932. Do U.S. sanctions prohibit U.S. persons from visiting, or making donations to, the Imam Reza Holy Shrine in Mashhad, Iran?
URGENT NOTE: The U.S. Department of State cautions against any travel by U.S. persons to Iran. The Department of State has issued a Level Four Travel Advisory (Do Not Travel) for Iran due to the risk of kidnapping, arbitrary arrest, and detention of U.S. citizens. See additional guidance available at https://travel.state.gov/content/travel/en/traveladvisories/traveladvisories/iran-travel-advisory.html.
Transactions ordinarily incident to travel to or from Iran by U.S. persons fall within an exemption under the Iranian Transactions and Sanctions Regulations (ITSR), 31 C.F.R. part 560, and therefore generally are not prohibited. See, e.g., 31 CFR. § 560.210(d). Exempt transactions include religious pilgrimages by U.S. persons to the Imam Reza Holy Shrine and the acquisition of goods or services for personal use while traveling. Furthermore, donations of articles, such as food, clothing, and medicine, by U.S. persons to the Imam Reza Holy Shrine intended to be used to alleviate human suffering also fall within an exemption and therefore generally are not prohibited under the ITSR.
However, U.S. persons may be prohibited from engaging in certain transactions involving persons blocked under sanctions programs or authorities outside the scope of the ITSR, such as Astan Quds Razavi (AQR) and its subsidiary, the Holy Shrine Organization, which oversees the Imam Reza Holy Shrine. AQR was designated and added to OFAC’s Specially Designated Nationals and Blocked Persons List on January 13, 2021 pursuant to Executive Order (E.O.) 13876 for being owned or controlled by the Supreme Leader of Iran. The Holy Shrine Organization is also considered blocked under E.O. 13876 pursuant to OFAC’s 50 Percent Rule to the extent it is 50 percent or more owned by AQR. More information about OFAC’s 50 Percent Rule is available at https://ofac.treasury.gov/faqs/401. U.S. persons are advised to act with caution when considering transactions or activities involving AQR or the Holy Shrine Organization.
Those seeking additional guidance on transactions and activities involving the Imam Reza Holy Shrine may contact OFAC’s Sanctions Compliance and Evaluation Division by email at: [email protected] or may request a specific license or interpretive guidance from OFAC’s Licensing Division online at https://licensing.ofac.treas.gov/Apply/Introduction.aspx.
Date Released
September 30, 2021
1) BACKGROUND
While ostensibly about the Imam Reza Holy Shrine and the entity that “oversees” it, this FAQ appears to contain some highly significant statements concerning the scope and operation of the travel exemption and the basic blocking prohibition.
According to OFAC (in the designation notice blocking Astan Quds Razavi (or "AQR")), Astan Quds Razavi is an Iranian “bonyad,” which OFAC characterizes as “opaque, quasi-official organizations generally controlled by current and former government officials and clerics that report directly to the Supreme Leader.” (https://home.treasury.gov/news/press-releases/sm1234). OFAC says that Astan Quds Razavi specifically “is ostensibly a charitable organization tasked with overseeing the operations of the Imam Reza shrine in Mashhad, Iran[, but] In reality, under the direct supervision of the Supreme Leader, Astan Quds Razavi has acquired vast economic holdings in construction, agriculture, energy, telecommunications, and financial services.”
See also "Inside Iran's Holy Money Machine" (WSJ, June 2, 2007, at https://www.wsj.com/articles/SB118072271215621679). The Shrine itself is a “parade of mosques, minarets and marble courtyards, is vaster than Vatican City. It draws more Muslim pilgrims than even Mecca, birthplace of the Prophet Muhammad in Saudi Arabia.” “The shrine has for centuries intermingled faith and money, collecting donations of cash, land, jewelry and works of art from the devout. Today, it is not only Iran's most sacred religious site but also, by some reckonings, the Islamic republic's biggest and richest business empire.”
