How is the Sanctions Landscape Looking These Days?

It’s been a long time since my last post.  People often come up and ask what has been going on recently with respect to sanctions matters.  This of course is an open-ended question.  Syria has been in the news as have other countries, but of course given that Iran has been the topic du jour for over the past year now (only to heighten in importance these coming weeks), I figured I’d post this quick rehash of what has been going on.

1. The Iran laws have stayed the same.  Indeed the value of the Iranian Rial has absolutely plummeted, but that really cannot possibly be due to any new sanctions issues, right? Exactly, the legal landscape is still the same. What is constantly changing is the logistical landscape – activities that are legal become increasingly challenging. It’s amazing how much banks and other companies have to learn in terms of what types of transactions are possible and which ones are not. A lot of “good” gets weeded out with the “bad,” and that’s where folks like yours truly come in, explaining the laws to those who don’t know them. 

2. General License C for the Iranian earthquake. Late in August, OFAC issued a general license allowing certain charitable organizations in the U.S. to each raise and transfer up to $300,000 for victims of the August earthquake in Iranian Azerbaijan. This general license is aimed at making the transfer of humanitarian aid easier, although there are certain strings attached, including a reporting requirement.

Basically, the licensing regimes for basic dealings in Iran and certain types of funds transfer (remember, not all funds transfers necessarily require specific licenses from OFAC) remain the same. Turnover time at OFAC seems to be increasing, however, and while I used to tell clients they’d likely have to wait 2.5-4 months, I’m finding myself giving longer estimates now. 

Interpreting the New US Sanctions on Iran

President Obama signed into effect the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 on July 1.  Just when you thought the United States had exhausted all its recourse against the Islamic Republic of Iran (due to very comprehensive, existing sanctions), a new legal framework has been implemented that makes full use of the U.S.’ economic prowess and influence over third countries.  I was quoted on this law in the Financial Times on July 14, 2010.  Click here for a link to the article.  The Los Angeles Times has also quoted me – click here.

How Does the Bill Affect Iran?

As mentioned above, the United States maintains comprehensive unilateral sanctions on Iran, preventing U.S. persons (as defined in the applicable regulations) from engaging in transactions for the provision of most goods and services to Iran.  As the United States has fewer levers to pull given the breadth of the current sanctions, Congress did the next best (and possibly better) thing – implementing sanctions on third country entities that assist or do business with Iran in key sectors, such as the country’s nuclear, finance, and energy sectors, not to mention the Islamic Revolutionary Guards Corps (IRGC) and related entities.

What’s Covered?

The new bill covers a range of entities and activities. Additionally, it requires that the administration periodically collect data on Iranian business done by G20 nations.  Notably, human rights play a key role as well – with the placement of sanctions on individuals responsible for human rights violations in Iran following that country’s June 2009 presidential elections.

A summary I wrote on the new law is available on the Iranian-American Bar Association (IABA) website.  Click here.