Archive for the ‘Iran Sanctions’ Category


Apr

18

Oh, The Places You’ll Go!


Posted by Clif Burns at 3:25 pm on April 18, 2014
Category: BISIran SanctionsOFAC

By Alec Wilson [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Flickr https://www.flickr.com/photos/awilson154/12221595055/sizes/l
N604EP in Zurich last January (Alec Wilson via Flickr, CC-BY-SA-2.0)

According to an article in the New York Times, and a picture snapped by one of its reporters in Tehran, a U.S. registered corporate jet with a discreet U.S. flag painted on the tail and with the registration number N604EP was spotted three days ago on the runway of Mehrabad Airport in Tehran, Iran. At first, apparently not having seen the photographic evidence, Director General of Tehran’s Mehrabad Airport Nasrollah Mansouri Shirazi told the Tasnim News Agency, an IRGC-affiliated group, that no U.S. planes had landed at his airport. (Baghdad Bob is alive and well at the Mehrabad Airport!)

The appearance of the U.S. plane in Tehran has, of course, resulted in a whirlwind of speculation about what it is doing there. As the Times correctly points out, its unlikely to be a covert diplomatic mission what with the U.S. flag emblazoned on the tail and the jet sitting in full daylight in a spot where a reporter could snap a photograph. (Such trenchant observations are why the New York Times is, after all, the U.S. newspaper of record.)

The whole affair has the Bank of Utah, which owns the plane in trust for some shadowy and undisclosed investors, all flustered.

Brett King, one of its executives in Salt Lake City, said, “We have no idea why that plane was at that airport.

Mr. King, who helps run the bank’s trust services business, said the bank had no “operational control” or “financial exposure” to any of the planes.

For his part, Mr. King said Thursday in an interview that he was trying to get to the bottom of the aircraft’s presence in Tehran. “The Bank of Utah is very conservative, and located in the conservative state of Utah,” he said. “If there is any hint of illegal activity, we are going to find out and see whether we need to resign” as trustee.

If the jet was in Iran without authorization, the Bank, as the legal owner of the plane, is going to have a hard time trying to wash its hands of the matter simply by resigning as “trustee” and trying to walk away from the issue. It will certainly need to demonstrate to federal regulators that it took all necessary steps in its dealings with the mysterious owners to prevent them from flying the plane to embargoed destinations without authorization.

One final amusing note is that the New York Times cannot figure out which agency needed to authorize the plane to land in Iran:

Under United States law, any American aircraft would usually need prior approval from the [Treasury Department's Office of Foreign Assets Control] to go to Iran without violating a complicated patchwork of rules governing trade.

In the case of this particular aircraft, powered by engines made by General Electric, the Commerce Department typically would have to grant its own clearance for American-made parts to touch down on Iranian soil.”

Er, no, the license from OFAC would be enough. If the Times reporter spent a few moments with Google he would have easily found the Commerce Deparment saying this:

Although BIS maintains license requirements for Iran, OFAC is responsible for administering most Iran sanctions. You are not required to seek separate authorization from BIS to export or reexport an item subject to both BIS’s Export Administration Regulations (EAR) and OFAC’s Iranian Transactions and Sanctions Regulations (ITSR) (31 CFR Part 560). However, you will also violate the EAR if you do not obtain an OFAC authorization if one is required.

I guess the fact-checkers at the Gray Lady aren’t what they used to be. . . .

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Mar

25

OFAC: Keeping Us Safe from MOOCs


Posted by Clif Burns at 5:24 pm on March 25, 2014
Category: Cuba SanctionsEconomic SanctionsIran SanctionsSudanSyria

By Aristóteles Sandoval [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Wikimedia Commons http://commons.wikimedia.org/wiki/File%3A16-02-2011_Guadalajara_Libre_en_Palacio_Municipal.jpgThis blog previously reported on the impact of OFAC sanctions on the Massive Open Online Courses, quaintly known as MOOCs, offered by the for-profit Coursera. The sanctions have led Coursera to block students with IP addresses from Iran, Cuba and Sudan, a half-hearted attempt by the company to comply with U.S. sanctions.   Those sanctions, in general, prevent providing services to nationals of blocked countries even outside their home countries, so offering MOOCs to Iranians in, say, Germany, would be equally problematic. (Coursera gave Syrian students a reprieve relying, rather questionably, on an exemption in Syria General License 11A for educational exports by NGOs).

Last week, the Office of Foreign Assets Control gave Iranian students, both inside and outside Iran, a partial reprieve from the ban on MOOCs when it issued Iran General License G. That license permits enrollment of Iranians, both in and out of Iran, in MOOCs

provided that the courses are the equivalent of courses ordinarily required for the completion of undergraduate degree programs in the humanities, social sciences, law, or business, or are introductory undergraduate level science, technology, engineering, or math courses ordinarily required for the completion of undergraduate degree programs in the humanities, social sciences, law, or business.

