Expanding Iran Sanctions to Aviation

August 26, 2026 by Leave a comment

A new list of sanctioned parties in the aviation industry could be on the horizon!

There is an existing Executive Order from the first Trump Administration that authorizes the Treasury Department to identify target persons and businesses as Specially Designated Nationals (SDNs) when the Secretary finds that the targets operate in certain sectors of the Iranian economy. This has traditionally included construction, mining, manufacturing, and textiles.

In a new order, the Treasury Department is adding aviation to the list of affected sectors. The new order is expected to be published in the Federal Register, tomorrow.

“I hereby determine that section 1(a)(i) of E.O. 13902 shall apply to the aviation, digital asset, gold, shipping, and technology sectors of the Iranian economy. Any person determined to operate in these sectors shall be subject to sanctions pursuant to section 1(a)(i).”

Publication of a Determination Issued Pursuant to Executive Order 13902, Federal Register (August 27, 2026).

This does not automatically impose sanctions – instead it authorizes the Secretary of the Treasury to add people and/or businesses ot the list of Specially Designated Nationals. It is typically illegal to export goods to Iran without a license, so naming Iranians as SDNs may have relatively little practical effect for American businesses. This new determination will authorize the Secretary to name SDNs from other countries who participate in the Iranian economy, and this could allow an expansion of sanctions to include more people and more companies from third countries who are doing business with Iran, especially those supporting the Iranian aviation industry.

When a person is named as an SDN, that person (and that person’s property) is blocked. This typically prevents all transactions with the blocked person. This is not just export transactions – the SDN sanctions programs typically apply to any other sort of transactions as well. Someone in the U.S. who is holding the blocked person’s property must retain that property and must file periodic reports with the Treasury notifying them of the blocked property that is held.

We expect to see more aviation companies being added to the Treasury sanctions lists as SDNs. This action highlights the importance of checking your export business partners against the US sanctions lists on every transaction.

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New Military-Intelligence Rules Apply to Certain Transactions

January 15, 2021 by Leave a comment

New US rules published today create new restrictions on support of certain military-intelligence end uses and end users. This will authorize the addition of new entities to the export control lists, and will also impose a de facto requirement to ensure your transactions are not supporting restricted military-intelligence end uses. This new restriction comes on the heels of new restrictions related to military end uses and military end users.

15 C.F.R. is being amended to create new restrictions on the support of certain military-intelligence end uses and end users.

The specific restrictions apply to transactions – of any item subject to the Commerce Department export regulations – because there is an unacceptable risk of use in, or diversion to, a ‘military-intelligence end use’ or a ‘military-intelligence end user’ in the People’s Republic of China, Russia, or Venezuela; or a country listed in Country Group E:1 or E:2 (currently Cuba, Iran, North Korea, Sudan and Syria).

Two key definitions are also added to the regulations, to explain the scope of the new restrictions:

‘Military- intelligence end use’ means the design, ‘‘development,’’ ‘‘production,’’ use, operation, installation (including on-site installation), maintenance (checking), repair, overhaul, or refurbishing of, or incorporation into, items described on the U.S. Munitions List (USML) (22 CFR part 121, International Traffic in Arms Regulations), or classified under ECCNs ending in ‘‘A018’’ or under ‘‘600 series’’ ECCNs, which are intended to support the actions or functions of a ‘military- intelligence end user,’ as defined in this section.

15 C.F.R. § 744.22(f)(1) (March 16, 2021).

‘Military-intelligence end user’ means any intelligence or reconnaissance organization of the armed services (army, navy, marine, air force, or coast guard); or national guard. For license requirements applicable to other government intelligence or reconnaissance organizations in China, Russia, or Venezuela, see § 744.21 of the EAR. Military-intelligence end users subject to the license requirements set forth in this § 744.22 include, but are not limited to, the following:

(i) Cuba. Directorate of Military Intelligence (DIM) and Directorate of Military Counterintelligence (CIM).

(ii) China, People’s Republic of. Intelligence Bureau of the Joint Staff Department.

(iii) Iran. Islamic Revolutionary Guard Corps Intelligence Organization (IRGC– IO) and Artesh Directorate for Intelligence (J2).

(iv) Korea, North. Reconnaissance General Bureau (RGB).

(v) Russia. Main Intelligence Directorate (GRU).

(vi) Syria. Military Intelligence Service.

(vii) Venezuela. General Directorate of Military Counterintelligence (DGCIM).

