GAO 

United States Government Accountability Office

Report to Congressional Requesters

IRAN SANCTIONS

Complete and Timely 

Licensing Data 

Needed to Strengthen 

Enforcement of 

Export Restrictions 

March 2010 

GAO-10-375 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

March 2010

IRAN SANCTIONS

Complete and Timely Licensing Data Needed to 

Strengthen Enforcement of Export Restrictions

Highlights of GAO-10-375, a report to 

congressional requesters 

In 1995, the United States banned 

exports to Iran of most U.S. goods 

without a Treasury Department 

license. In 2008, the U.S. media, 

citing U.S. government statistics, 

reported that U.S. firms were 

exporting numerous goods to Iran. 

The statistics are maintained by the 

Census Bureau and are based on 

data filed by exporters or their 

agents. The United States has also 

generally banned unlicensed 

transshipments of U.S. goods to 

Iran via other nations. In this 

report, GAO assesses the extent to 

which (1) U.S. trade statistics 

accurately depict exports to Iran, 

(2) Treasury licenses exports to 

Iran in accordance with the trade 

restrictions and provides licensing 

data to enforcement agencies and 

Congress, and (3) Iran obtains U.S. 

military and dual-use goods 

through transshipment. GAO 

analyzed Census export data, a 

randomly selected sample of 

Treasury export licenses, Treasury 

licensing information systems, and 

U.S. government transshipment 

data. It also interviewed relevant 

U.S. government officials. 

What GAO Recommends

GAO recommends that Treasury 

develop the capability to provide 

complete and timely information 

on all licenses for the export of 

goods to Iran. Treasury 

commented that it was upgrading 

its licensing system for agricultural 

and medical exports, but it did not 

specify when it would upgrade its 

licensing system for dual-use items 

with potential military uses. 

U.S. trade statistics for exports to Iran erroneously include goods that were 

not exported to Iran. While the statistics indicate that U.S. firms exported 278 

types of goods to Iran from 2004 to 2008, 97 of these types of goods were 

instead exported to Ireland, Iraq, and other countries. The misidentification 

of Iran as the recipient resulted from errors in export data filings that Census 

did not detect or correct. As a result of our review, Census officials stated, 

Census has begun manually checking all new filings of exports to Iran and 

posting corrections to a Census Web page. 

While Treasury is licensing exports to Iran in accordance with export 

restrictions, it cannot provide complete and timely information about the 

licenses it has issued. Its paper-based licensing information systems cannot 

be searched to quickly identify licenses for exports of goods to Iran. For 

example, Treasury was unable to address a 2009 request from U.S. Customs 

and Border Protection (CBP) officials for complete and timely licensing data 

to support CBP inspectors at U.S. ports. Treasury’s information systems 

weaken the ability of the government to assess compliance with Iran 

sanctions. Treasury plans to upgrade its licensing information system for 

agricultural and medical exports to Iran. However, the upgrade would not 

address its inability to readily identify licenses for other goods, including 

civilian items with potential military uses. 

A wide range of U.S. military and dual-use goods are illegally transshipped to 

Iran through the United Arab Emirates (UAE), Malaysia, Singapore, and other 

countries, according to U.S. officials. The Justice Department has prosecuted 

several individuals for efforts to transship military aircraft parts to Iran. 

Illegal Transshipment Routes to Iran 

Location of transshipment intermediaries U.S. exports to intermediary countries Transshipments to Iran

UAE

Singapore

Australia

Malaysia

Luxembourg

Germany

Netherlands

Colombia

Brazil

Canada France

Iran

Sources: GAO analysis of Justice Department data; Map Resources (map).

Thailand

Austria

United Kingdom

View GAO-10-375 or key components.

For more information, contact Joseph A. 

Christoff at (202) 512-8979 or 

christoffj@gao.gov. 
Page i GAO-10-375 

Contents 

Letter 1

Results in Brief 3 

Background 5 

U.S. Export Statistics for Iran Erroneously Include Goods Not 

Exported to Iran 8 

Treasury Is Licensing Exports to Iran in Accordance with Trade 

Ban but Cannot Provide Complete and Timely Information on Its 

Licensing Decisions 11 

Iran Is Obtaining Illegal Transshipments of U.S. Military and DualUse Goods through Other Countries 15 

Conclusions 19 

Recommendation for Executive Action 19 

Agency Comments and Our Evaluation 20 

Appendix I Objectives, Scope, and Methodology 22 

Appendix II U.S. Legal Tools for Sanctioning Foreign Companies 

That Transfer Sensitive Technology 24 

Appendix III Comments from the Department of the Treasury 32 

Appendix IV Comments from the Department of Commerce 35 

Appendix V GAO Contact and Staff Acknowledgments 42 

Tables 

Table 1: Selected Goods Erroneously Included in Export Statistics 

for Iran 9 

Table 2: Selected Countries and Country Codes 9 

Table 3: Non-TSRA Licenses Issued 2008 to August 2009 12 

 Iran Sanctions 
Page ii GAO-10-375 Iran Sanctions 

Figures 

Figure 1: TSRA Licenses Issued by Treasury for Exports to Iran, 

2002-2009 7 

Figure 2: F-14 and F-4 Aircraft 16 

Figure 3: Illegal Transshipment Routes Cited in Cases Prosecuted 

2007-2009 17 

Abbreviations 

AECA Arms Export Control Act 

AES Automated Export System 

CBP Customs and Border Protection 

Census U.S. Census Bureau 

CENTCOM Defense Department Central Command 

IEEPA International Emergency Economic Powers Act 

MTCR Missile Technology Control Regime 

OFAC Office of Foreign Assets Control 

TSRA Trade Sanctions Reform and Export Enhancement Act of 

2000 

WMD weapons of mass destruction 

This is a work of the U.S. government and is not subject to copyright protection in the 

