Recently, I reviewed a response by the United States Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) responded to a request for interpretative guidance, or in the alternative, specific license authorization. Here is a run down of the basic facts that were responded to: a U.S. entity sought to collaborate and partner with Iranian universities to facilitate the study of Iranian students at U.S. universities. The services to be provided as part of this collaboration include language training and recruitment services. As part of these proposed transactions, the U.S. entity would send employees to Iran and host representatives from Iranian academic institutions, universities, and counseling agencies in the U.S. In addition, the U.S. entity proposed to create a Persian-language website specifically tailored to Iranian students, build and maintain a web portal to be accessed by Iranian students for purposes of accessing information regarding the U.S. entity and its partner institutions, enroll in courses, access course information, and pay application and enrollment fees for those courses.
For those not familiar with U.S. sanctions targeting Iran, it is important to note that there is a comprehensive trade embargo–the Iranian Transactions and Sanctions Regulations (“ITSR”)–barring most activities between U.S. persons and Iran, such that the importation of Iranian-origin goods or services to the United States is prohibited, as is the exportation of U.S.-origin goods, services, or technology to Iran, and dealings in either Iranian-origin goods or services or U.S.-origin goods or services.
Notwithstanding the aforementioned prohibitions, there are several exemptions to the ITSR that apply to the facts here. For example, the ITSR–carrying through statutory exemptions found in the International Emergency Economic Powers Act–exempts from the scope of its prohibitions any postal, telegraphic, telephonic, or other personal communication that does not involve the transfer of anything of value; the importation or exportation of information or informational materials, provided the materials are fully created and in existence at the date of the transactions; and transactions ordinarily incident to travel, including importation or exportation of accompanied baggage, maintenance within any country such as payment of living expenses and acquisition of goods and services for personal use, and arrangement and facilitation of the travel.
Furthermore, there are several general authorizations contained in the ITSR that might bear on the facts here. For example, the ITSR provides general authorization for activities and services related to certain nonimmigrant and immigrant categories. This includes activities for which category F (students) and category J (exchange visitors) are authorized to carry out pursuant to those visa categories. Further, U.S. persons are authorized by the ITSR to export services to Iran in connection with an application for a visa pursuant to those categories identified in 31 C.F.R. § 560.505(a)(1).
In addition, the ITSR generally authorizes the export from the U.S. or by U.S. persons to Iran of services and software incident to the exchange of personal communications, subject to certain conditions. Further, pursuant to General License D-1, OFAC authorizes the exportation to Iran of certain services, software, and hardware incident to personal communication.
The ITSR also authorizes U.S. depository institutions to process transfers of funds to or from Iran, or for the benefit of persons in Iran, if the transfer arises from, and is ordinarily incident and necessary to give effect to, an authorized transaction, subject to certain conditions.
OFAC also maintains General License G (“GL G”) which, amongst other things, generally authorizes accredited graduate and undergraduate degree-granting academic institutions located in the United States (collectively, “U.S. academic institutions”), including their contractors, to enter into student academic exchange agreements with Iranian universities related to undergraduate or graduate educational courses, and to engage in all activities related to such agreements, including the provision of scholarships to students enrolled in Iranian universities to allow such students to attend U.S. academic institutions. GL G also authorizes the export to Iran of certain additional educational services by U.S. academic institutions, including their contractors, and further authorizes U.S. persons to administer professional certificate examinations and university entrance examinations, including multiple choice standardized tests, and to provide those services that are necessary or required for admission to U.S. academic institutions, to individuals who are located in Iran or located outside Iran but who are ordinarily resident in Iran.
The key to any of these authorizations applying, however, is that the U.S. person engaging in them be a academic institution or a contractor of such an institution. Absent meeting that definition or have a contract with an institution meeting that definition, General License G would not apply. Despite this, the ITSR does maintain a specific licensing policy that may allow the transactions to proceed. Specifically, pursuant to 31 C.F.R. § 560.545 specific licenses may be issued on a case-by-case basis to authorize U.S. persons to engage in certain targeted educational exchange programs in or related to Iran, provided they are not in furtherance of Iranian military or industrial infrastructure or potential and are designed to directly benefit the Iranian people. ITSR, § 560.545(b)(2).
So how did OFAC rule in the guidance I’m recently reviewed? First, with respect to the U.S. entity’s proposal to send its employees to Iran and to host representatives from Iranian academic institutions, universities, and counseling agencies in the United States, OFAC found those transactions to be exempt in party under the travel-related exemptions identified above, and authorized, in part, by the visa related general authorization (31 C.F.R. § 560.505) discussed in the above.
Second, OFAC determined that the creation of a Persian-language website specifically tailored to Iranian students, and building and maintenance of a web portal to be accessed by Iranian students to allow their access to information regarding the U.S. entity and its partner institutions, enroll in courses, access course information, and pay application and enrollment fees for courses was authorized by the ITSR either under 31 C.F.R. § 560.540 or General License D-1
Finally, although OFAC ruled that the General License G did not apply, after consultation with the U.S. State Department, OFAC did use its licensing authority to authorized the remaining proposed transactions pursuant to the specific licensing policy at 31 C.F.R. § 560.545.
For those keeping score at home this means, at least currently, that OFAC views:
|Provision of scholarships to Iranian students for enrollment and participation in a U.S. entity’s education programs, and in certain university programs*||X|
|Sending Employees to Iran for language training and recruitment services||X|
|Remitting payments of consultancy fees, grants, and sub-grants to partner Iranian academic institutions and
universities, to aid in funding the provision of services by a U.S. entity
|Hosting Iranian representatives from academic institutions, universities, and counseling agencies||X|
|Creating a Persian-language website specifically tailored to Iranian students||X|
|Building and maintaining a web portal to be accessed by Iranian students for purposes of accessing information regarding a U.S. entity and its partner institutions, enroll in courses, access course information and pay application and enrollment fees||X|
|Provision to Iranian students of advice on study abroad programs and certain university programs, advising on visa application procedures and planning, and advice on travel planning (including regarding the purchase of flights and housing accommodations*||X|
|Partnering with, and developing formal working agreements (e.g., Memoranda of Understanding) with
Iranian academic institutions and universities for student recruitment and in furtherance of other licensed
|Entering into contracts with Iranian consultants, including professors at Iranian academic institutions
and universities and recruiting agents, for student recruitment and in furtherance of other licensed activities
|Partnering with and retaining counseling agencies in Iran that are engaged in providing services related
to Iranian students’ study-abroad opportunities to facilitate efforts to:
a) identify prospective students for
b) provide counseling and admissions services to Iranian students;
c) aid a U.S. entity’s efforts to develop partnerships with Iranian academic institutions and universities;
e) assist in securing the U.S. entity’s accreditation from the Government of Iran
|Engaging in certain activities to promote U.S. educational institutions in Iran,
including marketing a U.S. entity’s services via partner Iranian academic institutions and universities
and counseling agencies and distributing promotional material through online and print publications
undergraduate and graduate programs in the humanities, social sciences, law, or business,
provided the only science, technology, engineering, or math courses required for completion of the
undergraduate and/or graduate degree are introductory undergraduate-level science, technology,
engineering, or math courses ordinarily required for the completion of an undergraduate or graduate
degree program in the humanities, social sciences, law, or business
The author of this blog is Erich Ferrari, an attorney specializing in OFAC matters. If you have any questions please contact him at 202-280-6370 or email@example.com.
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