Comments on: OFAC: Just One Letter Short of FCPA

By: Mike Deal

Mike Deal — Fri, 29 Feb 2008 15:24:01 +0000

In addition to the Berman Amendment, as confirmed and expanded in 1994 by the Free Trade in Ideas Act, IEEPA 1702(b) also includes an exemption for communications of no commercial value, thus OFAC is doubly restrained by statute, not that they ever mind the statutes. The legislative history of the FTIA amendments to IEEPA make it clear that Congressional intent in the original Berman Amendment, which was a part of the 1988 Omnibus Trade Act that extensively revised the EAA, was to grant a statutory exclusion for information from the grant of emergency powers to the President that was at least as broad as the First Amendment. In Junger v. Daley, the 6th Circuit found that encryption source code - controlled per Section 5 of the EAA - was entitled to First Amendment protection, but because of its functionality (in the sense that some machines can read source code directly), source code was entitled only to an intermediate level of protection. It is questionable whether restrictions on communications conveying pure information that have no direct functional capability can pass muster under either the Berman/FTIA amendment or the First Amendment. Moreover, given the expiration according to its terms of the EAA and with it the Congressional findings of necessity, its questionable whether export controls on tecnology, which are de facto permanent prima facie regulations on content instead of conduct, can pass muster even under intermediate scrutiny.

By: Clif Burns

Clif Burns — Fri, 22 Feb 2008 21:19:18 +0000

Good point, Ex-OFAC. If I’d thought that example through more carefully I’d have realized it was a bad one. Here’s a better example: could a U.S. company, say Motorola, sell Syriatel handsets for resale to its customers?

By: Ex-OFAC

Ex-OFAC — Fri, 22 Feb 2008 21:14:07 +0000

This relates to your question: “If Makhluf in fact owns a majority-stake in Syriatel, are American telephone companies violating the law when they connect U.S. outbound calls to that network and pay the connection fee?” OFAC has long ago put out advice that telephonic message traffic constitutes “information or informational materials” trade in which is exempted from direct or indirect Presidential regulation or prohibition under the International Emergency Economic Powers Act or the Trading with the Enemy Act by the (Rep. Howard) Berman Amendments to IEEPA and TWEA. The bar to direct or indirect regulation or prohibition would also exempt payments for connection to a blocked telephone company’s network, with — as usual — a Cuban quirk: telecommunications between the United States and Cuba (only) are permitted but payments to Cuba must be licensed by OFAC as authorized in the Cuban Democracy Act of 1992. (My simplified statements ignore the possibility that some telephonic message traffic is not covered by the Berman Amendments because it includes technical data controlled for export by the Commerce Department or defense information controlled by criminal espionage prohibitions. I do not believe OFAC has asserted licensing authority over the broader telecommunications services industry on the basis of these non-exempt categories of message traffic.)

By: EdO

EdO — Fri, 22 Feb 2008 00:46:13 +0000

If OFAC’s creating a list for Specially Designated Cronies, what’s next? May I offer a name to start up a list of Specially Designated Mothers-in-Law?!