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Page 1 GAO-10-375 

 

United States Government Accountability Office

Washington, DC 20548 

 

March 4, 2010 

The Honorable Howard Berman 

Chairman 

Committee on Foreign Affairs 

House of Representatives 

The Honorable David M. Scott 

House of Representatives 

Iran’s actions to enrich uranium, conceal its nuclear program, and sponsor 

international terrorism present significant challenges to U.S. national 

interests. In response, the United States has banned the export of most 

U.S. goods to Iran without an export license from the Department of the 

Treasury. According to Treasury officials, Treasury’s general policy is to 

deny most license applications for Iran with the exception of agricultural 

and medical goods specified in a 2000 law.1

 Treasury is responsible for 

maintaining records of its export licensing decisions. In 2008, the U.S. 

media, citing U.S. government official trade statistics, reported that U.S. 

firms had exported a wide range of restricted goods to Iran, including 

military rifles. At that time, Treasury officials questioned the statistics’ 

accuracy and stated that Treasury had licensed exports to Iran in 

compliance with U.S. law and policy. The statistics, which are maintained 

by the U.S. Census Bureau (Census), are based on data that exporters or 

their agents file.2

 In addition to restricting direct exports, the United States 

has also generally prohibited U.S. firms from knowingly shipping goods to 

Iran through other nations without a Treasury license.3

 This prohibition 

includes dual-use goods (civilian goods with potential military 

applications) that the Department of Commerce has licensed for export to 

other countries. The Departments of Commerce, Defense, Justice, and 

Homeland Security are responsible for detecting and prosecuting illegal 

transshipment of U.S. goods to Iran. 

1

Trade Sanctions Reform and Export Enhancement Act of 2000, Pub. L. No. 106-387, Title 

IX, 114 Stat. 1549, 1549A-67 – 1549A-72 (codified as amended at 22 U.S.C. §§ 7201-7211). 

2

The official U.S. trade statistics can be accessed at http://www.usatradeonline.gov/. 

3

31 C.F.R. § 560.204. 

 Iran Sanctions 
 

In this report, we assess the extent to which (1) U.S. trade statistics 

accurately depict U.S. exports to Iran, (2) Treasury licenses U.S. exports to 

Iran in accordance with the trade restrictions and provides complete and 

timely licensing data to enforcement agencies and Congress, and (3) Iran 

obtains U.S. military and dual-use items through illegal transshipments. We 

also present information in appendix II regarding U.S. legal tools for 

sanctioning foreign firms that export sensitive non-U.S. technologies to Iran. 

To assess the extent to which U.S. statistics accurately depict U.S. exports 

to Iran, we asked Census to review the export statistics for Iran and 

identify the addresses of the recipients of the exports. We also met with 

Census officials to determine their methods and policies for assuring the 

accuracy of the statistics. To assess Treasury’s licensing activities, we 

selected a random sample of Treasury export licenses for agricultural and 

medical goods and determined if the goods and recipients cited in the 

licenses were consistent with U.S. law. We also reviewed Treasury 

documents concerning the systems Treasury uses to record its licensing 

activities, interviewed Treasury and other executive branch officials, and 

requested detailed licensing data from Treasury. To review the extent to 

which U.S. goods are illegally transshipped to Iran, we obtained and 

analyzed lists of relevant criminal prosecutions from the Department of 

Justice. We also discussed transshipment issues with officials of the 

Departments of Commerce, Defense, Homeland Security (including U.S. 

Customs and Border Protection and U.S. Immigration and Customs 

Enforcement), Justice, and the Treasury; the Federal Bureau of 

Investigation; and other government agencies. The Department of 

Commerce (Commerce) provided us with transshipment-related 

information that it controls as being “for official use only.” We have not 

included that information in this report but have instead incorporated it 

into a “For Official Use Only” report that is not publicly available. 

We conducted this performance audit from May 2009 to March 2010 in 

accordance with generally accepted government auditing standards. Those 

standards require that we plan and perform the audit to obtain sufficient, 

appropriate evidence to provide a reasonable basis for our findings and 

conclusions based on our audit objectives. We believe that the evidence 

obtained provides a reasonable basis for our findings and conclusions 

based on our audit objectives. Our scope and methodology are described 

in greater detail in appendix I. 

Page 2 GAO-10-375 Iran Sanctions
 

The U.S. government’s official statistics for U.S. exports to Iran 

erroneously include goods that were exported to countries other than Iran. 

These statistics indicate that U.S. exporters shipped a total of 278 different 

types of goods to Iran from 2004 to 2008. However, we found that 97 of 

these types of goods, including military rifles, were shipped not to Iran but 

to a variety of other nations, including Ireland, Israel, and Iraq. The 

remaining 181 types of goods consisted primarily of agricultural, medical, 

humanitarian, and informational items. The misidentification of Iran as the 

recipient country in the statistics resulted from export data filing errors 

that Census did not detect or correct because of the low dollar value of the 

export transactions. Although their dollar value is small relative to the 

value of all U.S. exports, the accuracy of the Iran export statistics is 

important because the United States has severely restricted trade with Iran 

as a state sponsor of terrorism. Census officials stated that, as a result of 

our review, they have initiated a manual check of new filings of exports to 

Iran, required filers of export data to select recipient countries from a list 

instead of allowing them to enter a two-letter international standard 

country code, and begun posting newly-detected corrections to Iran 

export data on a Census Web page. According to Census officials, it is too 

soon to determine whether these actions will improve the accuracy of 

future U.S. trade statistics for Iran. 