As OFAC notes in the FAQ, Astan Quds Razavi is blocked pursuant to EO 13876 (targeting the Supreme Leader of Iran). EO 13876 is an IEEPA-based EO with a standard blocking prohibition to which the travel exemption applies (see General Note on the Applicability of IEEPA/TWEA Exemptions in EOs and Sanctions Regulations not Specifically Mentioning Them). However, section 3 of EO 13876 serves to disable the otherwise applicable exemption for “humanitarian donations” at section 203(b)(2) of IEEPA.
OFAC notes in the FAQ that “the Holy Shrine Organization” is a “subsidiary” of Astan Quds Razavi, so the status of the Holy Shrine Organization under EO 13876 would be the same as Astan Quds Razavi itself (assuming 50% or greater ownership, which is presumably implied by the characterization as a “subsidiary,” but we return to that question further below). As entities “in Iran,” Astan Quds Razavi and the Holy Shrine Organization are both subject to the broad non-blocking embargo prohibitions of the ITSR (e.g. 560.204 and 560.206) to which the travel exemption applies (560.210(d)). The travel exemption also applies to entities blocked pursuant to 560.211 as meeting the definition of the “Government of Iran.” The “humanitarian donations” exemption (at 560.210(b) of the ITSR) applies to non-blocked persons “in Iran,” but it does not apply to persons meeting the definition of “Government of Iran” (at 560.304 of the ITSR), and it does not apply to persons blocked pursuant to EO 13876.
Finally, there is “Imam Reza Holy Shrine” itself, which OFAC, in the FAQ, appears to consider conceptually distinct from AQR and “the Holy Shrine Organization” that oversees the shrine. OFAC does not explicitly state that a donation to the “shrine” would generally be administered by “the Holy Shrine Organization,” but one must presume (and the evidence discussed below suggests) that to be a part of the “oversight” function of “the Holy Shrine Organization”.
To summarize the above, there are three categories of prohibitions that could apply to transactions involving AQR, “the Holy Shrine Organization” and the shrine.
(i) Cat. 1 is the non-blocking, general embargo prohibitions of the ITSR (560.204, 560.206).
(ii) Cat. 2 is the blocking prohibition of the ITSR that applies to transactions involving the "Government of Iran".
(iii) Cat. 3 is the blocking prohibition applicable to persons blocked pursuant to EO 13876.
The travel exemption applies to all three categories. The humanitarian donations exemption only applies to the first category.
Furthermore, there are potentially three distinct categories of sanctioned persons/property at issue here.
(i) The first is AQR, which is definitely subject to the first and third categories of prohibitions (but apparently not the second).
(ii) The second is the Holy Shrine Organization, which OFAC suggests would be subject to the same prohibitions as AQR as a "subsidiary" of AQR
(iii) The third is "the Imam Reza Holy Shrine" itself, i.e. the physical structure, which OFAC suggests, without being explicit on that point, is distinct from AQR and the Holy Shrine Organization for sanctions purposes.
2) SCOPE OF THE TRAVEL AND HUMANITARIAN DONATIONS EXEMPTIONS (WHERE APPLICABLE)
OFAC says that transactions exempt by 560.210(d) “include religious pilgrimages by U.S. persons to the Imam Reza Holy Shrine and the acquisition of goods or services for personal use while traveling.” While “acquisition of goods or services for personal use” appears in the text of the regulation itself, it is unusual for OFAC to address the question of what specific activities can be undertaken within a country by a U.S. traveler to which the travel exemption applies. Here, “religious pilgrimages” are explicitly acknowledged as being within the scope of the exemption. This is not surprising in light of OFAC’s other travel exemption-related interpretations.
