The New-Jersey-based Educational Testing Service recently put up an announcement on its website indicating that it had, at least temporarily, stopped administering the “Test of English as a Foreign Language” (“TOEFL”) in Iran.

The United Nations Security Council has passed a resolution affecting banks and financial institutions that conduct business in Iran. As a result of this resolution, ETS is currently unable to process payments from Iran and has had to temporarily suspend registration and all paid services until alternative arrangements can be made. ETS is working on a solution that will allow us to reopen registration as soon as possible. This message will be updated when we have more specific information to share.

U.S. colleges and universities typically require that Iranians, and other foreign students, demonstrate English proficiency through satisfactory scores on the TOEFL prior to admission, and the cessation of the TOEFL in Iran will make it more difficult for Iranian students to study in the United States.

It’s more than a little embarrassing for a company that tests others for their knowledge to make a n avoidable mistake on their website. The recently passed UNSCR 1929 does not prevent banks from processing payments from students taking TOEFL unless processing those payments “contribute[s] to Iran’s proliferation-sensitive nuclear activities, or the development of nuclear weapon delivery systems” in contravention of Paragraph 21 of the resolution.

ETS may have meant to refer to recently passed U.S. sanctions on Iran, but even then those sanctions don’t prohibit banks from processing TOEFL payments. Section 104(c)(1) of the Comprehensive Iran Sanctions, Accountability and Divestment Act of 2010 requires Treasury to promulgate regulations (which has not yet occurred) to forbid foreign banks from opening correspondent accounts with U.S. banks if the foreign bank has aided Iran’s efforts to acquire weapons of mass destruction or to support foreign terrorist organizations. Processing TOEFL payments from Iranian students is several steps short of that.

The New York Times weighs in on the situation with this:

Karim Sadjadpour, an Iran expert at the Carnegie Endowment for International Peace, said E.T.S. was exactly the kind of organization that should be exempt from the sanctions.

“Prohibiting Toefl from operating in Iran is counterproductive to the spirit of smart sanctions,” he said, noting that the exam is often a path to the outside world for young Iranians.

“The government is not being hurt by Toefl not operating in Iran,” he said. “It’s the people, and precisely the people we’re hoping to empower.”

Neither the new U.N. or U.S. sanctions are prohibiting ETS from administering tests in Iran. At most, foreign banks, spooked by potential due diligence obligations that may be imposed by not yet adopted Treasury regulations, have decided to stop doing business with all Iranian banks.

(For those of you wondering what ETS is doing providing testing services in Iran, the company is probably exploiting the loophole in section 560.314 of OFAC’s Iranian Transaction Regulations that would permit its Dutch subsidiary to operate in Iran.)

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