Results in Brief 

Treasury is issuing export licenses for Iran in accordance with export 

regulations but cannot routinely provide complete and timely information 

about those licenses. We reviewed a random sample of 58 licenses drawn 

from 1,833 agricultural and medical export licenses issued from late 2006 

to mid-2009 and found that the sampled licenses were consistent with U.S. 

export regulations related to agricultural and medical items. We also 

determined that Treasury had complied with legal restrictions applicable 

to licensing the export of dual-use technology to insure the safety of civil 

aviation and safe operation of U.S.-origin commercial aircraft. However, 

we identified weaknesses in Treasury’s ability to retrieve and provide 

complete information about its licensing decisions. Treasury uses two 

paper-based information systems to record data on all Iran-related 

licensing decisions. The systems are not integrated with one another, and 

neither can be searched to specifically identify licenses for the export of 

goods to Iran. As a result, Treasury has been unable to consistently 

provide timely responses to requests for complete information on such 

licenses. For example, Treasury was unable to respond to a 2009 request 

from U.S. Customs and Border Protection (CBP) officials for complete and 

timely Iran licensing data. CBP officials stated that they sought the 

information to help CBP inspectors verify that goods at U.S. ports had 

been properly licensed for export to Iran. Because Treasury administers 

Page 3 GAO-10-375 Iran Sanctions
 

the U.S. sanctions program on Iran, its inability to provide complete and 

timely information on export licenses undermines the U.S. government’s 

ability to assess compliance with the sanctions. Treasury is planning to 

upgrade its system for tracking licenses for agricultural and medical 

exports to Iran, which are permitted by U.S. law. However, the upgrade 

would not include the small number of export licenses for other types of 

goods, such as civilian aircraft safety equipment with potential military 

uses. 

Iran is obtaining U.S. military and dual-use goods that are illegally 

transshipped through intermediaries in third-party nations, according to 

U.S. officials. Goods involved in cases of actual or attempted 

transshipment include parts for Iran’s U.S.-built fighter aircraft, military 

helicopters, and air defense systems; night vision equipment; submachine 

guns; computers; laboratory equipment; specialized steel; pumps with 

nuclear applications; and electronic components for missiles. Criminal 

cases handled by the Justice Department indicate that U.S. goods are often 

transshipped to Iran through the United Arab Emirates, Malaysia, or 

Singapore. To address the problem, U.S. agencies have conducted 

investigations to uncover Iranian procurement networks and prosecuted 

at least 30 firms and individuals during 2007 through September 2009. 

To help ensure that U.S. agencies have timely access to reliable data 

concerning licensed U.S. exports to Iran, we are recommending that the 

Secretary of the Treasury ensure that Treasury develop the capability to 

provide other agencies and Congress with complete and timely 

information concerning all licenses issued for the export of goods to Iran. 

In commenting on a draft of this report, Treasury stated that it was 

upgrading the licensing system that tracks agricultural and medical 

exports to Iran. However, it did not specify when similar upgrades would 

occur for a licensing system that tracks other exports, including dual-use 

items that have potential military applications. We therefore have not 

changed our recommendation. Treasury also stated that the title of our 

draft report implied that its information systems weakened 

implementation of sanctions on Iran. We therefore modified the title to 

clarify our message and reinforce our recommendation. Treasury’s 

comments are reproduced in appendix III. 

The Department of Commerce provided technical comments in writing, 

which we have incorporated as appropriate and reproduced in appendix 

IV. The other agencies cited in this report did not provide formal 

comments. CBP, U.S. Immigration and Customs Enforcement, and 

Page 4 GAO-10-375 Iran Sanctions
 

Treasury provided technical comments, which we incorporated as 

appropriate. 

The U.S. government’s official trade statistics are maintained by the U.S. 

Census Bureau for use as economic indicators and measures of the U.S. 

balance of trade with other countries. The statistics are based primarily on 

data filed by exporters and their agents4

 into the electronic Automated 

Export System (AES) database.5

 Census maintains the AES data on a 

mainframe computer operated by the Department of Homeland Security’s 

U.S. Customs and Border Protection. While most filers enter data through 

the Census Bureau’s AESDirect or a related Census system, others have 

developed their own software for this purpose. The data filed into AES 

includes the recipient country. Until recently, filers of export data 

designated the recipient country by choosing a two-letter international 

standard country code. Data filers also designate the type of good being 

exported from a list of more than 8,000 internationally harmonized 

commodity codes. According to these statistics, the United States 

exported worldwide nearly $1.3 trillion during 2008. 

Background 

U.S. exports to Iran are severely restricted by U.S. laws and regulations. 

Before 1979, the United States enjoyed good relations with the Iranian 

government and exported military equipment to Iran. However, U.S.-

Iranian relations deteriorated sharply following the 1979 Iranian revolution 

and the consequent seizure of U.S. embassy personnel. Iran’s subsequent 

efforts to enrich uranium and support international terrorism prompted 

the United States to impose numerous sanctions on Iran, including a 1995 

ban on almost all U.S. exports to that country.6

 The current ban is 

administered by the Office of Foreign Assets Control of the U.S. 

Department of the Treasury, which is also responsible for licensing 

financial transactions with Iran and imports from Iran.7

 Under the ban, in 

 

4

Most data (67 percent) are submitted electronically by exporters and their agents using the 

Automated Export System, according to Census. The remainder is compiled using data 

obtained electronically through a U.S. data exchange with Canada. 