OFAC also says that “donations of articles, such as food, clothing, and medicine, by U.S. persons to the Imam Reza Holy Shrine intended to be used to alleviate human suffering also fall within an exemption and therefore generally are not prohibited under the ITSR.” (Emphasis added). This is presumably a reference to 560.210(b) of the ITSR, i.e. the “humanitarian donations” exemption that provides that “[t]he prohibitions of §§560.204 and 560.206 do not apply to donations by United States persons of articles, such as food, clothing, and medicine, intended to be used to relieve human suffering.” One could read that sentence in the second paragraph of the FAQ as implying that such donations fall within the scope of the “humanitarian donations” exemption are categorically excluded from the scope of the travel exemption, but the wording of the FAQ is less than definitive on that point. In other words, OFAC declines to rule out the possibility that making donations could (depending on the facts) be incident to an otherwise exempt pilgrimage when they are hand-delivered by a U.S. person traveler. It is, however, fairly clear that the source of authority for the making of the donations exempt from the ITSR cannot solely be the travel exemption, since the donation-related statement is not limited to donations made in connection with actual travel to the shrine (and one would expect many donations to be made without actual travel, especially in light of the State Department travel warning highlighted in the FAQ itself).
In any event, whether or not it is owed solely to the humanitarian donations exemption or the humanitarian donations exemption alongside the travel exemption in certain cases, the statement concerning the applicability of the ITSR humanitarian donations exemption to “donations of articles, such as food, clothing, and medicine” to the shrine is extremely consequential for the reasons discussed below.
3) A BLOCKED ENTITY THAT “OVERSEES” THE SHRINE DOES NOT NECESSARILY HAVE AN “INTEREST” CONTRIBUTIONS OF GOODS TO THE SHRINE (OR DOES IT?)
Embedded within the FAQ appears to be a significant “no interest” determination. It may not directly contradict any other agency interpretation of the standard blocking prohibition, but it is nevertheless not easy to reconcile with OFAC’s past practice. We first call attention to the fact that the second and third paragraphs of the FAQ appear to distinguish between transactions involving "the Imam Reza Holy Shrine " (to which donations "are not prohibited under the ITSR") from transactions involving "Astan Quds Razavi (AQR) and its subsidiary, the Holy Shrine Organization," which are "persons blocked under sanctions programs or authorities outside the scope of the ITSR."
As noted above, the IEEPA-based exemption for “humanitarian donations” does not apply to persons blocked pursuant to EO 13876. OFAC says that humanitarian donations may be made “by U.S. persons to the Imam Reza Holy Shrine” are "generally are not prohibited under the ITSR." OFAC does not explicitly address the status of those specific donations under EO 13876. Instead, the second and third paragraphs distinguish between donations made “to the Imam Reza Holy Shrine” and “certain transactions or activities involving AQR or the Holy Shrine Organization.”
Unless the FAQ is set up as a trap for the unwary or is simply incorrect as a matter of law, it must be read as standing for the proposition that a donation “to the Imam Reza Holy Shrine” is not necessarily an activity covered by the blocking prohibition applicable to "Astan Quds Razavi (AQR) [or] its subsidiary, the Holy Shrine Organization, which oversees the Imam Reza Holy Shrine". Put differently, “donations of articles, such as food, clothing, and medicine, by U.S. persons to the Imam Reza Holy Shrine” are NOT necessarily transactions or dealings in property in which "Astan Quds Razavi (AQR) [or] its subsidiary, the Holy Shrine Organization, which oversees the Imam Reza Holy Shrine" has an “interest.” OFAC had explicitly characterized those entities as "persons blocked under sanctions programs or authorities outside the scope of the ITSR" (to which the humanitarian donations exemption does not apply).
This conclusion does not, to put it mildly, sit easy with OFAC’s generally broad conception of the scope of the basic blocking prohibition. The physical shrine is presumably not a “person” for the purposes of the ITSR, so it could not be a blocked person even if it were “owned” by Astan Quds Razavi (though the physical shrine could, depending on the facts, constitute real “property” in which Astan Quds Razavi has an “interest” such that the blocking prohibition of EO 13876 would extend to all U.S.-based or offshore "transactions or dealings" with respect to such property). In any case, a donation of “articles” such as “food, clothing, and medicine” cannot, for practical purposes, be made to a physical, inanimate shrine, especially when mailed. The donations would presumably be received and administered by a “person,” i.e. the Holy Shrine Organization or Astan Quds Razavi itself. Indeed, the appearance of the travel warning in the FAQ—in conjunction with the "humanitarian donations" exemption that exists as an authority apart from the travel exemption—leads the reader to believe that shipping humanitarian donations to "the Shrine" is not prohibited.
