US Office of Foreign Assets Control Issues Guidance on Iran Sanctions
On August 10, 2012, President Obama signed into law the Iran Threat Reduction and Syria Human Rights Act of 2012 (TRA). On February 6, 2013, the U.S. Office of Foreign Assets Control (OFAC) issued guidance relating to the implementation of Section 504 of the TRA. Section 504 amended the National Defense Authorization Act for Fiscal Year 2012 (NDAA), which the President had signed into law on December 31, 2011. On February 6, 2013, the Section 504 amendment to the NDAA took effect.
With the new amendment going into effect, OFAC prepared responses to a series of frequently asked questions relating to the implementation of Section 504 of the TRA. Currently, sanctions may be imposed upon a foreign financial institution (FFI) that knowingly finances or otherwise facilitates transactions with the Central Bank of Iran (CBI) or a designated Iranian financial institution. These sanctions are waived when it is determined that there is a short-supply of non-Iranian crude oil available or when the Secretary of State, the Secretary of the Treasury and other federal agencies determine that a country has significantly reduced its purchase of Iranian crude oil. The most important change taking effect is the narrowing of the significant reduction exemption, which exempts from sanctions only transactions which facilitate bilateral trade in goods or services between the country granted the exception and Iran and requires that funds owed to Iran as a result of these bilateral trades be credited to an account located in the country granted the exception. Currently the following twenty (20) countries have been granted the significant reduction exception: Belgium, China, the Czech Republic, France, Germany, Greece, India, Italy, Japan, Republic of Korea, Malaysia, the Netherlands, Poland, Singapore, South Africa, Spain, Sri Lanka, Taiwan, Turkey, and the United Kingdom.
OFAC also prepared guidance regarding the U.S. policy on providing humanitarian assistance and related exports to the Iranian people. Under U.S. law, the sale and export of nearly all types of food, medicine, and medical devices to Iran are broadly authorized and require no specific license or special authorization from OFAC. This is in line with the U.S. government's commitment to facilitating humanitarian engagement with the Iranian people. In instances where U.S. persons engage in humanitarian exports to Iran, financial institutions here and abroad are generally permitted to process all financial transactions necessary to facilitate the trade.