5

Section 1404(b) of the Foreign Relations Authorization Act, Fiscal Year 2003 requires the 

issuance of regulations to require all persons required to file export data to do so through 

AES. Pub. L. No. 107-228, § 1404(b), 116 Stat. 1350, 1454 (2002). 

6

Exec. Order No. 12,959, 60 Fed. Reg. 24,757 (May 6, 1995). Items exempted from the ban 

include donations of clothing, food, and medicine to relieve human suffering; and 

informational materials such as films, posters, and publications. 

7

Iranian Transaction Regulations, 31 C.F.R. part 560. 

Page 5 GAO-10-375 Iran Sanctions
 

general, a U.S. person must obtain a Treasury license before exporting or 

selling goods to Iran.8

 Congress had already restricted exports to Iran by 

prohibiting the export of dual-use goods (civilian goods with potential 

military applications) to Iran.9

 This prohibition can be waived by the 

President if the President determines that doing so is essential to the 

national interests of the United States.10

According to Treasury officials, Treasury policy is to generally deny 

license applications for the export of U.S. goods to Iran, with the 

exception of goods covered by the Trade Sanctions Reform and Export 

Enhancement Act of 2000 (TSRA). TSRA requires the President to 

terminate any unilateral agricultural or medical sanctions against a foreign 

country or foreign entity.11 TSRA also states that the export of agricultural 

commodities, medicine, or medical devices to a designated state sponsor 

of terrorism, such as Iran,12 shall only be made pursuant to 1-year 

licenses.13 As a result, Treasury licenses the export of agricultural goods, 

medicines, and medical goods to Iran and other sanctioned countries.14

Treasury has issued a growing number of licenses for agricultural and 

medical exports to Iran following passage of TSRA, as shown in figure 1. 

TSRA licenses may not be granted for exports to entities linked to 

international terrorism, the proliferation of weapons of mass destruction, 

or narcotics trafficking. 

 

8

In this context, a U.S. person is “any United States citizen, permanent resident alien, entity 

organized under the laws of the United States (including foreign branches), or any person 

in the United States.” 31 C.F.R. § 560.314. 

9

The Iran-Iraq Arms Nonproliferation Act applies to Iran specific sanctions established in 

section 586G of the Iraq Sanctions Act of 1990, as contained in the Foreign Operations, 

Export Financing, and Related Programs Appropriations Act, 1991(Pub. L. No. 101-513, §§ 

586-586J, 104 Stat. 1979, 2047-55 (1990)). Pub. L. No. 102-484, § 1603, 106 Stat. 2315, 2571 

(codified as amended at 50 U.S.C. § 1701 note). These sanctions prohibit exports of dualuse items. See 50 App. U.S.C. §§ 2401-2420; 15 C.F.R. Pt. 774, Supp. 1. 

10Pub. L. No. 102-484, § 1606. Commerce is generally responsible for licensing dual-use 

exports but has deferred to Treasury on licensing the export of such items to Iran. 15 

C.F.R. § 746.7. 

1122 U.S.C. § 7204. 

12In 1984, the Secretary of State designated Iran as a state sponsor of terrorism. 

Determination Pursuant to Section 6(i) of the Export Administration Act of 1979 – Iran, 49 

Fed. Reg. 2,836 (Jan. 23, 1984). 

1322 U.S.C. § 7205. 

1431 C.F.R. §§ 560.530, 560.532, 560.533. 

Page 6 GAO-10-375 Iran Sanctions
 

Figure 1: TSRA Licenses Issued by Treasury for Exports to Iran, 2002-2009 

Licenses

Source: GAO analysis of Treasury data.

Fiscal year

0

100

200

300

400

500

600

700

800

2002 2003 2004 2005 2006 2007 2008 2009

The trade ban also generally prohibits exports of U.S. goods (including 

dual-use items) to countries other than Iran without a Treasury license if 

the exporter has reason to know the goods are specifically intended for 

transshipment to Iran.15 Foreign firms are generally prohibited from 

knowingly reexporting goods on Commerce’s list of controlled dual use 

goods to Iran even if those goods were originally legally exported from the 

United States to a third country under a Commerce license.16 For example, 

dual-use U.S. goods exported to countries other than Iran under a 

Commerce license may not be subsequently transshipped to Iran without a 

Treasury license if the exporter knew or had reason to know that such 

goods were intended for Iran. The Departments of Commerce, Defense, 

Homeland Security, Justice, and the Treasury investigate allegations of 

illegal transshipment of U.S. goods to Iran. Exporters who knowingly ship 

U.S. goods to Iran via other countries without a Treasury license are 

subject to prosecution by the Department of Justice. Congress is 

 

1531 C.F.R. §§ 560.204 

1631 C.F.R. §§ 560.205 

Page 7 GAO-10-375 Iran Sanctions
 

considering new sanctions that would restrict Iran’s ability to import 

goods from other countries.17

The U.S. government’s official statistics for U.S. exports to Iran 

erroneously include many types of goods that U.S. firms did not export to 

Iran. The misidentification of Iran as the recipient country in the statistics 

is the result of export data filing errors that Census did not detect or 

correct. Census officials stated that, as a result of our review, Census has 

begun manually checking new export filings reporting exports to Iran. 

While Census policy is not to correct errors in the statistics that are older 

than 1 year, it has begun posting Iran-related corrections on a separate 

Web page. 

