The American University in Beirut (the “AUB”) recently agreed to pay $700,000 to settle claims in a civil suit under the False Claims Act brought by the United States. One of the violations alleged was that the AUB, while receiving funds under government contracts with USAID, provided material support to Jihad al-Binaa, an SDN designated under the SDGT program, by “including Jihad al-Binaa in a database that AUB maintained on its public website (the “NGO database”) for the stated purpose of connecting Non-Governmental Organizations (“NGOs”) with students and others interested in assisting them.”
This seems to run contrary to guidance from OFAC that says that the so-called informational materials exception (otherwise known as the Berman Amendment) allows listings in membership directories. In this guidance, issued in 2003, OFAC says this
The listing of basic information on a website in a uniform format for companies around the world, including Iran, by a U.S. person, is not prohibited by the ITR. … You note in your letter that the information being added to the enhanced listings displayed on your website is based on pre-existing information supplied by customers wishing to purchase enhanced advertising from the U.S. Company. The posting of this alternative layout of information on your website regarding companies in Iran, including additional data elements of identifying information, would not be prohibited, as long as the U.S. Company does not provide any marketing services to customers in Iran or substantively enhance information provided by Iranian customers.
The same logic would seem to apply whether the sanctioned party is a resident of Iran or an SDN designated under another program.
There may be, however, some reasons why it might not. Section 594.201(a)(4)(i) prohibits the provision of “financial, material, or technological support” to an entity designated under those regulations. And although section 594.305 of the SDGT regulations contains the standard definition of “informational materials,” that term, oddly, is not used elsewhere in the SDGT regulations and there is not an explicit informational materials exemption as there is, for example, in 560.210(c) of the Iranian Transactions and Sanctions Regulations. This means that there is at least an argument that the provision of informational materials to an SDN designated under the SDGT program might constitute prohibited “financial, material or technological” support to that SDN.
The language of the Berman Amendment, set forth in 50 U.S.C. § 1702(b)(3) prohibits regulation of “importation from any country, or the exportation to any country” of informational materials. Arguably, the prohibition of provision of informational materials to an SDN does not involve the prohibition of the importation or exportation of informational materials.
The better criticism of the government’s case here is whether simply listing an SDN in a database for students is a financial, material or technological support of the SDN. If it is, then one might wonder whether OFAC violates its own regulations by providing a listing, complete with an address and alternate names, in the SDN directory, er, list. Also, one has to wonder about how Facebook gets away with giving Jihad al-Binaa its own page without violating the rule if this kind of activity if “financial, material or technological” support. The answer is simple: providing this sort of information on the Internet is not such support.
Copyright © 2017 Clif Burns. All Rights Reserved. (No republication, syndication or use permitted without my consent.)