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Feb

14

OFAC Expands License for Personal Communications Items to Iran

Posted by Clif Burns at 1:24 pm on February 14, 2014

By Alireza Javaheri (http://www.panoramio.com/photo/50249960) [CC-BY-3.0 (http://creativecommons.org/licenses/by/3.0)], via Wikimedia Commons http://commons.wikimedia.org/wiki/File%3ATehran_-_Azadi_Tower.jpg Last week, the Office of Foreign Assets Control issued General License D-1 relating to provision of personal communications software, services and hardware to Iran. Â This general license amends and replaces, as of February 7, 2014, General License D on the same subject. The following changes are made by the amendment

The amended license now permits exports of covered software, services and hardware by non-U.S. persons to Iran.
Additionally, hardware and software that is not subject to the EAR, because it is located outside the United States or otherwise, can be exported to Iran by U.S. and foreign persons.
The amendment also cleans up an embarrassing drafting error. General License D permit exports to “persons in Iran” rather than “to Iran,” meaning that it did not authorize persons traveling to Iran to carry covered hardware and software with them for personal use when traveling to Iran. General License D-1 makes clear that exports are authorized “to Iran” and that this covers travelers to Iran.
Exports of publicly available, no-cost services and software to the Iranian Government are now authorized.
A footnote makes clear that payments can involve indirect dealings with Iranian financial institutions blocked only under Executive Order 13599 (as opposed to Iranian banks like Bank Saderat and Bank Melli that are sanctioned under terrorism and WMD sanctions).

The FAQs on General License D-1 provide some insight into why this General License, rather unusually, permits dealings with the Government of Iran. They note that the authorization includes the Government of Iran “to further ensure that the sanctions on Iran do not have an unintended chilling effect” on companies seeking to make available publicly available, no-cost personal communications tools to persons in Iran. What this means, I think, is that when no-cost software or services are at issue, it is impossible for the provider to tell whether the recipient is an Iranian government official or not. This exception is limited to no-cost software and services presumably because when payment is required the provider will at least have a name of the supposed end-user of the software and services. Even then, it’s not clear how a company providing fee-based personal communications software to, say, Edward Casaubon in Tehran can tell whether Mr. Casaubon is an Iranian government official or simply a tiresome and frustrated author bearing an uncanny resemblance to John Locke.

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Feb

12

OFAC Filches Professor’s Good Name

Posted by Clif Burns at 8:17 pm on February 12, 2014

Sources:http://stephenlaw.blogspot.com/ and http://magwayfootballclub.com/images/stories/group/u_tun_myint_naing.jpg [Fair Use] Stephen Law is a distinguished scholar, a philosopher and a senior lecturer at Heythrop College, University of London. Steven Law, on the other hand, is a Burmese man, also known as Tun Myint Naing, who helps to run his father’s drug trafficking empire as Managing Director of Asia World Co., Ltd. Guess which one of these men is on the Office of Foreign Assets Control’s List of Specially Designated Nationals and Blocked Persons? Guess which one on these men pays the price for this and is unable to conduct basic business transactions? If you guessed Steven and Stephen, respectively, then you were right.

Professor Stephen Law recounted his travails at the hands of OFAC in this recent blog post.

I have discovered that, as a result of this listing, US Customs block shipments of goods to me here in the UK. Also when people try to wire me money from abroad (not just from the US, but from anywhere), for e.g. occasional travel expenses for academic conference attendance, the payment is interrupted and various checks are made before the funds are released. This became so bad during one period (a series of payments every single one of which triggered a block) that I had to switch to a different bank account. At no point was I told why this was happening (i.e. that you, OFAC, are responsible). The banks concerned believe they must keep this information from me (I was told this by my bank branch). Hence it took me many months to figure out what the source of the problem was: OFAC/US Treasury.

Long-time readers will know that we’ve been highlighting for quite some time the injustice caused to innocent people by OFAC designations of similarly named individuals. Back in 2007, we described in one post cases of people who had mortgages and car loans denied, PayPal accounts closed, and basic consumer transactions refused because they had a name similar, in whole or in part, to someone else on the SDN list.