U.S. Export Statistics 

for Iran Erroneously 

Include Goods Not 

Exported to Iran 

U.S. Export Statistics 

Contain Numerous 

Erroneous Entries for Iran 

U.S. export statistics erroneously indicate that U.S. exporters shipped 278 

types of goods to Iran from 2004 to 2008. At our request, Census reviewed 

its records and determined that more than a third (97) of these types of 

goods had not been exported to Iran. As shown in table 1, the types of 

goods erroneously included in the Iran export statistics include military 

rifles exported to Iraq and aircraft parts exported to Ireland, Israel, and 

Iraq.18 The remaining types of goods in the export statistics for Iran are 

primarily agricultural, medical, humanitarian, or informational. 

 

17The U.S. export ban (31 C.F.R. part 560) does not apply to foreign firms that export nonU.S. goods to Iran from abroad. U.S. legal tools for sanctioning foreign firms that export 

sensitive goods to Iran are described in Appendix II. Some of the bills currently under 

consideration in Congress include the Comprehensive Iran Sanctions, Accountability and 

Divestment Act of 2009, S. 2799, 111th Cong. (2009); Iran Sanctions Enabling Act of 2009, S. 

1065, 111th Cong. (2009); Iran Refined Petroleum Sanctions Act, S. 908, 111th Cong. (2009); 

Iran Refined Petroleum Sanctions Act of 2009, H.R. 2194, 111th Cong. (2009); and Iran 

Sanctions Enabling Act of 2009, H.R. 1327, 111th Cong. (2009). 

18Similarly, U.S. export statistics for 2002 include aircraft launching gear among the items 

exported to Iran. At our request, Census reviewed its records and determined that this item 

had been exported to Italy and not to Iran. 

Page 8 GAO-10-375 Iran Sanctions
 

Table 1: Selected Goods Erroneously Included in Export Statistics for Iran 

Type of Good 

Total value shipped 

(2004-2008) 

Actual countries of 

destination 

Civilian aircraft, engines, and parts $640,235 Ireland, Israel, Iraq 

Military rifles 106,635 Iraq 

Military rifle parts 8,760 Iraq 

Military equipment 33,197 Iraq, Kyrgyzstan 

Specially designed vehicles 21,000 Iraq 

Work trucks 60,713 Israel 

Cinema cameras 3,000 Iraq 

Perfumes and toilet waters 8,938 Israel 

String musical instruments 8,123 Ireland 

Source: GAO analysis of Census data. 

The misidentification of Iran as the recipient country for these and other 

exports was the result of errors made by filers of export data into the 

Automated Export System. In checking its records at our request, Census 

determined the addresses of the recipients to which the shipment were to 

be delivered. It found many cases of “improbable” addresses, such as 

“Dublin, Iran.” In these cases, exporters apparently mistook the two-letter 

country code for Iran (“IR”) for the code for the actual recipient country. 

For example, exporters shipping goods to Ireland might enter “IR” instead 

of the correct code for Ireland (“IE”). Table 2 depicts the code for Iran and 

the codes for several other recipient countries. 

Table 2: Selected Countries and Country Codes 

Country Standardized country code 

Iran IR 

Ireland IE 

Israel IL 

Iraq IQ 

Italy IT 

Source: U.S. Census Bureau. 

Page 9 GAO-10-375 Iran Sanctions
 

Census officials stated that they did not detect or correct all of the Iranrelated errors in new exporter filings or in the export statistics for 

previous years. The officials focused on detecting errors involving highdollar value transactions because of the statistics’ use in determining the 

U.S. balance of trade rather than the sensitivity of the reported recipient 

country. The officials stated that they did not focus on detecting errors in 

the data for exports to Iran because the value of such exports was 

relatively small. In 2008, the reported value of U.S. exports to Iran was 

$683 million, while the total value of all U.S. exports worldwide was nearly 

$1.3 trillion.19 Moreover, the officials stated, the policy of the Census 

Bureau is not to make changes in trade statistics that are more than a year 

old. For example, Census officials have not corrected an erroneous entry 

in the statistics concerning the alleged export of rifles to Iran in 2004, 

although they learned of the error in 2008. Census officials also stated that 

Census is not involved in enforcing U.S. export controls on Iran. 

Census Did Not Detect or 

Correct Errors in Export 

Data for Iran 

Although the dollar value of U.S. exports to Iran is small relative to the 

value of all U.S. exports, the accuracy of the Census Bureau’s Iran export 

statistics is important. The nature and composition of the U.S. exports to 

Iran is sensitive because the United States has severely restricted trade 

with Iran as a state sponsor of terrorism. Also, other U.S. government 

agencies use these statistics in connection with the trade with Iran. For 

example, Commerce and Homeland Security enforcement officials use the 

statistics as part of their enforcement targeting efforts. In addition, 

officials from the Department of State stated that they employ these 

statistics in defending U.S. trade policy with Iran in discussion with other 

governments. 

Census Has Taken Action 

in Response to Our Review 

In response to our review, Census officials have taken action to improve 

the accuracy of statistics concerning current U.S. exports to Iran. 

• Beginning in August 2009, Census officials began routine accuracy checks 

of new filings of exports to Iran and other heavily sanctioned countries 

(Cuba, North Korea, and Sudan), regardless of the dollar value of the 

exports. Census officials stated that they are now checking recipient 

addresses to verify that they match the reported country of destination 

and are calling filers of export data to verify questionable entries. 

 

19According to Census officials, more than 85 percent of the transactions involved in the 

Iran-related errors were valued at less than $50,000 and the highest-valued transaction was 

valued at $1 million. 

Page 10 GAO-10-375 Iran Sanctions
 

Although they have not formalized the process, Census officials have 

stated that they intend to continue these accuracy checks. 

