Under U.S. sanctions, iPhones and Facebook are OK for Iran. But no sales agents

The United States government has imposed tough long-term trade sanctions on Iran because of its nuclear program. But our policy makers want Iranian citizens to have access to the Internet, mobile phones, chat services, and other social media. That, after all, is how news spreads and change happens.

So in May last year, the Treasury Department’s Office of Foreign Assets Control (OFAC) issued a general license that allowed U.S. businesses to export to Iran relevant services, software, and hardware. But there were few takers. U.S. businesses, after years of sanctions, were still worried about the risks of trade with Iran, even under the general license.

To fix that, OFAC in February issued an amendment to the general license (GL D-1). OFAC said it was trying to “promote the availability of personal communications over the Internet to Iranian citizens, including instant messaging, chat and email, social networking, sharing of photos and movies, web browsing and blogging.”

The amended version “expanded and clarified” the general license, OFAC said.

OFAC still needed to talk about using agents to sell the permitted software, hardware, or services. Agents, as everyone knows, are sometimes essential for doing business in closed countries like Iran.

But . . . sales agents can be hard to control. There’s always a chance they’ll pass money along to foreign officials, even when they’re told not to. And in Iran, how much reliable due diligence would a U.S. company be able to do on a perspective sales agent? In any case, the comprehensive trade sanctions would prohibit paying for on-the-ground due diligence in Iran and sales agents there.

So in its FAQs, OFAC said sorry — no sales agents in Iran are allowed, even under GL-D-1.

Here’s the item:

348. May U.S. persons employ agents in Iran to facilitate sales, create or fund a physical sales presence on the ground in Iran, or utilize Iranian commercial marketing services in furtherance of exports authorized under GL D-1?

No. GL D-1 does not authorize the employment of persons in Iran to facilitate sales, the maintenance of a physical sales presence in Iran, or the utilization of Iranian marketing services. However, certain copy-ready advertising materials are exempt from the prohibitions of the ITSR [Iranian Transactions And Sanctions Regulations] to the extent they qualify as information or informational materials pursuant to 31 C.F.R. § 560.210(c).

OFAC’s FAQs are here.

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Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.