What types of activity are prohibited by Iran’s country-based sanctions?
Interviewee: Virtually all transactions with Iran are prohibited. There are exceptions for a handful of transactions that are either exempt from the sanctions or that are generally licensed pursuant to particular general licenses that are in the regulations or that appear on OFAC’s website. I always start with the assumption that everything is prohibited, and then I look at the regulations. I might find that transactions related to humanitarian goods are authorized, or that the exportation of food, medicine, and medical devices are authorized in certain circumstances. There are general licenses that are exceptions to the rule, but, generally, almost all transactions with Iran are prohibited.
How would someone know if they are violating OFAC sanctions on Iran?
Interviewee: Due diligence is the best way to avoid a violation. That due diligence should ideally be done before the person carries out a transaction, but business moves fast so sometimes people perform due diligence after the fact. In such a situation, a person will discover the violation themselves and will have to decide whether or not to self-report the violation to OFAC. Otherwise, a person can find out that they are violating the sanctions when they receive an administrative subpoena from OFAC alleging that a violation has occurred.
With respect to due diligence, one would want to make sure that none of the persons that they are dealing with are residing in Iran and that none of the goods that they are exporting are being re-exported to Iran through a third country. The U.S. company or person has an obligation to investigate such facts because OFAC violations are strict liability offenses. One effective way to investigate the facts is to ask your customers background questions and to train your employees. Maintaining a comprehensive and well-audited sanctions compliance program is also helpful. In an audit, the company will undertake a transaction that is designed to look like a violation and see if its employees stop it and flag it appropriately in accordance with the compliance program. If the audit fails, then there is a good chance that the company has carried out a violation in the past, so they would want to hire an attorney or an investigator to look at their prior transactions and to rework the compliance program so it is more effective.
Do the Iran sanctions include Iranian nationals who are in third countries?
Interviewee: That depends on several factors. The primary factor is whether or not the person ordinarily resides in Iran. If the person is normally a resident of Iran, then the U.S. person is prohibited from transacting with that person and exporting goods, services, or technology to them. They also need to be cautious of the person returning to Iran with the things that they exported because that could be a violation. If a person exported satellites to someone who is an Iranian national living in Germany, and the Iranian national takes those satellites to Iran with them, that is a violation on the part of the U.S. satellite manufacturer or the person who exported them. It all depends on the facts of the situation.