• Census also clarified the country selection process in AESDirect, the filing 

system used by most exporters to enter information into the Automated 

Export System. Because exporters often apparently assumed that “IR” was 

the code for other countries, Census has changed the data entry process to 

include a pull-down menu that lists all the countries of the world by their 

complete names. 

• In June 2009, Census began posting an online list of corrections to Iran 

export data.20 However, Census officials stated that they will continue 

their policy of not correcting errors in the trade statistics older than 1 

year.21

rts may improve the accuracy of U.S. statistics concerning 

exports to Iran. 

n. 

s 

 such as dualuse civilian aviation equipment with potential military uses. 

 

Census officials stated that it is too early to determine the extent to which 

these recent effo

Treasury is licensing exports to Iran in accordance with the trade ban but 

cannot provide other agencies or Congress with complete and timely 

licensing information. It is hindered by paper-based information systems 

that cannot be searched to identify licenses for the export of goods to Ira

As a result, Treasury has been unable to quickly respond to requests for 

complete information on such licenses. Treasury is planning to upgrade it

system for tracking licenses for agricultural and medical exports to Iran,

which are permitted by TSRA. However, the upgrade would not include 

the small number of export licenses for other types of goods,

Iran Sanctions

Treasury Is Licensing 

Exports to Iran in 

Accordance with 

Trade Ban but Cannot 

Provide Complete and 

Timely Inform

Its Licensin

ation on 

g 

Decisions 

20The Census corrections are at http://www.census.gov/foreigntrade/statistics/corrections/iran/. As of December 2009, Census had listed 270 corrections 

to the Iran export data. 

21In commenting on a draft of this report in late February 2010, Census officials stated they 

are “developing new processing systems that will allow corrections to be applied over 

several years.” 

Page 11 GAO-10-375 
 

Our review of a sample of TSRA licenses found no evidence that Treasury 

has issued TSRA licenses for the export of goods other than those covered 

by TSRA. We also found no evidence that TSRA licenses involved recipients 

engaged in forbidden activities. We selected a random sample of 58 licenses 

from 1,833 TSRA export licenses issued by Treasury between October 2006 

and August 2009. The licenses selected authorized the export of more than 

275 types of goods. None of the licenses in our sample authorized the export 

of nonagricultural or nonmedical items. Also, none of the end users listed on 

the licenses in our sample appeared on Treasury’s Specially Designated 

Nationals and Blocked Persons List, which contains individuals known to be 

linked to international terrorism, the proliferation of weapons of mass 

destruction, and narcotics trafficking. 

Treasury Licenses for 

Exports to Iran Are in 

Accordance with the Trade 

Ban 

We also reviewed 34 non-TSRA licenses that Treasury issued between 

January 2008 and July 2009. As shown in table 3, we found that all but one 

of the licenses involved the return of human remains to Iran; official U.S. 

government and law enforcement matters; educational, research, and 

exchange programs; and media-related enterprises for broadcasting or 

Internet connectivity. The remaining license involved the export of dualuse equipment to help ensure the safety of Iran’s U.S.-built civilian 

airliners. U.S. law prohibits the export of any dual-use item to Iran and 

states that the President may waive the prohibition if doing so is essential 

to the interests of the United States.22 The President has delegated the 

authority to issue such waivers to the Secretary of State.23 We obtained a 

list of waivers from the Department of State and confirmed that a waiver 

had been issued for this dual-use export. 

Table 3: Non-TSRA Licenses Issued 2008 to August 2009 

Purpose of licenses Number of licenses 

Transport of human remains to Iran 13

U.S. Government/Law Enforcement 9

Educational/Research/Exchange Programs 8 

Media/Broadcasting/Internet Connectivity 3

Aircraft Safety (dual-use) 1 

Total 34

Source: GAO analysis of Treasury data. 

 

22Iran-Iraq Arms Non-Proliferation Act of 1992, §§ 1603 and 1606. 

23Memorandum of the President of the United States, 59 Fed. Reg. 50,685 (Sept. 27, 1994). 

Page 12 GAO-10-375 Iran Sanctions
 

Treasury cannot provide other agencies or Congress with complete and 

timely information concerning the licenses it has issued. It cannot do so 

because it relies on paper-based information systems that cannot be 

searched to identify licenses for the export of goods to Iran. Treasury’s 

primary licensing information system for export licenses is based on 

correspondence tracking software. According to a Treasury official 

familiar with the system, it contains nonstandardized data for license 

applications entered before 2007, relies on manual data entry, and requires 

time-consuming case-by-case review by licensing officials to ensure its 

reliability and suitability for release. Treasury’s secondary information 

system was created by TSRA licensing personnel to support the licensing 

of exports of TSRA goods. In January 2009, an internal Treasury budget 

request characterized the TSRA information system as a “largely paperbased” system that hinders “the speed, efficacy, reliability, and security of 

[Treasury’s] licensing, enforcement and compliance activities.” Treasury 

officials must manually review all TSRA licensing data for Iran to identify 

licenses that authorize the export of goods. Because the TSRA system is 

not integrated with Treasury’s primary licensing information system, TSRA 

licensing officials must manually enter the same data into both systems. 

Treasury Information 

Systems Cannot Provide 

Complete and Timely 

Licensing Data to Other 

Agencies and Congress 

Treasury has been unable to consistently provide timely and complete 

licensing information for Iran to other agencies and Congress. For 

example, a Treasury official informed U.S. Customs and Border Protection 

(CBP) officials in 2009 that Treasury’s information systems could not 

provide CBP with complete and timely information on licenses issued for 

the export of goods to Iran. CBP officials stated that they had sought the 

information to help CBP officers at U.S. ports quickly determine whether 

goods slated for export to Iran had been properly licensed by Treasury. 

