|Wednesday, 13 February 2013 14:07|
In addition to the laws and regulations, familiarize yourself with U.S. policy reasons for sanctions programs
On February 6, 2013, OFAC published updated guidance for companies and individuals who provide or wish to export humanitarian assistance and other support to the Iranian people. While it is an especially good overview document for individuals and companies that have never engaged in such activities, these guideline materials are not a substitute for the laws and regulations.
In the case of Iran, you should refer to U.S. regulations including: Iranian Assets Control Regulations; Iranian Transactions and Sanctions Regulations; Iranian Financial Sanctions Regulations; and the Iranian Human Rights Abuses Sanctions Regulations, as well as underlying laws they are based on such as the Comprehensive Iran Sanctions, Accountability and Divestment Act (CISADA), the Iran Threat Reduction and Syria Human Rights Act (ITRASHRA).
In addition, when reviewing your company's trade security policies and procedures, or if you're an individual or company unfamiliar with U.S. sanctions laws, you should also familiarize yourself with overall U.S. policy aims with respect to a target country or sanctions programs.
When the United States imposes economic sanctions on a foreign country or lists a person or entity on a watch-list, there are significant policy reasons for such an action. Becoming familiar with the policy reasons can help in putting together a fulsome trade security compliance program. Humanitarian exceptions are a part of just about every economic sanctions program. And while the general licensing guidelines may not appear as rigorous, they can be. There is a great deal that can go wrong and legally expose you or your company.
Policymakers make every reasonable effort to mitigate the impact of sanctions on humanitarian assistance. Food and medicine are two of the more common exceptions of every economic sanctions program. These and other related exceptions are designed to keep vital assistance flowing to the general population of a country without providing economic support to the target government.
In some cases, under these humanitarian exceptions, a company may not need to apply for U.S. Government authorization (this is called a general authorization). However, there are many variations in the regulatory guidelines depending on the target of the sanctions, the statutory authority mandating the sanctions, the nature of the transaction and items to be provided, with accompanying record-keeping requirements that must be followed. In addition, U.S. persons must also comply with other federal regulatory rules such as anti-corruption as well as export control laws and regulations.
The Treasury Department, Office of Foreign Assets Control (OFAC) is the primary agency in charge of enforcing the various economic sanctions programs currently on the books. Is it as easy as opening these regulations and following the rules? It should be. However, these rules are based on a series of statutory and public policy aims and interpretation can be challenging to an unseasoned exporter.
When a company exports food, medicine, and medical equipment to Iran, it should have in place a compliance program to ensure that it addressing the many regulations that will cover these transactions. You need to know your customer and ensure these individuals or companies are not a banned entity listed on the Specially Designated Nationals list. Even foreign subsidiaries of U.S. parent companies can be subject to severe penalties and other enforcement actions for violating U.S. sanctions.
While the Executive Branch agencies are the lead for these matters, it helps to understand the "hows" and "whys" of Congressional oversight for these sanctions programs to prevent running afoul of Congressional intent, particularly if you conduct any business with U.S. Government agencies. The oversight Committees pay close attention to how these laws are enforced. Your compliance program will be a lot more complete if you do so. And, if you or your company ever become the target of a Congressional investigation, you'll be better prepared to deal with these inquiries.
If you would like to learn more about the Iran sanctions program, start with this OFAC Overview or search our website for previous postings on these issues. Please contact us for specific questions related to your company or proposed transactions.