The United States Department of the Treasury Office of Foreign Assets Control (OFAC) issued a third general license today related to the the arrest, detention, and judicial sale of vessels belonging to the Islamic Republic of Iran Shipping Lines (IRISL). This general license relates to two vessels, the MV First Ocean and the MV Second Ocean, which were both designated as OFAC SDNs (Specially Designated Nationals) last summer pursuant to the Weapons of Mass Destruction Proliferators Sanctions Regulations (WMD Program).

The general license authorizes all transactions related to the arrest, detention, and judicial sale of the MV First Ocean and MV Second Ocean. Included within the scope of these authorized transactions are bidding on the purchase of the vessels; paying deposits; providing financing, insurance, or funding in connection with the purchase; and, in furtherance of the arrest, detention, and judicial sale of the vessels, providing vessel management services; providing port agency services; purchasing of bunkers; repairing or modifying the vessels for commercial use; providing crewing; and hiring surveyors to inspect the vessels. This general license expires at 11:59 p.m. eastern standard time, February 15, 2012.

Despite this laundry list of authorized transactions, this general license does not authorize any provision of services, or any transfer of funds or other property, directly or indirectly, that would otherwise be prohibited by 31 C.F.R. Chapter V, including to any entity or individual whose property and interests in property are blocked pursuant to any Executive order, statute, or 31 C.F.R. Chapter V.

In the event that one of these vessels is sold pursuant to judicial sale, the purchaser may provide OFAC with evidence demonstrating that the basis for the blocking is no longer applicable. This evidence is required to expedite the removal of the vessels from the OFAC SDN List. Such evidence should consist of (1) documentation demonstrating completion of the vessel sale, such as a bill of sale or other evidence provided by a sheriff or court; (2) documentation demonstrating the source of funds for the vessel purchase, such as evidence of any financing associated with purchasing the vessel and the parties associated with such financing; (3) corporate and other documentation to substantiate the identity of the buyer; and, if applicable, (4) information or documentation regarding plans to lease the vessel to any party other than the buyer.

A few months ago I wrote a blog posting where I speculated as to whether or not OFAC would continue to issue these general licenses in a piecemeal fashion or just issue one comprehensive general license for all IRISL vessels. The answer is becoming clear: OFAC is providing general licenses for IRISL vessels in a piecemeal fashion. What is less clear is what action IRISL will take in attempting to regain hold of these vessels if and when they are sold. That will remain to be seen, however, for the time being the vessels can be purchased without (for the most part) the fear of incurring consequences from OFAC.

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@ferrari-legal.com.