CBP officers currently use a more time-consuming process to access 

limited Treasury data through a third agency. Treasury officials stated in 

January 2010 that their licensing information systems focus on the 

exceptions that Treasury grants to the Iran trade embargo, rather than on 

controls over the export of specific goods. 

Similarly, as of March 1, 2010, Treasury had yet to provide Congress with a 

required biennial report on TSRA licenses issued to Iran from October 1, 

2006 to September 30, 2008.24 Treasury officials noted that Treasury has 

published quarterly reports that contain the number of TSRA licenses 

issued during this period. However, the data in the quarterly reports were 

 

2422 U.S.C. § 7205. 

Page 13 GAO-10-375 Iran Sanctions
 

not consistent with data that Treasury provided us during our review. A 

TSRA official stated that Treasury could not resolve the inconsistencies in 

a timely manner because of information system limitations. In addition, 

Treasury required more than 2 months to provide GAO with adequate data 

concerning its TSRA licenses. 

Treasury has begun work to upgrade its system for managing TSRA 

licensing information. During our review, Treasury hired a contractor in 

September 2009 to begin designing a system to better manage TSRA 

licensing information. The stated goal of the project is to provide Treasury 

with an integrated, largely paperless TSRA database that would allow it to 

better collect and manage information, conduct analysis, improve 

efficiency, provide U.S. law enforcement agencies with better information, 

and improve the timeliness of reports to Congress. Treasury intends to 

complete the upgrade by September 2010. Treasury officials informed us 

that they gave priority to upgrading the TSRA database because of the 

volume of licensing requests. 

However, the new TSRA system would not include licenses that Treasury 

has issued for the export of goods that are not agricultural or medical in 

nature, including dual-use civilian goods with potential military 

applications. Congress has prohibited the export of any dual-use item to 

Iran and has stated that the President may waive the prohibition if doing 

so is essential to the interests of the United States.25 Treasury has had 

difficulty in identifying licenses for dual-use items. For example, Treasury 

officials informed a Defense Department Central Command (CENTCOM) 

official in 2009 that they could not provide CENTCOM with a list of 

Treasury licenses for the export of U.S. dual-use civilian aircraft parts to 

Iran. According to the CENTCOM official’s report, Treasury officials stated 

they could not do so because of information system limitations.26 Similarly, 

Treasury took more than 4 months to provide GAO with adequate data 

concerning a dual-use export license and 33 other non-TSRA licenses 

issued during the preceding 18 months (January 1, 2008-July 2009). 

Treasury officials stated in December 2009 that Treasury had yet to 

determine when it might upgrade its licensing information system for nonTSRA export licenses. 

 

25Iran-Iraq Arms Non-Proliferation Act of 1992, §§ 1603 and 1606. 

26Treasury officials stated in January 2010 that they had been unable to develop the list 

within four hours as requested and that Treasury could have provided the data within a 

“reasonable” period of time if it had received a written request. 

Page 14 GAO-10-375 Iran Sanctions
 

In 2007, we identified the lack of data concerning U.S. trade sanctions as a 

governmentwide problem affecting the U.S. government’s ability to assess 

the impact of the sanctions on Iran.27 Given Treasury’s central role in 

licensing exports to Iran, its inability to provide complete and timely 

licensing information weakens government efforts to determine whether 

dual-use and other goods exported to Iran have been properly licensed and 

to assess compliance with the trade ban. 

According to U.S. officials, Iran is obtaining U.S. military and dual-use 

goods that are being illegally transshipped by firms and individuals 

through locations in numerous countries, including the United Arab 

Emirates, Malaysia, and Singapore. The goods include components for 

U.S.-built fighter aircraft, electronics, and specialized metals. To address 

the problem, U.S. agencies have conducted undercover investigations to 

detect Iranian procurement networks, prosecuted criminal cases against at 

least 30 firms and individuals for transshipping or attempting to transship 

goods to Iran, and provided export control training and support to the 

United Arab Emirates and other countries. 

Iran Is Obtaining 

Illegal 

Transshipments of 

U.S. Military and 

Dual-Use Goods 

through Other 

Countries 

Wide Range of Military and 

Dual-Use Goods Involved 

in Iran Transshipment 

Cases 

Firms and individuals have transshipped or attempted to transship a wide 

range of U.S. military and dual-use goods to Iran, according to U.S. 

officials. The Department of Justice reported in September 2009 that 

individuals and firms were seeking to transship military components to 

Iran. For example, the department listed nine major criminal prosecutions 

between 2007 and September 2009 that involved transshipment of 

components for Iran’s U.S.-built fighter aircraft. These aircraft include the 

F-14 fighter, a highly capable aircraft used by the U.S. Navy until 2006 (see 

fig. 2); the F-4 fighter-bomber; and the F-5 fighter. The department also 

reported efforts to transship parts for Iran’s U.S.-built military helicopters, 

military-grade night vision equipment, submachine guns, computers, and 

specialized laboratory equipment. Immigration and Customs Enforcement 

officials expressed concern regarding Iranian efforts to acquire through 

transshipment electronic components for missiles, parts for Iran’s U.S.-

built Hawk anti-aircraft missiles, specialized steel, and pumps with nuclear 

applications. 

 

27GAO, Iran Sanctions: Impact in Furthering U.S. Objectives Is Unclear and Should Be 

Reviewed, GAO-08-58 (Washington, D.C.: Dec. 18, 2007). 

Page 15 GAO-10-375 Iran Sanctions
 

Figure 2: F-14 and F-4 Aircraft 

Sources (left to right): U.S. Navy (F-14) and U.S. Air Force (F-4).

