Iran Export Controls

Expectations for sanctions compliance are increasing amid the COVID-19 pandemic as both U.S. and United Kingdom agencies continue sanctions enforcement, trade lawyers said. The U.S. Treasury Department Office of Foreign Assets Control and the U.K. Office of Financial Sanctions Implementation continue to issue sanctions, pursue enforcement and expect heightened due diligence from industry, the lawyers said, “You've got OFAC doing its continuing expansion of U.S. sanctions and … you've got increasing pressure from even the U.K.,” said David Wolff, a trade lawyer with Crowell & Moring, speaking during an April 2 webinar hosted by the law firm. “The regulatory expectations, if anything, are getting worse.”

The Trump administration should issue “broad licenses” to medical companies and create dedicated channels for industry to export medical goods to Iran during the COVID-19 pandemic, former Vice President Joe Biden said April 2. Although the Treasury's Office of Foreign Assets Control already has broad general licenses that allow exemptions for humanitarian exports, Biden said they are not effective. “In practice, most governments and organizations are too concerned about running afoul of U.S. sanctions to offer assistance,” Biden said. “As a result, our sanctions are limiting Iran’s access to medical supplies and needed equipment.”

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The head of the Commerce Department Bureau of Industry and Security revoked a shipping company’s export privileges for 15 years for export violations but ordered a review of the assessed fine, saying it was too high, according to a March 11 order. The company and its chairman -- Singapore-based Nordic Maritime Pte. Ltd and Morten Innhaug, respectively -- were originally fined more than $30 million by an administrative law judge, who also revoked the company’s export privileges until the fine was paid, according to the order. But Cordell Hull, BIS’s acting undersecretary, said the fine was too high, ordering the judge to review its decision to impose the penalty.

Export Compliance Daily is providing readers with some of the top stories for March 2-6 in case you missed them.

The Treasury’s Office of Foreign Assets Control issued a frequently asked question March 6 clarifying how humanitarian goods can be sent to Iran to assist with the coronavirus outbreak. OFAC said there are a “number of ways” humanitarian goods, including donations, can be sent to the country, adding that medical-related donations are “generally exempt” from U.S. sanctions if those donations are not being sent to the Iranian government or others blocked by the Iranian Transactions Sanctions Regulations. OFAC also said donations are not authorized for shipments to entries on the agency’s Specially Designated Nationals List. Nongovernmental organizations are authorized under General License E to export services to Iran “in support of certain not-for-profit activities designed to directly benefit the Iranian people,” OFAC said. Others interested in exporting humanitarian goods to Iran should review the ITSR and other OFAC guidance, the agency said.

The U.S. should lobby for increased export controls and more stringent sanctions regimes relating to weapons proliferation at the upcoming Non-Proliferation Treaty review conference, arms control experts said during a March 3 House hearing. While it may be difficult for all treaty members to sign off on a broad consensus document relating to non-proliferation, the U.S. should use the spring conference in New York to seek common ground on controls of items used to produce dangerous weapons.

The U.S.-Swiss joint mechanism used to export humanitarian goods to Iran is now “fully operational,” the Treasury Department said Feb. 27. Treasury also issued a general license and a series of frequently asked questions to clarify how the mechanism can be used.

The Treasury’s Office of Foreign Assets Control released a report Feb. 19 on licensing activities for certain exports to Iran and Sudan during the second quarter of fiscal year 2019. The report provides licensing statistics for exports of agricultural goods, medicine and medical devices to both countries as required by the Trade Sanctions Reform and Export Enhancement Act of 2000.

United Kingdom companies are facing challenges navigating sanctions conflicts between the U.S. and the United Kingdom, which is leading to confusion over which items they can legally export, according to Roger Arthey, chair of the Institute of Export & International Trade’s Export Control Profession and the former head of export control compliance for Rolls-Royce. Those challenges were complicated by the U.S.’s withdrawal from the Joint Comprehensive Plan of Action in 2018 and the introduction of the European Union Blocking Regulation, which blocks EU businesses from complying with certain U.S. sanctions (see 1906240014).