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14 August 2019
On 23 July 2019 the US Treasury Department's Office of Foreign Assets Control (OFAC) issued its Iran-Related Civil Aviation Industry Advisory, which discusses "deceptive practices by Iran with respect to the Civil Aviation Industry". The advisory announces no new or modified sanctions, but summarises the existing sanctions regimes and cautions persons to be aware of Iran's use of deceptive practices to circumvent prohibitions regarding the unauthorised transfer of US-origin aircraft (including aircraft with 10% or more US-origin content) or related goods, technology or services to Iran.
In particular, the advisory reminds aviation industry participants about the potential consequences of doing business with air operators, such as Mahan Air, Caspian Air, Syrian Air, Dart Airlines and Kyrgyz Trans Avia. It also cautions against transactions involving any Iranian individual or entity on the OFAC's Specially Designated Nationals and Blocked Persons lists (SDN list).
The advisory further reminds sector participants that the sanctions are not limited to air carriers. Rather, the OFAC's regulations apply to a broad range of aviation-related industries, including:
The advisory describes multiple examples of Iranian practices which seek to deceive aviation-related service providers in order to acquire aircraft and related goods, technology or services. Such efforts, which have resulted in illicit business activities, include:
Some good news for the industry is that existing policies and authorisations remain in effect for the time being. This includes the "safety of flight statement of licensing policy", under which the OFAC will consider issuing specific licences to authorise exports needed to ensure the safe operation of US-origin commercial passenger aircraft. It also includes General Licence J-1, which authorises non-US persons to fly fixed-wing civil aircraft of US origin or containing greater than 10% US content to Iran on a 'temporary sojourn' basis.
The stated purpose of the advisory is to inform the civil aviation industry of potential exposure to US enforcement actions and economic sanctions for engaging in or supporting unauthorised exports to Iran or designated Iranian airlines. While no new restrictions have been announced, the publication of the advisory could signal that the OFAC will be taking a greater interest in the Iranian aviation sector.
Sanction violations can result in a variety of penalties, including:
As such, US and non-US participants in the aviation sector must remain vigilant to avoid deceptive practices by Iran and its surrogates which could result in violations of US sanctions.
For further information on this topic please contact Donald J Kassilke or Robert F Foster at Cozen O'Connor by telephone (+1 202 912 4800) or email (firstname.lastname@example.org or email@example.com). The Cozen O'Connor website can be accessed at www.cozen.com.
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