15 C.F.R. § 744.22(f)(2) (March 16, 2021).

In summary, the recent expansion to the military end use/user rules is further expanded to include military intelligence services (in the seven affected countries) as well.

The most difficult compliance target may be China, because of the complicated manner in which the private sector and the state are intertwined (and also because of the large volumes of trade between these two nations). Compliance in China in particular will require special attention to detail, and to ensuring that regulatory obligations are understood and that compliance is well-documented.

The new rules apply to both direct exports and also to certain transactions that are not U.S. exports. There are some limited, specific cases where the U.S. export laws apply to transactions that are not U.S. exports. The best known case is re-exports, where U.S. origin products that are exported from one third-country location to another are nonetheless subject to U.S. export regulations.

Another special case involves weapons of mass destruction, the restrictions for which have been summarized in subsection 730.5(d). Current regulations provide:

“(d) U.S. Person Activities. To counter the proliferation of weapons of mass destruction, the [Export Administration Regulations] restrict the involvement of “United States persons” anywhere in the world in exports of foreign-origin items, or in providing services or support, that may contribute to such proliferation.”

15 C.F.R. § 730.5(d) (2020).

In today’s Federal Register, the government expanded the scope of subsection 730.5(d) to read as follows (note that restrictions on missiles and nuclear, chemical, and biological weapons already existed in the regulations, but the text dealing with them is also expanded in the new rule change):

(d) ‘‘U.S. person’’ activities. The[Export Administration Regulations] restrict specific activities of ‘‘U.S. persons,’’ wherever located, related to the proliferation of nuclear explosive devices, ‘‘missiles,’’ chemical or biological weapons, whole plants for chemical weapons precursors, and certain military-intelligence end uses and end users, as described in § 744.6 of the [Export Administration Regulations].

15 C.F.R. § 730.5(d) (March 16, 2021).

This should be of note to ASA members because it expands the scope of this rule to include certain military-intelligence end uses and end users – which means that some transactions that are not strictly U.S. exports will nonetheless be restricted when the participants include U.S. persons.

The new regulation is an interim final regulation. It is exempt from the APA’s requirements for notice and comment so it will go into effect on March 16, 2021 without comment. In the interest of effective rule-making, the government is nonetheless collecting comments on this rule.

As always, if you think that your transactions may be affected by the new rule, please consider seeking our legal advice to support your compliance program.

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International Court Requires U.S. to Sell Aircraft Parts to Iran

October 5, 2018 by Leave a comment

The International Court of Justice (ICJ) has ruled that the United States must remove all sanctions that would prohibit the export of aircraft parts to Iran.  The ruling also directs the United States to “ensure that licences and necessary authorizations are granted and that payments and other transfers of funds are not subject to any restriction in so far as they relate to the goods and services.”

The Iranian Complaint in this matter was bought on or about July 16.

The Decision was issued on October 3.  It is a preliminary ruling in the case.  The court describes it as a “provisional measure[] responding to humanitarian needs [that] would not cause irreparable prejudice to any rights invoked by the United States.”  This is analogous to preliminary injunctions issued by U.S. courts (including a finding of irreparable harm, likelihood of success on the merits, and a weighing of the equities).

In response, the United States announced that it would withdraw from the Treaty of Amity that serves as the legal basis for the Iranian claim.  Article XXI of that agreement explicitly granted jurisdiction over US-Iranian disputes to the ICJ.

What effect will this ICJ ruling have?  In the United States, the Administration has already been critical of the decision, and has announced plans to withdraw from treaties that serve as the legal basis for elements of the court’s jurisdiction over the matter.  This is a strong signal that the US intends to ignore the ICJ ruling.  For US exporters, this is likely to mean that US law will continue to apply sanctions prohibiting export of aircraft parts to Iran.  But there is a stronger likelihood that the United States may stand alone in these sanctions, and other nations will continue to follow the Joint Comprehensive Plan of Action (JCPOA) that permitted nations to begin exporting certain aircraft parts to Iran.  US exporters will have to be especially vigilant about compliance in international transactions, to ensure that they are not inadvertently made parties to exports with a forbidden final destination.

For now, US exporters should continue to forbear from exporting aircraft parts to Iran unless the exporter has a valid export license covering the transaction, from the United States government.

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Doing Business With Iran Under a JCPOA License? Get Your Transactions Completed by August 6, 2018.

June 13, 2018 by 1 Comment

As we reported on May 8, the United States’ decision to end the JCPOA agreement with Iran means that existing JCPOA-based licenses will be revoked on August 6.  A number of ASA members have these export licenses, which permit aircraft-parts-business with the specified Iranian parties.

