On December 7, 2020, the Department of the Treasury’s Office of Foreign Assets Control published several Iran-related Frequently Asked Questions. OFAC released two new FAQs (855 and 856) and published updates to FAQs 830, 831, 832, and 847. All of the FAQs relate to Executive Order 13902, that authorizes the Treasury to sanction any Iranian financial institution (Iranian FI), and General License L that allows certain humanitarian transactions as long as they are not prohibited by the Iranian Transactions and Sanctions Regulations (ITSR), 31 CFR part 560).
In FAQ 855, OFAC explains that section 560.539 of the ITSR authorizes transactions related to the official business of the United Nations and its Specialized Agencies Programmes, Funds, and Related Organizations, and emphasizing that transactions with these international organizations are not prohibited under section 12 of EO 13902. Furthermore, transactions related to the official business of missions in Iran or associated with missions by the Government of Iran that are connected to Iran’s membership in an international organization, are allowed and not subject to secondary sanctions as long as they are between non-US persons and Iranian FIs, and only if the transaction would otherwise be blocked pursuant to EO 13599 or EO 13902.
In FAQ 856, OFAC clarifies that transactions related to legal proceedings with Iran, are generally authorized pursuant to section 560.510 or 560.525 of the ITSR, including reasonable and customary payments for legal services, bail/bond payments, court costs and fees, costs related to the production of documents and witnesses, and payments made to experts. OFAC emphasizes that any payment made to an Iranian FI as the result of court award, order, decision or settlement, may be subject to sanctions unless it is humanitarian in nature, permitted under GL L or FAQ 844. OFAC will assess transactions related to Iran-related court decisions or legal settlements on a case-by-case basis.
FAQs 830, 831, 832, and 847 generally address various transactions that are permitted because they are not considered to be part of the manufacturing sector of Iran’s economy. According to FAQ 830, persons or entities in Iran that manufacture medical and hygiene-related items solely for use inside of Iran and not for export, including the sale of food and agricultural commodities, are not considered to be part of Iran’s manufacturing sector and generally not subject to sanctions under EO 13902. FAQ 831 defines activities that OFAC considers to be part of the construction, mining, manufacturing, textiles and financial sectors of the Iranian economy that are usually subject to sanctions, while FAQ 832 specifically defines goods or services within each sector of Iran’s economy. Finally, FAQ 847 provides an overview of activities, mostly humanitarian in nature, that non-US persons are authorized to continue with Iranian FIs under EO 13902, without the risk of secondary sanctions.