
Yes. The export of humanitarian aid is one of the major exemptions within the Iran sanctions program. There is a general license that permits the export of goods intended to relieve human suffering (such as food and clothing). If you wish to donate professional medical services, you need to apply to OFAC for a specific license.
Can my organization participate in a human rights conference in Iran?
Yes, but only if you are authorized to do so by a specific license. OFAC issues specific licenses to NGOs and other corporate entities for activities that support democracy and human rights in Iran, such as conferences, training, and establishing or supporting independent civic organizations. OFAC also issues specific licenses to individuals and entities for academic, cultural, and sports exchange programs. OFAC will only authorize participation in activities designed to directly benefit the Iranian people.
Can I use a third country to indirectly import prohibited goods or services into the United States, or use a third country to indirectly export prohibited goods, services, or technology to Iran?
No. The ban on imports and exports includes direct and indirect transactions. This means that if you wouldn’t be able to do it directly – between the United States and Iran – you are also not able to do it indirectly by using a third country to act as a buffer. “U-turn” transfers – whereby a US bank authorizes or processes a transfer involving Iran, but which originates and ends with non-Iranian foreign banks – are also prohibited, with very few exceptions.
Are my company’s foreign subsidiaries subject to OFAC regulations?
For purposes of the Iran sanctions, non-US entities that are owned or controlled by a US person (ie. foreign subsidiaries of US companies) are considered US persons. However, OFAC has issued a general license authorizing US-owned or –controlled foreign entities to engage in certain transactions involving Iran that would otherwise be prohibited by the sanctions still in place. These activities must be consistent with the JCPOA and applicable US laws and regulations. In order to be considered a US-owned or –controlled foreign entity for purposes of this new general license, the US person that owns or controls the foreign entity must meet one of the following criteria: (1) hold a 50% or greater equity interest by vote or value in the entity, (2) hold a majority of seats on the board of directors of the entity, or (3) otherwise control the actions, policies, or personnel decisions of the entity.
There are several transactions that are not permitted by this new general license, including any transfer of funds to, from, or through a US bank. This new general license is especially complex, and US-owned or –controlled foreign entities should consult with an experienced OFAC attorney before engaging in otherwise-prohibited transactions with Iran.
I live outside the United States, but not in Iran. Can I help broker a deal between two foreign companies to sell goods to Iran?
US persons, wherever they are located, (as well as anyone within the United States) are generally prohibited from brokering offshore transactions that benefit Iran or the Iranian government. This includes any transaction involving the sale of foreign goods, or arranging for third-country financing. Importantly, US persons may not approve, finance, facilitate, or guarantee any transaction by a foreign person if that transaction would be prohibited if performed by a US person or from within the United States.
The JCPOA created one exception to this rule: US persons may engage in activities related to the establishment or alteration of operating policies and procedures of a US entity or a foreign subsidiary of a US entity, to the extent necessary to allow the foreign subsidiary to engage in authorized transactions with Iran. However, while US persons can be involved in making the decision to allow foreign subsidiaries to engage in business with Iran, and creating the relevant policies and procedures to ensure that US persons are excluded from those activities, US persons are still prohibited from being involved in the the business transactions themselves.
What if I am not sure if a particular transaction is prohibited or not?
Even if you intend to engage in a transaction that you believe is permitted, it is highly recommended that you first seek confirmation from an experienced OFAC attorney or submit a request for interpretive guidance to OFAC. Conversely, an attorney may be able to help you secure a specific license for an otherwise prohibited transaction. It is important to remember that certain transactions are only permitted if they are authorized by OFAC through a specific license. Given the serious consequences for violating OFAC regulations, you cannot be too cautious when it comes to transactions with Iran.
This article provides only general information, and is not intended as legal advice. Please consult with an attorney for guidance on specific legal matters.