The United States Department of the Treasury Office of Foreign Assets Control (“OFAC”) has removed the Iraqi Sanctions Regulations and replaced them with the Iraq Stabilization and Insurgency Regulations (“ISISR”) thereby creating a new part to Title 31 of the Code of Federal Regulations.

31 C.F.R. Part 576 outlines the prohibitions of the ISISR. This new sanctions program implements the mandates of Executive Order 13315 (August 28, 2003), Executive Order 13350 (July 29, 2004), Executive Order 13364 (November 29, 2004), and Executive Order 13438 (July 17, 2007). This program is used to block certain individuals and entities who are former senior officials of the former Iraqi regime and their immediate family members; those parties who are deemed to pose a significant risk of violence for the purpose of threatening the peace or stability of Iraq or the Government of Iraq, or are undermining efforts to promote economic reconstruction and political reform in Iraq or to provide humanitarian assistance to the Iraqi people; those individuals materially assisting any of the aforementioned groups; and those owned by any of the aforementioned groups.

Once blocked, all property and interest in property under the jurisdiction of the United States of those parties can not be transferred, exported, or in any way dealt with. Such prohibitions include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any person whose property and interests in property are blocked and the receipt of any contribution or provision of funds, goods, or services from any person whose property and interests in property are blocked by this program. Furthermore, any dealing in any security (or evidence thereof) held within the possession or control of a U.S. person and either registered or inscribed in the name of, or known to be held for the benefit of, or issued by, any person whose property and interests in property are blocked is also prohibited. This prohibition could include but is not limited to, the transfer (including the transfer on the books of any issuer or agent thereof), disposition, transportation, importation, exportation, or withdrawal of, or the endorsement or guaranty of signatures on, any such security on or after the effective date. This prohibition applies irrespective of the fact that at any time the registered or inscribed owner of any such security may have or might appear to have assigned, transferred, or otherwise disposed of the security. It is important to remember, that these prohibited transactions may be authorized pursuant to a license from OFAC.

There are some exemptions found within the ISISR including exemptions relating to transactions dealing with personal communications, information and/or informational materials, and travel.

This posting is merely a very cursory review of the ISISR. There is certainly a lot more to it than is found here. If you believe you may be impacted by the ISISR, then its best to consult with an attorney who understands the ISISR and who has experience handling matters before OFAC. As with all new sanctions programs it takes time for the parties to understand what it entails. Obtaining guidance from counsel early on may save you from major headaches down the road.

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.