A couple of weeks ago Microsoft Corp. suspended access to their instant messaging services to citizens of countries having U.S. sanctions imposed against them. In addition, Google and AOL (rumored) have also taken this stance.

Microsoft has confirmed that it no longer provides its Windows Live Messenger service to users in Cuba, Syria, Iran, Sudan and North Korea. With the exception of North Korea, all of these nations have U.S. sanctions imposed against them which are being administered by the United States Department of Treasury Office of Foreign Assets Control (“OFAC”).

Google has also confirmed that it prohibits the download of its instant messaging application, Google Talk, its instant messaging app, as well as Google Earth, its satellite mapping software, to Sudan. A Google spokesperson stated that this was due to “U.S. export controls and economic sanctions regulations.”

AOL has also released a statement asseting that it “takes its responsibilities under the sanctions programs administered by the Office of Foreign Assets Control seriously and has implemented policies and procedures designed to ensure compliance with all applicable laws and regulations. For various reasons, AOL does not disclose the details of its internal compliance program.”

Meanwhile, Microsoft has not stated whether they instituted the ban voluntarily or at the request of OFAC.

A lawyer dealing with OFAC compliance who was recently quoted by a Computer World article on this subject stated, “while offering communications services such as IM to sanctioned countries such as Iran or Cuba is not restricted by OFAC, offering software is. That’s because software, even free apps downloadable from the Internet, are considered exportable goods, and thus can be banned by OFAC.”

The Computer World article went on to say, “By that reasoning, Web-based e-mail such as gMail or Windows Live HotMail can’t be banned by OFAC, he said. Nor would pure cloud-based services such as Salesforce.com or those hosted by Amazon.com’s EC2 be affected by the ban.”

This is technically not true. The sanctions regulations are designed to prohibit unlicensed transactions between U.S. persons (individuals and companies) and those sanctioned nations and designated individuals and entities. In addition, they prohibit any U.S. person from material assisting in any transaction with a sanctioned or designated nation or person. This includes BOTH goods and services. Both “service” and “material assistance” are given very broad definitions by OFAC.

What these companies are providing is a service. These services could be used to materailly assist transactions with these nations and persons. For example, terms of a deal of one of these transactions could take place through Google Talk or Yahoo Messenger, or Meembo. If that transaction is not subject to an OFAC license, then technically those companies have provided a service in furtherance of a transaction in violation of the sanctions regulations.

As I wrote a few weeks ago, OFAC is becoming more serious about enforcing the sanctions regulations against violations taking place in cyber space. Naturally, this is the right move from their perspective. If it has not already become so, I think cyber space will soon be the new front in the Financial War on Terror and as a result we will be seeing further steps like the ones taken by Microsoft and Google. As more and more business moves online companies like Paypal, Amazon, Google, Facebook,, and even beloved media darling Twitter may have to start looking more seriously at these issues.