As readers of this blog may know, dietary supplements are generally authorized for export to Iran, pursuant to the general license for export of food found in 31 C.F.R. § 560.530 of the Iranian Transactions and Sanctions Regulations (“ITSR”). A quick scan of the the ITSR shows that dietary supplements fall under the definition of food at 31 C.F.R. § 560.530(e)(1)(ii)(A). However, a recent interpretative guidance letter issued by the United States Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) explored whether the marketing of such products to Iran via a website would be exempt from, or otherwise authorized under, the ITSR.

The particular party seeking clarity on this issue wanted to create and manage an informational website that markets dietary supplements to Iran, the export of which would be generally authorized under the ITSR. The website would contain specific product information for potential customers to reference when planning to make purchases from the exporter. This information would include descriptions of the products, pricing information, and images of the products. The images collected and published on the website would be pre-existing images provided by the manufacturers of the supplements, and the product descriptions would also be those provided by the manufacturers. Although the website would be for customers in Iran to gather information concerning products that would seek to purchase from the U.S. exporter, the website would not be created at the behest of any parties in Iran. It should also be noted that the website would not allow importers in Iran to purchase the products through the website.

The arguments set forth in this case were three part: 1) the creation and use of the website to market the products was ordinary and incidental to the sale of generally authorized goods under 31 C.F.R. § 560.530; 2) the creation of the website for use by Iranian importers would be authorized under General License D-1; or 3) the information or informational materials exemption contained in both the ITSR and the International Emergency Economic Powers Act (“IEEPA”) would exempt the conduct.

In the interpretative guidance letter from OFAC, the agency chose to ignore the first two arguments completely, and rather opined on the applicability of the information or informational materials exemption. In doing so, OFAC found that 31 C.F.R. § 560.210(c)(1) of the ITSR contained exemptions to the prohibitions of the ITSR including those which related to the importation from, or exportation to, any country of information or informational materials as defined in 31 C.F.R. § 560.315. OFAC did note that their were some limitations to this exemption including, those in relation to the provision of marketing and business consulting services.

Despite this noted limitation in the informational or informational materials exemption, OFAC found that in this particular case that the exemption did apply to the development and management of a website to publish existing images and product descriptions. That said, there are a couple of important caveats to be noted here.

First, it should be noted that the exporter was merely aggregating and posting content created and published by the manufacturer. There was no effort to create new content for publication on the website. As such, an inference can be drawn from OFAC’s explicit reliance on the “existing images and product descriptions” language that had the materials to be published on the website not been existing that the information or informational exemption may not be applicable.

Second, there was no ability to purchase goods through the website. As such, there was no operational transactions to be conducted through the transaction; merely an exportation of pre-existing information. That distinction is an important one, and one that has come up before, for example in the context of exporting computerized reservations services under the Cuban Asset Control Regulations. Had the proposed website allowed importers in Iran to actually place orders and purchase products, then the exemption may not have been applicable.

In short, the guidance letter referenced above is limited in terms of its scope. While it does allow for the reposting of information on a website that may be referenced by importers in Iran seeking to purchase authorized goods from the U.S., it does not address the issue of whether the website could facilitate operational transactions, such as direct sales from the website. Thus, while the guidance provides valuable insight into a channel for advertising products to potential customers in Iran, those relying upon it should be cautious of its limits.

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