Sadly, there was no happiness in Coursera-ville, because the license is restricted to “accredited graduate and undergraduate degree-granting academic institutions.” Not all of Coursera’s courses are offered by accredited academic institutions, so some of its course offering will not benefit from this general license.

Another beneficiary of the new general license would appear to be EdX, the MOOC platform founded by Harvard and MIT. EdX partners with other accredited academic institutions that provide the various offerings made available by EdX. One significant difference between EdX and Coursera is that EdX sought and obtained a license to provide MOOCs to students in  Cuba, Iran and Sudan. Apparently that license did not cover provision of STEM courses, i.e., courses in science, technology, engineering and mathematics, without specific approval by OFAC, according to this Harvard Crimson article.  That article went on to note the refusal of OFAC to permit a MOOC entitled “Flight Vehicle Aerodynamics” taught by MIT faculty.

This would mean that EdX and Coursera no longer need specific licenses for Iranian students to participate in courses taught by accredited institutions other than certain advanced STEM courses. However, licenses will still be required to initiate Cuban and Sudanese students into the intricacies of George Eliot’s Middlemarch or the structure of French symbolist poetry. (It is well known that familiarity with Eliot and Valéry are mere stepping stones to terrorist and anti-American activity, so we will be safe from literary Cuban and Sudanese terrorists, at least for the moment.) This General License, however, probably has no effect on the “Flight Vehicle Aerodynamics” course, because although it is far from clear what is meant by STEM courts “ordinarily required for the completion of undergraduate degree programs in the humanities, social sciences, law, or business,” it is probably safe to assume that “Flight Vehicle Aerodynamics” is not among them.

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Mar

18

University Medical Researcher Prosecuted for Sending Medical Device to Iran


Posted by Clif Burns at 8:21 pm on March 18, 2014
Category: Criminal PenaltiesIran SanctionsOFAC

By Erin! Nekervis [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Wikimedia Commons http://commons.wikimedia.org/wiki/File%3APlanking_on_an_MRI_machine.jpgAccording to this article in the San Diego Union Tribune, Mohamad Nazemzadeh, who was a Research Fellow in the Neurology Department of the University of Michigan at the time of his arrest, is being prosecuted for sending a medical device to Iran. At issue is a coil for a magnetic resonance imaging (MRI) machine. The coil is the assembly of wires that generates the necessary radio signals when electricity flows through them to permit imaging the part of the body within the coil. Mr. Nazemzadeh is currently a researcher at the Henry Ford hospital in Detroit and his area of specialty is, not surprisingly, magnetic resonance imaging.

A part for an MRI machine would, under the Trade Sanctions Reform and Export Enhancement Act of 2000, be eligible for an export license notwithstanding the embargo on Iran. Nazemzadeh’s failure to obtain a license would, of course, be a violation of the embargo. Even assuming that it was a criminal violation in his case, one has to wonder why prosecutorial resources are being consumed to prosecute a researcher for trying to send life-saving medical equipment to Iran. Aren’t there dangerous people out there with guns and bombs who might warrant the attention instead?

An affidavit in support of a search warrant for Nazemzadeh’s mobile phone provides more detail on the case than the Union-Tribune article and casts some doubt on whether Nazemzadeh actually had the criminal intent necessary to support a criminal prosecution for the attempted export of the MRI part. According to the affidavit, Nazemzadeh was negotiating with the undercover federal agent (who had been tipped off by the used medical device company that Nazemzadeh had contacted) to ship the MRI coil to Iran through a company in the Netherlands. As is often the case, it is not uncommon for people to believe (incorrectly) that if it is legal to ship an item to a particular country, no laws are broken if the item is then re-exported to a prohibited destination. Here, according to the affidavit, Mr. Nazemzadeh continued to say to the undercover agent that he believed the transaction was legal and says this is true because the export from the United States is to the Netherlands, not Iran.

Just tell that, you sold that item to some company in the Netherlands, and you have the request so you’re, you issued pro forma form for them and they sent money from the bank account to you, everything is legal between you[r] two companies …. [T]here’s nothing to do with Iran. You actually have sold that coil to one company in Netherland [sic], ok?

Granted that isn’t a true statement of the law, but a good faith legal mistake is not a criminal act. Instead, this is precisely the sort of case that ought to be handled as an administrative matter by OFAC. Such a proceeding could result in the imposition of substantial civil penalties on Mr. Nazemzadeh notwithstanding his mistaken belief that the transaction did not violate U.S. law.

