A few days ago, I reported on the number of licenses issued pursuant to the Trade Sanctions Reform and Export Enhancement Act of 2000 (“TSRA”) by the United States Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) for export of agricultural commodities, medicine, and medical devices to Iran and Sudan. Of course, those applications were filed prior to the last six (6) months, and therefore were not made under the new Iranian Transactions and Sanctions Regulations (“ITSR”), the Iranian Threat Reduction and Syria Human Rights Act (“TRA”), or Executive Order (“E.O.”) 13628. As such, I thought it would make sense to go through how the application process for a basic TSRA application to export medicine to Iran would look nowadays.

First, let’s assume the transaction to be engaged in involves a foreign subsidiary of a U.S. parent company who wants to export non-U.S. origin medicine to Iran. The application also requests authorization for payment by letter of credit drawn upon a private Iranian financial institution.

It should be understood that Section 218 of the TRA and E.O. 13628 extends prohibitions on dealing with Iran and the Government of Iran to foreign subsidiaries of U.S. companies. The question then arises who applies for the TSRA license, the U.S. company or the foreign subsidiary? The answer is that either the U.S. parent company or the foreign subsidiary could apply for the TSRA license from OFAC.

Even before applying for the licenses, however, it should be understood that the ITSR now generally authorizes the export of a number of medicines to Iran. In addition, the ITSR also provides general license authorization for certain financing terms for those products being exported to Iran. Including the financing of sales of agricultural commodities, medicine, and medical devices by letters of credit issued by blocked (not designated) Iranian financial institutions.

If after taking these new regulations into consideration, a specific license is still required then it should be known that the underlying facts of the transaction noted above would allow for an OFAC TSRA specific license to be issued. OFAC regulations and legislation imposing economic sanctions are always changing, particularly in regards to Iran. As such, keeping an eye on developments with OFAC administered sanctions regulations should be a key responsibility of any compliance officer. To that end, OFAC’s website can be a great resource, but attention should also be paid to other secondary sources as well to help make sense of how the new laws apply in practice.

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.