Before any officials of the Office of Foreign Assets Control (“OFAC”) or any other U.S. agency takes this post the wrong way, let me provide a disclaimer: I do not intend to suggest that the U.S. Government has deceived the public as to its good intentions in issuing General License D which allows for the export of U.S. origin hardware, software, and services related to personal communications to Iran. The title actually references the fact that many people may be deceiving themselves in how broad the authorization actually is and how easy it is to actually effectuate. Here are three (3) examples of what I’m talking about:
1. Last Friday and this past Monday, your humble author represented a foreign national at his 3+ hour sentencing in U.S. District Court in the District of Columbia for, in part, his export of U.S. origin laptops classified as 5A992 to Iran. Your humble author argued to the Court that although the offense conduct occurred prior to the promulgation of OFAC General License D, the recent promulgation of such general license should be considered a mitigating factor and allow for a variance below the sentencing range established by the U.S. Sentencing Guidelines pursuant to the 18 USC 3553(a) factors. This argument upset the Government, and as a result, a prosecutor from The U.S. Department of Justice’s National Security Division represented to the Court that OFAC General License D did not warrant consideration, because although laptops are now authorized for export to Iran, the export has to be intended to be exported for personal communication purposes, and according to the Government these laptops were being sent to an auto manufacturer in Iran. I responded with the fact that General License D, while making reference that the exports are authorized with the purpose of promoting personal communications, did not prohibit a U.S. person from exporting to an Iranian business so long as it complied with those categories of laptops identified in the Annex to the general license, so long as the end-user is not the Government of Iran, or a Specially Designated National (SDN). Ultimately, the Judge went below the sentencing guidelines and imposed a sentence of 29 months, and in light of General License D and the fact that the exports were no longer prohibited.
2. Despite the presence of General License D, reports have come out that U.S. sanctions targeting Iran have been blamed for the shutting down of a website for Iranian opposition leader and reformist cleric Medhi Karoubi. According to reports, the website was using an .IR domain name and as such involved an importation of an Iranian-origin service, due to the .IR, and such importations are not covered under the General License.
3. In a similar vein, there are reports that OFAC is currently investigating a number of companies in the field of telecommunications and social media whose activities seems to be clearly authorized under General License D; for example, those involved in the provision of Voice Over Internet Protocal services. In those cases OFAC’s concern is that such services may have involved the importation of Iranian-origin services. This may be concern with no solution as it seems inherent in the nature of some of these transactions that there will have to be some services of Iranian-origin provided in order to effectuate the export from the U.S. side; but, that’s perhaps another topic for another post.
Essentially here is the problem: when general license authorizations come out, individuals and companies construe them broadly to try to justify every conceivable transaction they want to engage in with the sanctioned country. On the other end, the U.S. Government construes the general licenses narrowly in order to prevent the stretching of such authorizations to those transactions which it actually doesn’t want to be covered but for which the general authorization could conceivably extend to. So what we have in the end are open authorizations subject to interpretation, which one can easily be held liable for if they do not fully comprehend or guess OFAC’s intention correctly.
For those of you believing OFAC’s General License D is the beginning of a beautiful relationship between you and Iranian importers of U.S. origin personal communication related hardware, software in services, you could be right or you could be wrong. I would advise you to tread carefully and consider the full extent of the transactions you will be engaging in which you feel falls under General License D. Remember one wrong step outside of what OFAC deems the authorization to cover could lead to liability.
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 email@example.com.