If sanctions were easy, we’d be out of a job and there would be no need for this blog. So it shouldn’t come as a surprise that even the United States Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) occasionally gets something wrong and is forced to issue a correction. Billed as an update, OFAC has changed their answer to the FAQ dealing with “Payments or the Facilitation of Payments to Iranian civil Aviation Authorities for Overflights of Iran or Emergency Landing in Iran.”

The original FAQ, issued on September 23, 2014, was likely in response to the September 3 incident where a FlyDubai plane carrying U.S. military personnel and chartered by the U.S.-led International Security Assistance Force (“ISAF”) was forced to land in Iran due to a “bureaucratic issue” with its flight plan.

Thanks to the magic of the Internet Archive’s Wayback Machine, we can compare OFAC’s recent changes to FAQ 417 to what had previously existed. Previously the FAQ read“:

“Provided that the relevant transactions do not involve persons on the Specially Designated Nationals and Blocked Persons List (SDN List) other than any political subdivision, agency, or instrumentality of the Government of Iran listed solely pursuant to Executive Order 13599 or any Iranian depository institution listed solely pursuant to Executive Order 13599, payments of charges for services rendered by the Government of Iran in connection with the overflight of Iran or emergency landing in Iran of aircraft owned by a non-U.S. person and registered outside the United States are not subject to sanctions under U.S. law. Please note that the involvement of other persons on the SDN List, including Iranian financial institutions designated pursuant to Executive Order 13224 or Executive Order 13382, would create sanctions exposure for participants to such transactions.”

Pretty straightforward, however, OFAC’s recent change makes clear that the old answer was not entirely accurate.

There are two additions to the new answer. The first paragraph of the new FAQ remains the same except for the addition of 4 words. The new FAQ reads:

“Provided that the relevant transactions do not involve the U.S. financial system or persons on the Specially Designated Nationals and Blocked Persons List (SDN List)…” (emphasis added).”

Clearly the preior version of FAQ 417 did not include a possible scenario where the payments for overflights or emergency landings in Iran would in fact be subject to sanctions under U.S. law.

The second addition is a paragraph reiterating (in a roundabout way) the authorization contained in §560.522 of the ITSR stating that U.S. persons and U.S.-owned or –controlled foreign entities may engage in payments related to overflights or emergency landings in Iran, so long as the transactions comply with §560.516.

The point of this post is not to play “gotcha” with OFAC. Sanctions, particularly those related to Iran are incredibly complex and it is virtually impossible for anyone, particularly an agency as overworked, understaffed, and underfunded as OFAC, to anticipate and provide guidance for every scenario that could arise as result of sanctions. In fact, it is to their credit that the FAQs are updated as regularly as they are, which has not always been the case.

However it does highlight the need for a more formalized dialogue between OFAC and the private sector. FAQ 417 is not the only FAQ that is either misleading or contains incomplete information, as anyone heavily involved in the Ukraine sanctions program will tell you.

A formal advisory group, as has been advocated most recently by Elizabeth Rosenberg, a former Senior Adviser to TFI Undersecretary David Cohen and current Senior Fellow at the Center for a New American Security (CNAS), would be extremely beneficial to both OFAC and the private sector. An advisory group would provide OFAC with a better understanding of how their actions impact the business community and allow for better targeting when imposing new sanctions.

The concept is not entirely new; in fact the idea was floated as part of the recommendations of the Judicial Review Commission on Foreign Assets Control. In our opinion, the establishment of such a committee is long overdue and one OFAC should consider the idea closely.