OFAC’s typical conception of an “interest” in property extends to property that a U.S. person ships to a blocked person (even prior to the receipt of such property by the blocked person, see e.g. 560.422(b)). It is, therefore, and notwithstanding that the physical shrine itself is not a “blocked person,” extremely difficult to understand how OFAC could consider donations to “the Shrine” to be transactions outside the scope of a blocking prohibition that presumably applies to the Holy Shrine Organization that “oversees” the shrine.
Below we go over the possible explanations for the FAQ in light of EO 13876 and the fact that "humanitarian donations" exemption does not apply to it.
*The Genuine "No Interest" Possibility
One possibility is that while OFAC characterizes the Holy Shrine Organization as a “subsidiary” of Astan Quds Razavi and states that “the Holy Shrine Organization” is blocked “to the extent it is 50 percent or more owned by [Astan Quds Razavi],” OFAC made that statement even though it had already determined the Holy Shrine Organization to not be blocked pursuant to EO 13876 (e.g., because OFAC considers the Holy Shrine Organization—of which little detail is publicly available in English—to be merely controlled, rather than “owned,” by Astan Quds Razavi, and therefore not blocked). If that is the case it does change the EO 13876 “interest” analysis from one that focus on the Holy Shrine Organization to one that focus on Astan Quds Razavi itself, but it also means that the FAQ contains what could only be described as misdirection (inasmuch as the FAQ does say that the Holy Shrine Organization is “blocked under sanctions programs or authorities outside the scope of the ITSR”). In any event, even if “the Holy Shrine Organization” were a “person” distinct from Astan Quds Razavi, and even if that “person” were not “owned” by Astan Quds Razavi (and therefore technically not blocked), the donations portion of the Astan Quds Razavi website leaves very little doubt that non-cash donations mailed from abroad are transactions in which Astan Quds Razavi has an “interest”. The below (with emphasis added) comes from a page on AQR's website that was (at the time of the FAQ) the fourth hit on the U.S. version of google for "imam reza shrine donations".
...It is also possible to deliver non-cash donations to the donations offices of the organization which can be found in almost all country's province centers. It is also possible for all Iranian and non-Iranian donators to sent the non-cash donation personally and via post and bill of lading. They should send these non-cash donations to the address of Razavi Shrine, Astan Quds Razavi's general management of donations.
In non-presence cases, the reception of the donations will be sent in a written form, if donators announce their address. If they announce their phone numbers, the reception will be announced via a phone call or a written receipt will be sent to the donator, in case of address availability and donator's demand.
See https://globe.razavi.ir/en/72734/get-familiar-donations-payment-methods-razavi-shrine (https://archive.vn/wip/rpM51). (Note that "Razali Shrine" and "Imam Reza Shrine" are the same thing). There is no set of instructions for the mailing of donations to some entity that is independent from AQR.
On the basis of the above, it is very difficult to fathom AQR not having an "interest" in a non-cash donation made to "the Shrine", whether the interest is direct or indirect through some "entity" wholly controlled and/or owned by AQR that is tasked with administering the donations but is ultimately a extension of AQR (of the sort that, in the commercial context, would be an entity with which all dealings would, on a per se basis, be dealings in which AQR had an "interest").