On May 8, the President announced his decision to discontinue the United States’ participation in the Agreement with Iran, and to reimpose sanctions against Iran.

The Treasury has published a document explaining the wind-down process, including answers to frequently asked questions.  The wind-down document explains that the United States government plans to revoke JCPOA-related authorizations, such as the aircraft and aircraft parts-related export licenses that were issued pursuant to the US-Iran Agreement.  Those export licenses are scheduled to be terminated as of August 6, 2018.

Those ASA members who hold JCPOA export licenses (which are being terminated) may consider applying for replacement licenses under the safety of flight statement of licensing policy found in 31 C.F.R. § 560.528. That provision permits licenses on a case-by-case basis for exporting to Iran in order to ensure the safety of civil aviation and safe operation of U.S.-origin commercial passenger aircraft.  Historically, the United States government has not issued many of these licenses, but if the transaction is valuable to the United States then the transaction might be considered for licensing.

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Business With Iran – Grinding to a Halt?

May 8, 2018 by 2 Comments

Several ASA members have looked into doing business with Iranian air carriers and other Iranian customers.  Some have even applied for export licenses to support such business.  But those efforts appear to be wasted as the US prepares to begin enforcing sanctions against Iran, once again.

Today (May 8, 2018), the President announced his decision to discontinue the United States’ participation in the Agreement with Iran, and to reimpose sanctions against Iran.

The Treasury has published a Frequently Asked Questions document explaining the upcoming process for Iranian sanctions.  The FAQ, consistent with the President’s announcement, requires the Secretaries of State and of the Treasury to take immediate steps to re-impose all United States sanctions lifted or waived in connection with the JCPOA, including those under the National Defense Authorization Act for Fiscal Year 2012, the Iran Sanctions Act of 1996, the Iran Threat Reduction and Syria Human Rights Act of 2012, and the Iran Freedom and Counter-proliferation Act of 2012.  These steps shall be accomplished as expeditiously as possible, and in no case later than 180 days from May 8, 2018.

As part of this process, the U.S. government plans to revoke JCPOA-related authorizations such as the aircraft and aircraft parts-related licenses issued pursuant to the US-Iran Agreement; expect to see these permits terminated as of August 6, 2018,

Applicants whose pending license applications are denied may resubmit their applications for consideration under the safety of flight statement of licensing policy found in 31 C.F.R. § 560.528. That provision permits licenses on a case-by-case basis for exporting to Iran in order to ensure the safety of civil aviation and safe operation of U.S.-origin commercial passenger aircraft.

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Treasury Continues to Clarify Policy on Iran

March 29, 2016 by Leave a comment

U.S. Treasury Department licensing policy with respect to Iran continues to gain clarity as the Office of Foreign Assets Control issues new licenses.  On March 24, 2016, OFAC  issued under the Iranian Transactions and Sanctions Regulations General License I – Authorizing Certain Transactions Related to the Negotiation of, and Entry into, Contingent Contracts for Activities Eligible for Authorization under the Statement of Licensing Policy for Activities Related to the Export or Re-export to Iran of Commercial Passenger Aircraft and Related Parts and Services.

In relevant part, the General License states

U.S. persons are authorized to enter into, and to engage in all transactions ordinarily incident to the negotiation of and entry into, contracts for activities eligible for authorization under the [policy for commercial aviation exports to Iran], provided that the performance of any such contract is made expressly contingent upon the issuance of a specific license by [OFAC] authorizing the activities to be performed.

In layman’s terms, the General License permits the ancillary processes that go into negotiating and finalizing a contract. The caveat is that the performance of the contract itself must be made conditional on issuance by OFAC of a Specific License covering the terms of the deal.

The benefit of General License I is to allow parties to bid on contracts and attempt to hammer out deals without having a Specific License already in place. But they must remember to make clear that the execution of any agreed-to contract is contingent upon issuance of a Specific License by OFAC.

Remember, General Licenses are those licenses that apply to everyone without any additional action required as long as you stay within the scope of the General License.

It remains important to exercise additional diligence in undertaking transactions with Iranian customers; but we can expect transactions to get easier as both Treasury and industry gain experience and familiarity with the process.  And as always, if in doubt, consult an export compliance attorney.

 

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Iran Sanctions are Still Active!

January 18, 2016 by Leave a comment

Iran has reached Implementation Day – but what does this mean? We’ve been receiving a number of inquiries about Iranian sanctions.