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Mar

10

A Grizzly Affair with Iran


Posted by Clif Burns at 5:56 pm on March 10, 2014
Category: Iran SanctionsOFAC

By Robert J. Pera (Coutesy of Robert J. Pera) [CC-BY-2.5 (http://creativecommons.org/licenses/by/2.5)], via Wikimedia Commons http://commons.wikimedia.org/wiki/File%3APera.jpeg
ABOVE: Robert J. Pera
CEO, Ubiquiti Networks


The Office of Foreign Assets Control (“OFAC”) announced last week that Ubiquiti Networks agreed to pay $504,225 to settle charges that Ubiquiti violated the Iran sanctions when it granted a distributor in the U.A.E. exclusive rights to distribute its products in Iran and then sold goods to that distributor which were then shipped to Iran. This was only a minor reduction from the base penalty of $560,250. The reason for Ubiquiti paying so much can be found in some harsh language from OFAC:

Ubiquiti demonstrated reckless disregard for U.S. sanction requirements; Ubiquiti was on notice in February 2010 that the conduct at issue constituted a violation of U.S. law; members of Ubiquiti’s senior management knew or had reason to know that Ubiquiti products were reexported to Iran; [and] Ubiquiti had no OFAC compliance program in place at the time of the apparent violations

Ouch.

You would think that a half-million dollar fine would have caused the company to beef up its compliance game. But head over to the company’s website and sign up for its newsletter to learn more about its products. Take a look at the country drop-down list in the sign up form and you’ll see Iran.

Of course, under the informational exception, it is not illegal to send the newsletter to Iran.  But the newsletter describes products and services that, as Ubiquiti now rather expensively has found out, cannot be shipped to Iran. So why would anyone in Iran be interested in a newsletter about something they are not able to purchase? Here’s a good export compliance tip for our readers: take Iran out of your country drop-down lists for product brochures, newsletters and other promotional materials.

The founder and owner of Ubiquiti is Robert J. Pera.  You might also know as the owner of the Memphis Grizzlies.  You might also know hims as one of the people on Forbes’s list of the ten youngest billionaires in the world.  Even in the unlikely event that he pays the entire OFAC fine out of his own pocket, he will still be a billionaire.

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Feb

25

OFAC Nukes MOOCS


Posted by Clif Burns at 8:59 pm on February 25, 2014
Category: Cuba SanctionsEconomic SanctionsIran SanctionsOFACSudanSyria

Formal Fridays via http://www.glassdoor.com/Photos/Coursera-Mountain-View-Office-Photos-EI_IE654749.0,8_IL.9,22_IC1147431.htm [Fair Use]I missed this earlier, but back at the end of January, Coursera, a provider of the euphoniously acronymed MOOCs (Massive Open Online Courses) said “No MOOCS for you” to residents of Cuba, Iran, Syria and Sudan who wanted to better themselves by taking online courses such as “Scandinavian Film and Television” or “Buddhism and Modern Psychology.” I certainly sleep better at night now knowing that the Cuban and Iranian threats are not being needlessly augmented by educating Cubans and Iranians on the subtle politics of Borgen or the psychological insights of the Four Noble Truths.

Because the online courses involve feedback, grading and the like, the concern is that these courses are an export of services, forbidden by the current sanctions on these countries, rather than the export of information, which is permitted under the Berman Amendment. Coursera is a little vague in explaining how it just found that out, saying that it “recently received information that has led to the understanding that the services offered on Coursera are not in compliance with the law as it stands” and that prior to that the law was “unclear.”

Coursera has given Syrian students a reprieve by saying that the State Department has told it that OFAC’s Syria General License 11A covers MOOCs for Syria. That license permits non-governmental organizations to export services to Syria in support of education. I’m not clear how Coursera qualifies as an NGO since it is not a non-profit but a for-profit corporation that seeks revenues and profits through its certification programs and sales of textbooks purchased through its affiliate relationship with Amazon. Nor am I quite clear how the State Department has acquired the ability to determine the scope of OFAC licenses.

The company claims that it is weeding out Cubans, Sudanese and Iranians based on IP addresses, apparently not having taken one of their own course on VPNs which would allow an Iranian wannabe student to appear, online at least, as a German or Italian or whatever. And since civil violations of OFAC rules do not require intent, Coursera is still liable if an Iranian is sitting in Iran but using a VPN to appear as if he or she were elsewhere.

This last point underlines a particular stupidity of applying a 19th century sanctions philosophy to a 21st century Internet where there are no borders. If an Iranian student is, in fact, sitting with his or her laptop in Germany, it would not be illegal for Coursera to provide its services to that student. It is only illegal when the student is in fact physically located in Iran. Now if you can identify a sensible policy which explains why it is more dangerous to teach an Iranian about Scandinavian TV while in Iran than it is in Germany, then you are much more clever than I am.

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