*The "Intentional Misdirection" Possibility (Non-enforcement)
Another (less likely) possibility is that OFAC does consider the Holy Shrine Organization to be blocked pursuant to EO 13876, and would consider donations administered by that entity to be non-exempt transactions in which it and/or AQR has an “interest” (and therefore prohibited under EO 13876 as a technical matter), but OFAC went ahead with the FAQ to merely suggest that the donations would be legal, with the intent of non-enforcement of technical violations of EO 13876. This cannot be ruled out, but it would be very much out of character for the agency, and OFAC would have presumably just issued a general license for certain dealings involving the Holy Shrine Organization and/or AQR if that were the case.
*Constructive Ambiguity (Potential Enforcement)
A third possibility is that OFAC drafted the FAQ to state specifically that certain "donations...to the Imam Reza Holy Shrine...fall within an exemption and therefore generally are not prohibited under the ITSR," while intending to be "constructively ambiguous" on whether the "donations...to the Imam Reza Holy Shrine" that are exempt from the ITSR are also within the subset of transactions identified in the third paragraph as prohibited (i.e. "certain transactions involving persons blocked under sanctions programs or authorities outside the scope of the ITSR, such as Astan Quds Razavi (AQR) and its subsidiary, the Holy Shrine Organization").
If that was OFAC's intention, it would be difficult to characterize the FAQ as anything other than a trap for the unwary, as one must squint very hard at the FAQ to find the constructive ambiguity in it as it relates to humanitarian donations to the shrine. It is obvious that the FAQ will be read by the overwhelming majority of ordinary people (and sanctions practitioners alike) as conveying that travel and "humanitarian donations" (exempt from ITSR prohibitions) to the shrine are allowed, while other transactions are not.
*Mistake
A fourth possibility explaining the implied "no interest" determination discussed above is that OFAC made a mistake. If this is the case, it would presumably be corrected in relatively short order (if for no other reason, the email sent to OFAC below).
4) THE MEANING OF “GOVERNMENT OF IRAN” – THE SECOND NOTABLE APPARENT “NO INTEREST” DETERMINATION
560.211 of the ITSR, which implements EO 13599, blocks “[a]ll property and interest in property of the Government of Iran.” In practice, the prohibitions cover all dealings in property in which the Government of Iran has an “interest,” including “the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any person whose property and interests in property are blocked pursuant to [EO 13599].” (Section 3, EO 13599).
560.304 of the ITSR defines “Government of Iran” to include “[t]he state and the Government of Iran” and “[a]ny person owned or controlled” thereby. Section 2 of EO 13599 specifies that the humanitarian donations exemption (implemented at 560.210(b) of the ITSR) does not apply to the blocking prohibition applicable to the Government of Iran. 560.426 of the ITSR specifies that “no charitable contribution of funds, goods, services, or technology, including contributions to relieve human suffering, such as food, clothing or medicine, may be made by, to, or for the benefit of, or received from, the Government of Iran…or any other person whose property and interests in property are blocked pursuant to §560.211.”
Notwithstanding the foregoing, OFAC says “donations of articles, such as food, clothing, and medicine, by U.S. persons to the Imam Reza Holy Shrine intended to be used to alleviate human suffering also fall within an exemption and therefore generally are not prohibited under the ITSR.” Note that it says "not prohibited under the ITSR," of which the blocking prohibition at 560.211 is a fully integrated, constituent part.
On the basis of the foregoing, it is clear that OFAC does not consider a donation made to the “Imam Reza Holy Shrine” to be a transaction in which the “Government of Iran” (as defined in the ITSR) has an “interest.”
The implied “no interest” determination here is different from the one described in section 3, above. The question above was whether the Holy Shrine Organization, as a (presumably) blocked entity, or Astan Quds Razavi, as a definitively blocked entity, has an “interest” in the donations. If so, there is no authority for the donations. For the EO 13876 analysis, the status of the “Holy Shrine Organization” as merely “controlled,” but not owned, by Astan Quds Razavi could be of practical significance and the reason why the donations might be legal even if administered by the Holy Shrine Organization.
