OFFICE OF FOREIGN ASSETS CONTROL
IRANIAN TRANSACTIONS REGULATIONS
31 C.F.R PART 560
GUIDANCE ON TRANSSHIPMENTS TO IRAN
SUMMARY
•Except as otherwise authorized, the Iranian Transactions Regulations, 31 C.F.R. Part 560, broadly prohibit the exportation, directly or indirectly, from the United States, or by a United States person, wherever located, of any goods, technology, or services to Iran or the Government of Iran.
•The prohibitions include exportation to a person in a third country undertaken with knowledge or reason to know, that such goods, technology, or services are intended specifically for supply, transshipment, or reexportation, directly or indirectly, to Iran or the Government of Iran.
FACTUAL CONTEXT
A U.S. company engaged in the manufacture and sale of equipment contacted OFAC after learning that one of its non-U.S. person distributors...
1) BACKGROUND
This guidance, still on OFAC's website and discussed in a recent court case in which an enforcement action was challenged [1], is thought to be the basis for the "inventory exception," or "general inventory rule," that holds that U.S. persons are not in violation of 560.204 when they sell items to non-U.S. third-party distributors who, in turn, sell quantities of the U.S. company’s products to Iran, provided that the U.S.-person exporter neither knows nor has reason to know that the specific item shipped to a third country is not destined for Iran when it is exported from the U.S. This "rule" is considered a bit of unwritten "agency lore" so well-established that it makes it into handbooks for beginners [2]. The guidance (and this comment) should be read carefully so as to avoid misapplication of the "rule."
2) THE HIDDEN...