Take a gander at this headline of a company press release today:

WWA Group Receives Cautionary Letter from Office of Foreign Assets Control

Yes, that’s right, the WWA Group, a global heavy equipment auctioneer, is trumpeting to the world that it received a “cautionary letter” from OFAC. You’d think that they had received a billion dollar government contract from the Department of Defense but, no, the cause for high fives and a happy dance is a “cautionary letter.” Either WWA Groups thinks it just dodged a bullet (or, perhaps, a thermonuclear device) or it was an extraordinarily slow news day in the WWA Group cubicles in Austin.

Maybe they did dodge a bullet. A statement in the company’s 2007 annual report reveals more about the nature of the company’s brouhaha with OFAC:

The U.S State Department and the U.S. Treasury Department of Foreign Assets Control (“OFAC”) have identified Iran, Sudan and Syria as state sponsors of terrorism, and forbid the sale of goods or services by U.S. persons or companies to these countries or to agents of the respective governments of these countries.

On April 27, 2007 WWA Group received a “cease and desist” order from OFAC proscribing the sale of equipment or services, or facilitating the sale of equipment or services to persons with registered addresses in Iran, Syria or Sudan. WWA Group has never sold equipment at auction or delivered equipment to countries or to agents of the respective governments of these countries which OFAC has identified as state sponsors of terrorism However, we have in the past sold equipment to private individuals or companies resident in Iran, Sudan or Syria who may have, on their own accord, exported such purchased equipment to their countries of residence.

If WWA Group got just a cautionary letter in such a circumstance, perhaps they do have the right to break out the champagne and alert the press. Because frankly the defense that they sold stuff to Iranians but were shocked, shocked to learn that the equipment wound up in Iran was, frankly, a flea-bitten dog of an argument. Now whether OFAC is happy that WWA Group is telling the whole world it got a pass in this case is a different matter.

[h/t to Michael Mellen, who is in the office next to mine, for sighting this press release.]

The White House issued an executive order today blocking all property of the Iranian government and all Iranian financial institutions. Prior to this action, the Iranian Transaction Regulations (“ITR”) required U.S. persons to reject transactions with these parties rather than to block them.

Simultaneously with the executive order, the Office of Foreign Assets Control issued two new general licenses — cleverly named General License A and General License B — that would nevertheless permit certain transactions involving the newly blocked parties. It also updated the FAQs on the OFAC website to provide further explanations of the effect of the executive order and the two new general licenses.

The first fear that you might have is that the blocking of the Government of Iran and all Iranian financial institutions might effectively end certain transactions authorized under the ITR, say, for example, the payment of fees in connection with the registration of trademarks in Iran permitted under section 560.509 of the ITR. General License A was issued to take care of that. It permits activities already authorized under specific licenses or general licenses issued under the ITR. “General license” in this context doesn’t just refer to documents titled “General License” like this General License A but also refers to activities specifically authorized by the regulations itself, like the previously mentioned authorization of certain activities relating to trademarks in Iran. General License A specifically excludes from its scope transactions relating to closing or liquidating Iranian accounts otherwise authorized by section 560.517.

General B permits non-commercial personal remittances as long as they are not made through Iranian banks or other entities that were previously blocked, such as Bank Saderat or Bank Melli, not including the Iranian financial institutions that were blocked by this latest executive order.

Yesterday, the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) added Iran’s Bank Tejerat to the list of Specially Designated Nationals and Blocked Persons List (the “SDN List”). This means that no U.S. person may engage in financial transactions with Bank Tejerat and all assets of Bank Tejerat that come into the possession or control of U.S. persons must be blocked.

The real impact of this is that this may well signal the end of legal exports of agricultural products, medicine and medical devices to Iran under the authority of the Trade Sanctions Reform and Export Enhancement Act of 2000, or TSRA (tis’-ruh) in Exporteranto, the lingua franca of export professionals. Exports to Iran licensed by OFAC require that the exporter must deal directly with a non-Iranian bank and that the non-Iranian banking intermediary may not use an Iranian bank on the SDN List to complete the financial aspects of the transaction.

Here is a link to a comprehensive list of Iranian financial institutions on the SDN List. As you can see, the U.S. has now designated what I believe to be all Iranian banks that are involved in international financial transactions. Here is a list on Wikipedia purporting to be all the private banks in Iran, but I am unaware of whether any of these other banks are able to engage in international transactions, although the website of EN Bank suggests that it may be able to handle international financial transactions.

That may mean, I’m afraid, that as a practical matter, TSRA exports to Iran will be cut off because there is no way for the U.S. exporter to be paid. If anyone is aware of any other banks that can be used for TSRA exports to Iran and that are not on the SDN List, please share that in the comments section.

Couple this with OFAC’s recent action putting most (and perhaps all) shipping ports in Iran on the SDN List when it designated Tidewater Marine, the executive branch has now effectively nullified the intent of Congress when it passed TSRA. This nullification could easily have been avoided if OFAC issued (or issues) general licenses that permit licensed TSRA transactions to use Iranian banks even if they are on the SDN List and to use ports on the SDN List for licensed TSRA transactions. But there is no indication that this is going to happen.

Of course, in the present environment, it is unlikely that Congress will protest this de facto executive repeal of the act.