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OFAC’s IFCA/Executive Order 13645 FAQ: Iranian Automotive Sector

The question (No 310):

What is considered Iran’s automotive sector for purposes of the Executive Order?

The answer:

The E.O. authorizes the imposition of correspondent and payable-through account and Iran Sanctions Act-style sanctions for certain transactions, on or after July 1, 2013, for the sale, supply, or transfer to Iran of significant goods or services used in connection with Iran’s automotive sector. The E.O. defines the automotive sector of Iran as the manufacturing or assembling in Iran of light and heavy vehicles including passenger cars, trucks, buses, minibuses, pick-up trucks, and motorcycles, as well as original equipment manufacturing and after-market parts manufacturing relating to such vehicles. [06-03-13]

The question (No 311):

What are goods or services used in connection with Iran’s automotive sector for purposes of the E.O.?

The answer:

We anticipate that regulations to be promulgated will define goods or services used in connection with Iran’s automotive sector to include goods or services that contribute to (i) Iran’s ability to research, develop, manufacture, and assemble light and heavy vehicles, and (ii) the manufacturing or assembling of original equipment and after-market parts used in Iran’s automotive industry.

The E.O. makes sanctionable certain transactions for the sale, supply, or transfer to Iran of “significant” goods or services used in connection with the automotive sector of Iran. (See Q&A 289 above for an interpretation of “significant.”) [06-03-13]

The question (No 316):

Is the sale, supply, or transfer of finished vehicles or “auto kits” to Iran sanctionable under the E.O.?

The answer:

The E.O. does not make sanctionable the export of finished vehicles to Iran if no further assembly or manufacturing is required. As such, exporting fully assembled and finished vehicles to Iran for sale by a non-sanctioned Iranian dealer or distribution network would not be sanctionable.

In contrast, “auto kits” (or “knock-down kits”) exported to Iran for assembly in Iran would be considered goods or services used in connection with the automotive sector of Iran and the export of such kits to Iran would be sanctionable if the transaction is “significant.” (See Q&A 289 above for an interpretation of “significant.”) [07-01-13]

The question (No 317):

Is the sale, supply, or transfer of goods or services for the maintenance of finished vehicles sanctionable under the E.O.?

The answer:

Goods or services for the maintenance of finished vehicles exported to Iran would generally not be considered “significant goods or services used in connection with the automotive sector of Iran,” for the purposes of the E.O., and the provision of such goods or services would generally not be sanctionable. However, the export, sale, or distribution of goods (e.g., auto parts and accessories) or services that would contribute to Iran’s ability to manufacture or assemble vehicles, or manufacture original equipment and after-market parts in Iran could create exposure to sanctions. Persons exporting parts and services to Iran for the maintenance or upkeep of finished automobiles, and foreign financial institutions facilitating such exports, should exercise caution to ensure that the parts or services are not diverted for the manufacturing or assembly of vehicles in Iran or the manufacturing of original equipment or after-market parts in Iran, and are used only for maintenance and upkeep. [07-01-13]

Categories: Guidance IFCA Iranian Sanctions OFAC Updates Sanctions Regulations

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