Posts Tagged OFAC Compliance

OFAC Provides More Insight Into New Sanctions Effective July 1, 2013

The United States Department of the Treasury’s Office of Foreign Assets Control (OFAC) has issued additional guidance concerning sanctions targeting Iran that went into effect today. That guidance is as follows:

1. To the extent that a shipping company transacts with port operators in Iran that have been identified as such under the Iran Freedom and Counter Proliferation Act (IFCA) and payments are limited strictly to routine fees including port dues, docking fees, or cargo handling fees, paid for the loading and unloading of non-sanctioned goods at Iranian ports, such transactions would not be considered significant transactions for the purposes of the IFCA. However, non-routine and/or large payments or fees that materially exceed standard industry rates could expose a person to sanctions under that authority, as could providing any port operator in Iran with any significant financial, material, technological, or other support.

2. The sanctions that went into effect today targeting Iran’s auto sector do not make sanctionable the export of finished vehicles to Iran if no further assembly or manufacturing is required. Therefore, parties can export fully assembled and finished vehicles to Iran for sale by a non-sanctioned Iranian dealer or distribution network and not face sanctions under the new authority. This, of course, does not include U.S. origin vehicles. On the other hand, “auto kits” exported to Iran for assembly in Iran would be considered goods or services used in connection with the automotive sector of Iran and the export of such kits to Iran would be sanctionable if the transaction is significant.

3. While, goods or services for the maintenance of finished vehicles exported to Iran would generally not be considered significant goods or services used in connection with the automotive sector of Iran, the export, sale, or distribution of goods (e.g., auto parts and accessories) or services that would contribute to Iran’s ability to manufacture or assemble vehicles, or manufacture original equipment and after-market parts in Iran could create exposure to sanctions. Persons exporting parts and services to Iran for the maintenance or upkeep of finished automobiles, and foreign financial institutions facilitating such exports, should exercise caution to ensure that the parts or services are not diverted for the manufacturing or assembly of vehicles in Iran or the manufacturing of original equipment or after-market parts in Iran, and are used only for maintenance and upkeep.

Anyone having further questions regarding this guidance would be wise to contact a qualified OFAC attorney for further guidance.

The author of this blog is Erich Ferrari, an attorney specializing in OFAC matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrariassociatespc.com.

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