The irony, then and now, is that kingpin Steven Law, the narcotics trafficker, has a right to seek removal from the SDN List but that, according to OFAC, a non-designated individual, such as Professor Stephen Law, has no right to request any relief from OFAC, whether it be a clearance letter or the inclusion on some kind of white list. OFAC officials have said that the reason for not providing such documentation is that the person involved might later need to be designated, a foolish and unconvincing rationale at best.

Of course, there is a recent development that suggests that OFAC’s rule might not be so hard and fast with respect to collateral victims of OFAC designations. In June 2011, OFAC designated Tidewater Middle East Co., which is the company in charge of managing seven of Iranâ€™s ports and which was accused by OFAC of facilitating Iran’s export and imports of arms and materiel. Oddly, however, the announcement designating Tidewater went out of its way to say this:

There is no relationship between today’s target, Tidewater Middle East Co., and Tidewater (US), an international shipping company headquartered in the United States, listed on the New York Stock Exchange as TDW.

It seems to me that OFAC’s special concession to a similarly named U.S. company erodes its already risible reason for not providing some assistance to collateral victims of the designation process and that if the innocent Stephen Law demanded that OFAC distinguish him from the other Steven Law, OFAC would find it harder to tell him to change his name if he didn’t like being treated like an SDN. This is not to say it wouldn’t do so, just that it would be even more shameless than it used to be and that such a position would possibly be more vulnerable now to challenge by litigation.

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Feb

7

Law Suit Prompts Removal of Ante Gotovina from SDN List

Posted by Clif Burns at 12:21 am on February 7, 2014

Category: Balkan Sanctions • OFAC • SDN List

Ante Gotovina http://rudebutgood.blogspot.com/2012/11/ante-gotovina.html [Fair Use]

ABOVE: Ante Gotovina

At the beginning of January, we reported on a lawsuit filed by Ante Gotovina, an alleged war criminal, who sued the Treasury Department’s Office of Foreign Assets Control (“OFAC”) seeking removal from OFAC’s Specially Designated Nationals and Blocked Persons List (the “SDN List”). Gotovina claimed that he should be removed based on the 3-2 reversal by an Appeals Panel of the International Criminal Tribunal for the Former Yugoslavia (“ICTY”) of his conviction for war crimes. Earlier this week OFAC quietly removed Gotovina from the SDN list, announcing the removal in this Federal Register notice and stating that “circumstances no longer warrant inclusion” of Gotovina on the SDN List.

Getting removed from the SDN List is normally no easy task. Requests for removal normally languish for months or years at Treasury without response even though during that period the designated individual is unable to conduct financial transactions with U.S persons or firms. Indeed, a listed individually technically can’t even buy a hot dog on a street corner in New York while designated, although I personally have never seen any NYC hot-dogÂ vendors card their customers and run their names against the SDN List. The Gotovina case suggests that the best way to get OFAC’s attention is to force the issue in court where, like it or not, OFAC will have to respond one way or the other on the court’s schedule, not its own.

Gotevina’s lawyer said that OFAC did not even bother to call him with the news of Gotovina’s removal.

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Feb

5

BIS Takes the Gloves Off

Posted by Clif Burns at 10:41 pm on February 5, 2014

Category: BIS • Iran Sanctions

Nitrotough Gloves http://www.marigoldindustrial.com/upload/img/nitrotoughN230B_web_situation_205x205.jpg [Fair Use] New Jersey based Ansell, maker of, among other things, protective gloves and protective, er, intimate apparel, was fined $190,000 in connection with the shipment of $73,700 of protective gloves to Iran. A French company affiliated with Ansell was also fined $190,000 in connection with these shipments.