Here, by contrast, the question is whether the “Government of Iran” has an “interest” in donations made to the shrine itself, and the “Government of Iran” includes all persons owned or controlled by “The state and the Government of Iran, as well as any political subdivision, agency, or instrumentality thereof…” (Emphasis added). The Supreme Leader of Iran is the Iranian head of state, and Astan Quds Razavi was sanctioned by OFAC for being indirectly controlled by the Supreme Leader ("In reality, [AQR is] under the direct supervision of the Supreme Leader"). Even if the Holy Shrine Organization is not “owned” by Astan Quds Razavi, it is certainly “controlled” by that entity.
Based on the foregoing, and given (i) that 560.210(b) does not apply to persons meeting the definition of “Government of Iran,” and (ii) that OFAC has explicitly stated that humanitarian donations to the “Shrine” are exempt from regulation under the ITSR, one of the two of the following must be true: one is that OFAC does not consider Astan Quds Razavi to meet the ITSR definition of “Government of Iran.” In Iran there is a significant conceptual difference between the "government" and the "state" (with the Supreme Leader being the head of state), but the term “Government of Iran” (as defined in the ITSR) includes "the state and the Government of Iran...as well as any...instrumentality thereof" and any person "controlled" by the foregoing. If AQR is not blocked by operation of law pursuant to 560.211, it would probably mean that "the state" (as it appears in the definition of Government of Iran) does not include the Supreme Leader.
Alternatively, OFAC would consider Astan Quds Razavi and the Holy Shrine Organization it controls to constitute the “Government of Iran” for ITSR purposes, but also that those entities do not necessarily have an “interest” in donations made to the shrine “overseen” by the Holy Shrine Organization. For the reasons discussed in the context of the EO 13876 analysis, it is extremely difficult, if not impossible, to square the possibility of the Holy Shrine Organization or AQR not having an "interest" in non-exempt donation transactions with OFAC’s usual practice interpreting the notion of an “interest” in property.
5) CONCLUSION; OUTREACH TO OFAC
In light of the foregoing, we have sent the email below to OFAC to seek clarification and will update this note if and when a response is received:
___
Greetings, I'm Brian Gatta, the director of the company that operates the sanctions related research tool called TURBOFAC. I have, in the past, offered comments on aspects of OFAC guidance (see "PEESA EO-Related Errors/Oversight", sent to [email protected] on Aug 24).
I would normally not expect an answer to an inquiry asking for clarity on what a given OFAC statement means, but in the case of FAQ # 932, OFAC says that "[t]hose seeking additional guidance on transactions and activities involving the Imam Reza Holy Shrine may [email protected]..." I am therefore wondering whether SC&E might be able to answer the following question (or at least state affirmatively if it cannot). The question is:
Does OFAC consider the "donations...to the Imam Reza Holy Shrine" that "fall within an exemption and therefore generally are not prohibited under the ITSR" to not necessarily be unlawful under E.O. 13876?
This should be a straightforward question, since OFAC must expect a reasonable would-be donor to the shrine to take the statement concerning the applicability of the donations exemption under the ITSR as implying that the same exact transaction would not be prohibited under E.O. 13876. All that I am asking is for confirmation that the FAQ, as drafted, is not effectively a trap for the unwary.
I ask because, as you know, the humanitarian donations exemption does not apply to EO 13876, or 560.211 of the ITSR for that matter. So if the answer to my question is "yes," it also means that OFAC has concluded that the EO 13876 blocking prohibition applicable to AQR does not necessarily reach donations of goods to a "shrine" that is "oversee[n]" by a "subsidiary" of that blocked person. If the answer to my question is "yes", it also means that OFAC has concluded that the "Government of Iran" (defined in the ITSR to include "[t]he state and the Government of Iran" and all persons "controlled" thereby) would not necessarily have an "interest" in the donation transaction. I would not expect assistance with the factual legwork needed to square those conclusions [with] OFAC's ordinary interpretation of the blocking prohibition, but it would first be helpful to have confirmation that donations of articles to the shrine are not, in principle, prohibited by EO 13876.
Thank you for your attention,