I received a call last night from a concerned Iranian-American acquaintance of mine who had some questions about the Iranian Transactions Regulations (“ITR”). His questions stemmed from the fact that the social networking site Linked In has made it so that the drop down menus in the education section of their profiles do not contain Iran as an option. This obviously has a disparate impact upon Iranian Americans as a number of them who have immigrated to the U.S. were educated in Iranian elementary schools, high schools, and/or universities.

Apparently, some calls have been made to Linked In and their response has been that to allow for people to select an Iran option on their education drop down menus would be a violation of U.S. export laws and the U.S. sanctions against Iran.

It would not be a stretch to say that my face was locked in a look of befuddlement for the remaining 20 or so minutes I was on the call. As an attorney who spends a majority of my time practicing in the area of U.S. sanction law, particularly handling cases involving the ITR, I tried very hard to devise some angle whereby Linked In’s actions here would constitute a logical course of conduct in complying with the ITR. Alas, I could not.

The ITR prohibits commercial transactions between U.S. persons and the Government of Iran, or persons (individuals and entities) located in Iran. Moreover, the provision of goods, services, and/or financing for such goods and services. Also, under the ITR one can not provide material assistance to any person engaged in a prohibited transaction. In short, the ITR is very broad and there is plenty of room for interpretation. Regardless, it’s unclear to me how allowing a person to say they were educated in Iran is engaging in a violation of the ITR or any U.S. law.

First, there is not really a transaction taking place.  What you do have is a person using a service to state a fact, i.e., they were educated in Iran, which is incidental to the actual transaction of the person paying for and using the service.  However, someone merely stating they where educated in Iran is not in and of itself a transaction.

With no transaction, that conduct or aiding in that conduct does not fall under the purview of the ITR. Remember, ITR stands for Iranian TRANSACTIONS Regulations. There is also another Iran sanctions program, known as the Iranian Assets Control Regulations, however, I cannot see how it would be applicable here.

Despite no immediately apparent reason for their actions, I will speculate as to what Linked In was thinking when they made this decision. They are a service provider whose service is available to the world. By providing this service to Iranians living in Iran they would technically be violating the ITR as Linked In does charge for its service and as such providing to an Iranian in Iran would constitute a service transaction. Therefore, I believe in order avoid this scenario completely, Linked In has decided just to cut Iran and everything about Iran out of the picture. This is an approach that a number of tech companies have taken, including to a degree, Google and MSN. While I’m not sure if this in fact true, it seems to me to be a likely approach.

It is an approach, however, that I do not feel is entirely correct. Readers of this blog will know that I am all for compliance with OFAC regulations. These regulations are U.S. law and violations of the regulations can lead to very, very serious civil and criminal penalties. Therefore, you should be very careful in how you approach transactions with any sanctioned country or target, and you should rely on an attorney with experience in OFAC administered sanctions law to guide you in determining that approach. That said, Linked In’s actions are a little bit over cautious, which says a lot coming from someone like me, who is a major advocate of doing all you can to comply with OFAC’s regulations.

To me it is the logic behind the decision that is not sound. First, in not allowing certain options you aren’t preventing a transaction from taking place. The transaction has already taken place at the point; in order for someone to utilize a service option, they would have already transacted to use the service. Second, you are impairing the ability of legitimate members to use the site. Just because someone was educated in Iran and they want to share that fact does not mean by allowing them to do so a violation of the ITR would occur. For example, a person could be a U.S. citizen who went to college at Tehran University during the 1970s and returned back to the U.S. in the 1980s. In such a scenario, if Linked In permitted this person to share that he was educated at Tehran University there would be no transaction whatsoever between a U.S. person and the Government of Iran, or someone located in Iran. As such, it would fall outside of the purview of the ITR. In my opinion, the only thing it would accomplish is to cause the service user to feel alienated and possibly offended.

I can appreciate Linked In being cautious here. There are very serious penalties involved for those that violate the ITR or any OFAC administered sanctions program. However, stating that they are prevented by U.S. law from allowing persons using their service to say they were educated in Iran is a misguided interpretation of the law and is not based on sound logic. If there are any differing opinions on this topic, or scenarios I might not have considered, please email as I find this matter to be very interesting.

The author of this blog is Erich Ferrari, an attorney specializing in OFAC litigation. If you have any questions please contact him at 202-280-6370 at 202-351-6161 or ferrari@ferrari-legal.com.