The most interesting part of this case is the evasion charge under Â§ 764.2(h) that BIS tacked on. Basically BIS charged that evasion occurred because the company transshipped the gloves through the UAE. Of course, most cases involving shipping to embargoed countries involve transhipment through a third country — usually the UAE — and yet BIS does not normally charge evasion in those cases, as it did not in this case. The charging documents here contain an extensive description of communications among the employees involved discussing the need to use a “middle company” in a third country to get around the embargo, so this may have been the motivating factor, although such discussions more normally used as a basis for adding an “acting with knowledge” charge under Â§ 764.2(e)

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Feb

4

Praise the Lord and Pass on Exporting the Ammunition

Posted by Clif Burns at 8:15 pm on February 4, 2014

Category: Criminal Penalties • DDTC • USML

U.S. Court of Appeals for the Fourth Circuit via http://www.gsa.gov/graphics/staffoffices/PowellCourthouse.jpg [Public Domain]

ABOVE: Fourth Circuit Court of Appeals

The Fourth Circuit recently handed down a decision in United States v. Bishop in which it upheld the conviction of Brian Bishop, a U.S. foreign service officer, who was convicted of an attempted export of ammunition in connection with his move from his residence in Alabama to his post in Jordan. Bishop’s appeal centered on the knowledge requirement for an export conviction, arguing that he was unaware that the items he was exporting were on the USML. The Fourth Circuit held that specific knowledge that the items were USML is not necessary to support a conviction and ruled that the District Court had adequate evidence that Bishop knew that the exports were illegal.

The odd part of this finding is that Bishop had left the ammunition in the boxes in which the ammunition was purchased and which were clearly labelled â€œORMâ€“Dâ€ and â€œcartridges, small arms.â€ Indeed, the District Court relied on that labeling to acquit Bishop on charges of delivering ammunition to a carrier without notice in violation of 18 U.S.C. Â§ 922(e). Generally speaking, criminal export cases almost always rely on mislabeling the goods as the most significantÂ indicia of criminal intent, so this case is a bit of an outlier.

The evidence of Bishop’s intent relied on by the District Court, and upheld by the Fourth Circuit, seems pretty sketchy. The Fourth Circuit cited State Department training that Bishop received on the Foreign Affairs Manual, which states that shipment of ammunition is prohibited. The FAM cites 27 C.F.R. Â§ 478 as authority for that prohibition and that regulation cites the Arms Export Control Act, although there is no suggestion that Bishop looked up the text of that regulation, not cited in the FAM, and saw its reference to the AECA. And, worse yet, the State Department employee who provided the FAM training to Bishop herself testified: “I can’t tell you what the State Department’s reasoning isâ€ for prohibiting the shipment of ammunition.

The Fourth Circuit further cites an email from the moving company that Bishop’s wife received after the moving company had taken possession of the household effects stating that the shipment of the ammunition was illegal. This hardly seems probative of Bishop’s state of mind when he gave the ammunition to the moving company for export. Also cited by the Court was an inventory, prepared by the movers, which Bishop signed, and which did not mention the ammunition. Â However, there was no evidence that he read the inventory carefully or noticed the omission. The worst evidence for Bishop is, perhaps, the fact that some of the ammunition was repacked by Bishop in boxes labelled “weights,” although it seems hard to rely on that when some of the ammunition remained in its original packaging and was clearly marked as ammunition. Â Indeed, all of the evidence cited by the two courts cannot trump the simple fact that Bishop shipped the ammunition in clearly marked boxes.

Ironically, in a case that turns on knowledge of illegality, the court and the prosecutors themselves seem to be confused about what ammunition is and isn’t on the USML. Excluded from the AECA charges were “nearly 2,000 rounds of .45â€“caliber and 12â€“gauge shotgun ammunition.” These were only included in the count alleging delivery of ammunition without notice to a carrier. The 12-gauge shotgun shells are probably not Category III of the USML because shotguns with barrel lengths of 18 inches or longer are excluded from Category I. That ammunition would therefore be controlled under ECCN 0A984 and could be exported to Jordan without license. But .45 caliber ammunition is clearly covered under USML Category III, so it is odd that it was excluded from the count alleging the AECA violations.

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