I have spoken before about the weirdness surrounding the E.O. 13599 List, which has some (but unaccountably not all) of the entities controlled by the Government of Iran that were removed by the Office of Foreign Assets Control from the SDN List as part of Implementation Day. As far as U.S. persons and companies are concerned, entities owned or controlled by the Government of Iran are still blocked whether they are on the SDN List or not, and the E.O. 13599 List was designed to flag some (but not all) of those entities owned or controlled by Iran that were once on the SDN list but are still off-limits.

What seems odd is this “some but not all” nature of the E.O. 13599 List. OFAC in its guidance made clear that U.S. persons could not assume that just because an entity was removed from the SDN List but not put on the E.O. 13599 List that it was okay to do business with that entity. Whether any such omission was the result of incompetence, uncertainty, a desire to lay a trap for U.S. exporters or some super secret reason only known to OFAC, no conclusion, OFAC said, should be drawn from such omission.

That being said, the most puzzling instance of an Iranian government entity falling into the uncertain limbo between the SDN List and the E.O. 13599 List is Iran Air. Although it appears that Iran has made several unsuccessful attempts to privatize Iran Air, the best evidence appears to be that Iran Air is owned and controlled by the government of Iran. The Iran Air website is, not surprisingly, cagey about revealing its ownership.

It seems clear that Iran Air was removed from the SDN List in order to make it eligible as an end-user under the new policy permitting licensing the sale of aircraft and parts to Iran. But why it was not added to the E.O. 13599 List is a complete mystery. Certainly OFAC, with the vast apparatus of the U.S. intelligence and spying apparatus, knows precisely whether Iran Air is owned and controlled by the government of Iran. The rest of us are forced to rely on the markedly less reliable Internet which seems to say, in some places and probably inaccurately, that Iran Air may have been privatized and in other places confirms that it is state-owned.

One has to imagine, but hope that it is not the case, that the omission of Iran Air from the E.O. 13599 is simply a trap for the unwary with OFAC hiding in the bushes, poised to pounce on the first U.S. company that dutifully checks the lists and concludes that it can deal with Iran Air.

Well, Implementation Day has come and gone.  Hassan Rouhani peeked out of his house, did not see his shadow, and his handlers declared that winter would soon be over … at least if you’re in Europe.  If you’re in the United States, not so much, where the sanctions remain pretty much the same, albeit more confusing.  Meanwhile half of the CEOs of European companies are booking first class flights on Air France to Tehran where they will sign lucrative contracts to sell their goods and services.

For U.S. persons, there are a few minor benefits to Implementation Day.   U.S. companies can sell civil aircraft parts to Iran as long as they get a license from OFAC.  And you can now enjoy Iranian foodstuffs such as Iranian caviar and pistachios.   In addition, foreign subsidiaries of U.S. companies can deal with Iran as long as the parent company, its employees and all U.S. persons carefully tread the treacherous facilitation line where one misstep leads to immediate catastrophe, penalties and, maybe, jail terms for all.

The only other benefit of Implementation Day to anyone in the U.S. involves removals of certain persons and companies from the SDN List.  But, but, but (surprise!) there are major caveats.   The removed parties are still blocked and off-limits to U.S. persons if they are part of the Iranian government (including state-owned enterprises) as defined in section 560.304. Second, they can’t be an Iranian financial institution as defined in section 560.324.

Now this is where the fun begins.   Many of the entries removed from the SDN List on Implementation Day were either Iranian government entities or financial institutions.   So, OFAC now has a new list for you to check of people removed from the SDN list who are still blocked and off-limits to U.S. persons.  That’s right:  implementation day brought U.S. citizens yet another list to check.  These are the entities marked with an asterisk in Attachment 3 to Annex II of the JCPOA which are now compiled in the new list, the E.O 13599 List, and which can be found here (at least until OFAC, to keep its web designers employed, reorganizes its website again and breaks all previous links).

But the fun doesn’t stop there.  The federal government, aware of its own incompetence and keen to punish those who rely on it, says this in the otherwise excellent January 16 guidance on the effect of implementation day:

Please be advised that, under the ITSR, U.S. persons continue to have an obligation to block the property and interests in property of individuals and entities listed in Attachment 3 to Annex II of the JCPOA that do not have an asterisk next to their name and are not included on the E.O. 13599 List if such persons meet the definition of either the Government of Iran or an Iranian financial institution as set forth in section 560.304 or 560.324 of the ITSR, respectively.

In plain English, just because we screwed up and didn’t put a removed party on the 13599 List and that party is in fact related to the Government of Iran, we still get to fine you if you blithely assume that removed parties not on the 13599 List are safe to deal with.  Heads we win, as they say, tails you lose.

Happy Implementation Day, everyone!