What are the most common types of sanctions that you see?
OFAC Attorney: OFAC’s main sanctions program in terms of resources expended is the Iran sanctions program. It is the most comprehensive sanctions program and has several overlapping legal authorities because of Iran’s position in the world as a threat in terms nuclear non-proliferation, threats to global terrorism, and other related national security issues. OFAC expends a lot of its resources in administering, implementing, and enforcing the Iran sanctions.
What are country-based sanctions and how does a country end up being targeted?
OFAC Attorney: Country-based sanctions are different from smart sanctions. Country-based sanctions target not just the government of a certain country, but anybody that resides in that country, any business that is formed in that country, and any subsidiary of a business that is located in that country. It broadly prohibits transactions with any of those entities. A country is targeted depending on the national security and foreign policy objectives of the United States. Prior to targeting a nation for sanctions, the President must usually declare a national emergency. Once that declaration is made, the President can invoke broad legal authorities to address the emergency. For example, Iran has a track record of carrying out human rights abuses, supporting global terrorism, and manufacturing weapons of mass destruction. It is also considered an emerging nuclear threat. Given those national security and foreign policy circumstances, the U.S. government had deemed it appropriate to apply very broad country-based sanctions against Iran.
Can the sanctions ever be lifted?
OFAC Attorney: Yes. Sanctions can be lifted when the national security and foreign policy circumstances change or the objectives of the United States change. The most recent example of country-based sanctions being lifted would be the Burma sanctions, which were lifted because of the good work and positive developments in Burma related to its democratic elections and providing rights to minority groups. After much consideration, the United States determined it was appropriate to lift country-based sanctions.
Which countries currently have sanctions against them?
OFAC Attorney: Right now, country-based sanctions exist against Iran, Cuba, Sudan, Syria, and North Korea. Some of these sanctions programs are implemented pursuant to the same legal authorities, so they also have similar exceptions and exemptions. However some countries, like Cuba, are legally premised on older, and more restrictive laws. For example, U.S. persons are allowed to travel to Iran or North Korea even though there are U.S. sanctions levied against them. But because Cuba’s sanctions were implemented pursuant to the Trading with the Enemy Act (TWEA), the restrictions even apply to travel. People cannot go to Cuba without first getting proper authorization from the United States.
Do country-based sanction programs all prohibit the same things?
OFAC Attorney: Most of them do. When dealing with country-based sanctions, it is safe to assume that whatever an individual is trying to do is prohibited. Working forward from that assumption, an attorney can investigate the law and see if an exemption applies. There are usually exemptions for personal communications, informational materials, and sometimes for travel. I always begin with the assumption that everything is prohibited and then investigate the law to see if a specific rule applies that will let the person or organization do what they are trying to do. Then you would want to see if any general licenses apply. Next, you would want to examine whether there are any favorable statements of licensing policy for the proposed transaction. And finally, you would want to make a determination as to whether OFAC will specifically license the proposed transaction if no other provision of law or statements of licensing policy apply.
What are common areas of business that might run into country-based OFAC sanctions?
OFAC Attorney: There is a very broad range of businesses that could run into these sanctions. There are many ways in which a business could get caught up in an OFAC violation or be exposed to the potential for violation. One example might be an import-export business that is exporting U.S. goods. If the end user of those goods ends up being in Iran, the U.S. exporter has caused a violation. Even if the goods go through a third country, it is considered a violation for the U.S. business.
There are also a lot of Iranian nationals who operate in places such as Dubai or Turkey that U.S. persons have to be cautious of because those people are evading sanctions and buying goods in Turkey to take them back to Iran. Legally, it does not matter that the U.S. person did not know of the subsequent transfer to Iran; there is strict liability for that type of offense. OFAC can bring an investigation against the person and they can be held liable.