The news media has been reporting that US sanctions against Iran have been eliminated. This is not (yet) true.  Conversations with European companies have suggested that Europe is permitting unfettered trade with Iran, and in fact Airbus announced a plan to sell 100 aircraft to Iran as soon as sanctions are formally lifted.  Iranian Transport Minister Abbas Akhoondi announced that Iran would buy 114 aircraft from Airbus.

In the U.S., there are still live sanctions against Iran (like 31 C.F.R. Part 560) that continue to preclude the sale of aircraft parts without a license.  The Treasury Department is the lead US organization for Iran sanctions.  U.S. Treasury Department regulations still prohibit the export, sale, or supply of any services to Iran, unless there is a specific exception in the regulations that permits that export, sale, or supply.  31 C.F.R. §§ 560.204, 560.204(a)(2), 560.410; see, e.g., Guidance Relating to the Lifting of Certain U.S. Sanctions Pursuant to the Joint Comprehensive Plan of Action On Implementation Day, p. 3, fn 4 and p. 38 (published jointly by U.S. Department Of The Treasury and U.S. Department Of State January 16, 2016) (reminding the reader of the general prohibition on provision of goods and services to Iran except where explicitly permitted).  So, until the restrictive regulations are removed, we should expect the government to issue specific exceptions on an occasional basis.

Treasury has published their initial plan for the abatement of sanctions – the first set of exceptions.  This abatement plan is available for public review but it is not valid until published in the Federal Register!  But the plan is primarily focused on importing food items and carpets from Iran so it is of little use to aircraft parts distributors.

Under the post-Implementation Day plan, we should not expect free trade in aircraft parts to Iran.  Instead, aircraft parts will be subject to a favorable licensing policy, similar to what they’ve enjoyed in recent years.

“[L]icenses may be issued on a case-by-case basis to authorize U.S. persons and, where there is a nexus to U.S. jurisdiction, non-U.S. persons to (1) export, re-export, sell, lease, or transfer to Iran commercial passenger aircraft for exclusively civil aviation end-use, (2) export, re-export, sell, lease, or transfer to Iran spare parts and components for commercial passenger aircraft, and (3) provide associated services, including warranty, maintenance, and repair services and safety-related inspections, for all the foregoing, provided that licensed items and services are used exclusively for commercial passenger aviation.”

This new licensing program is effective immediately under the new licensing policy.  Under the new licensing program, there will be an expectation of controls to prevent re-transfer of goods to parties on the Specially Designated Nationals (SDN) list.  The US has warned that if aircraft, goods, or services licensed for export to Iran are used for purposes other than exclusively for commercial passenger aviation, or have been transferred to SDNs, then the United States could view this as grounds to cease performing its commitments under the agreement with Iran.

Sanctions are not going away, totally.  The fact that there is a favorable licensing policy shows that the US will maintain a presumption against trade that must be overcome with licenses.  And new sanctions are always a possibility: on Sunday, the Treasury Department announced new sanctions against parties involved in Iran’s ballistic missile program (who will be added to the SDN list).

So really, for aircraft parts distributors it remains ‘business as usual.’  Treasury licenses will still be necessary for aircraft parts transactions to Iran that are subject to US jurisdiction.

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US Easing Iran and Cuba Sanctions

November 23, 2015 by Leave a comment

The United States continues to ease sanctions against Iran and Cuba by small increments.

Sellers of commercial aircraft parts (subject to US jurisdiction) are able to apply for U.S. licenses for exporting commercial aircraft parts to Iran and Cuba. For all commercial aircraft parts transactions to these two jurisdictions,  export licenses are still required from the U.S. government (currently you may not freely ship aircraft parts on a ‘No License required’ basis to either of these jurisdictions).

Licenses for exporting aircraft parts to Iran are issued by the Treasury Department’s Office of Foreign Asset Control (OFAC).  Licenses for exporting aircraft parts to Cuba are issued by the Commerce Department’s Bureau of Industry Security (BIS).

Recently, the United States has started to remove Cuban nationals from the list of Specially Designated nations, which will make it easier to obtain licenses to do business with the Cuban aviation community.

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US-Iran Trade Possibilities Continue to Move Forward

October 19, 2015 by 1 Comment

On July 14, 2015, the United States, the European Union, and other negotiators concluded a deal with Iran called the “Joint Comprehensive Plan of Action” (JCPOA).  The purpose of this deal was to ensure that Iran’s nuclear program will be exclusively peaceful, and to open up trade with Iran.

Yesterday, Sunday October 18, 2015 was the “Adoption Day” under the JCPOA.  This is the day on which the JCPOA becomes effective.  Starting today, US government officials are acting to make the necessary preparations for implementation of their JCPOA commitments.

In connection with Adoption Day, yesterday, the President issued a memorandum directing the Secretary of State, the Secretary of the Treasury, the Secretary of Commerce, and the Secretary of Energy to take all appropriate preparatory measures to ensure the prompt and effective implementation of the U.S. commitments set forth in the JCPOA upon Iran’s fulfillment of the requisite conditions.  In particular, the President directed the agencies to take steps to give effect to the U.S. commitments with respect to sanctions described in the JCPOA beginning on Implementation Day, which will occur only once the IAEA verifies that Iran has implemented key nuclear-related measures described in the JCPOA.

In addition, on October 18, 2015, the Secretary of State issued contingent waivers of certain sanctions provisions.  These waivers are not currently in effect and will only take effect on Implementation Day.

Until Implementation Day is reached, it is still possible to use Treasury Department licenses to ship aircraft parts to Iran.

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Opportunities in Iran Extended Indefinitely

July 17, 2015 by Leave a comment

One of the biggest news stories this week was the announcement of the agreement between the P5+1 countries and Iran intended to prevent Iran from developing a nuclear weapon.  Naturally there has been vocal discussion from both sides of the aisle about the pros and cons of the deal; but one of the more immediate issues relevant to the distribution community is what the agreement means for distributors’ ability to continue selling civil aircraft parts to Iran.

As readers of this blog know, since November 24, 2013, the United States operated under a Joint Plan of Action (JPOA) with Iran that has permitted the export of commercial aircraft parts to Iran (when licensed by the US Treasury Department’s Office of Foreign Asset Control). Over the past two weeks that permission has been incrementally extended to allow sales to continue during the ongoing negotiations.

On July 14 the parties to the Iran talks announced that a Joint Comprehensive Plan of Action (JCPOA) had been reached. Included among the provisions is a provision that will permit the sale of commercial aircraft, parts, and services to Iran.  Annex II Section 5.1.1 states that the United States shall:

Allow for the sale of commercial passenger aircraft and related parts and services to Iran by licensing the (i) export, re-export, sale, lease or transfer to Iran of commercial passenger aircraft for exclusively civil aviation end-use, (ii) export, re-export, sale, lease or transfer to Iran of spare parts and components for commercial passenger aircraft, and (iii) provision of associated serviced, including warranty, maintenance, and repair services and safety-related inspections, for all the foregoing, provided that licensed items and services are used exclusively for commercial passenger aviation.

This provision, however, does not take effect until what is termed “Implementation Day” by the agreement.  Implementation Day occurs when the IAEA reports that Iran has implemented the nuclear-related measures required of it under the agreement, and the US and EU simultaneously take certain actions prescribed by the agreement. Based on the language of the JCPOA Implementation Day is not a hard and fast date, therefore it cannot be stated with specificity when the provision allowing the sale of commercial aircraft, parts, and services, official takes effect.

In order to bridge the gap between this week’s announcement of the JCPOA and the effectiveness of the provisions on Implementation Day, the Treasury Department has once again extended the JPOA, this time indefinitely.  The Treasury Department also again extended previously issued licenses.  The most recent Announcement from the Treasury Department states that:

Effective July 14, 2015, all specific licenses that:

(1) were issued pursuant to OFAC’s Second Amended Statement of Licensing Policy on Activities Related to the Safety of Iran’s Civil Aviation Industry, and

(2) have an expiration date on or before July 14, 2015, are hereby authorized to remain in effect according to their terms until Implementation Day.

This is further good news for those have licenses issued under the Second Amended Statement of Licensing Policy. As we have previously stated, please look carefully at your license language to ascertain whether it is extended with the JPOA extension.

This is generally good news for aircraft parts distributors.  Between the Treasury Department Announcement extending the JPOA under which companies have been permitted to sell to Iran (with the appropriate license) for the last year and a half, and the trade provision of Annex II Section 5 specifically providing for the sale of commercial aircraft, parts, and services, the Iran commercial aircraft market continues to be open for business.

As always, be sure before engaging in any export that the parties are allowed and that you have satisfied all the necessary license requirements mandated by the Treasury Department and other regulators.  When in doubt, consult an export compliance professional.

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