Goods Are Transshipped 

through Several Nations 

Firms and individuals have transshipped or attempted to transship goods 

though intermediaries in several countries. A 2009 report by the Justice 

Department cited 30 cases that involved the use of intermediaries in the 

United Arab Emirates (UAE), Malaysia, Singapore, Thailand, Australia, 

Canada, Colombia, Brazil, Austria, France, Germany, Luxembourg, The 

Netherlands, and the United Kingdom. As shown in figure 3, the cases 

involved efforts to ship the goods to Iran through the use of intermediaries 

in these countries. More than 50 percent of the cases listed involved use of 

intermediaries in the UAE for transshipment. About 20 percent involved 

the use of Malaysia and Singapore.28 U.S. goods involved in these cases 

included U.S. military aircraft components, laboratory equipment, 

specialty alloy pipes, night vision goggles, and sensitive technologies sent 

to Iranian missile and nuclear entities. 

 

28The information made public by Justice does not necessarily include all recent 

prosecutions of efforts to illegally transship U.S. goods to Iran. 

Page 16 GAO-10-375 Iran Sanctions
 

Figure 3: Illegal Transshipment Routes Cited in Cases Prosecuted 2007-2009 

U.S. exports to intermediary countries

Transshipments to Iran

Location of transshipment intermediaries

UAE

Singapore

Australia

Malaysia

Luxembourg

Germany

Netherlands

Colombia

Brazil

Canada France

Iran

Sources: GAO analysis of Justice Department data; Map Resources (map).

Thailand

Austria

United Kingdom

U.S. officials stated that the UAE has taken steps to address the use of its 

territory for transshipment. They noted that the UAE has increased 

cooperation with U.S. enforcement entities and enacted new export 

control legislation in 2007. According to the UAE government, the new law 

addresses goods subject to import and export control procedures, bans 

the export or re-export of strategic goods (including arms and military 

hardware, chemical and biological materials, and dual-use items) without 

a special license, and specifies penalties of imprisonment of up to a year 

and fines totaling over $270,000. U.S. officials met with UAE officials in 

June 2009 to discuss the implementation of the new law. Commerce 

officials stated that the law contains the basic elements of an export 

control regime to combat transshipment. However, some U.S. officials also 

Page 17 GAO-10-375 Iran Sanctions
 

stated that individuals involved in illegal transshipment may shift their 

operations to other nations, such as Malaysia and Singapore. 

Actions Are Being Taken 

by U.S. Agencies to 

Combat Transshipment 

U.S. enforcement officials stated that they pursue allegations of 

transshipment. For example, Defense Criminal Investigative Services and 

U.S. Immigration and Customs Enforcement officials stated they conduct 

undercover investigations to detect efforts by Iranian procurement agents 

to obtain U.S. goods in response to requests from Iran’s military-industrial 

establishment. To do so, procurement agents may seek to build long-term 

relationships with suppliers by initially buying small quantities of 

relatively-innocuous items before seeking more sensitive items. Defense 

Criminal Investigative Services and U.S. Immigration and Customs 

Enforcement officials stated that, in one case, a procurement agent with 

ties to the Iranian military attempted to procure about 700 goods, 

including aircraft parts and radar components. Most of the goods would 

have required U.S. government licenses to be exported to their alleged 

destination in the United Arab Emirates. The individual seeking the parts 

typically identified himself as a United Arab Emirates businessman in 

approaching U.S. firms, according to U.S. enforcement officials. The 

individual provided false documents and attempted to convince the U.S. 

firms that they did not need to obtain export licenses. 

U.S. law provides criminal penalties for the illegal transshipment of goods 

to Iran.29 For example, violators of Treasury’s Iranian Transactions 

Regulations may receive sentences of up to 20 years imprisonment and 

fines of up to $1 million. The Justice Department has reported that from 

January 2007 to September 2009 it handled at least 30 criminal 

prosecutions involving actual or attempted transshipments to Iran. Five 

individuals convicted in connection with these cases received sentences of 

imprisonment that ranged from 6 months to more than 5 years. 

The Commerce Department is responsible for licensing U.S. exports of 

dual-use items to the UAE, as well as countries other than Iran. To help 

detect illegal transshipments of U.S. dual-use goods, Commerce 

enforcement personnel select a sample of previously shipped goods and 

 

2931 C.F.R. § 560.701. 

Page 18 GAO-10-375 Iran Sanctions
 

attempt to verify they are located and being used in accordance with 

licensing conditions.30

U.S. agencies have provided export control assistance to countries that 

have been used by intermediaries to transshipment goods to Iran. For 

example, the UAE has received assistance provided by U.S. agencies, 

including the Department of Homeland Security and the Department of 

Energy. The Departments of Commerce and Justice have also worked with 

the UAE in improving its controls over exports. 

While the United States government has severely restricted U.S. exports to 

Iran, it cannot readily determine the extent to which it has issued licenses 

for such exports or the extent to which goods marked for Iran are leaving 

U.S. ports. U.S. agencies should have complete, reliable, and timely 

information concerning these matters to ensure the U.S. government is 

implementing the ban on exports to Iran. While covert transshipments of 

U.S. goods through third-party countries are inherently difficult to detect, 

erroneous reports of overt shipments of U.S. goods to Iran have prompted 

concerns that the United States is not abiding by its own export ban. The 

Census Bureau has taken some steps to detect and correct errors in its 

latest statistics, but the Treasury Department has yet to take action to 

ensure that it can retrieve complete and timely data on which exports to 

Iran it has licensed and which it has not. 

To help ensure that U.S. agencies have timely access to reliable data 

concerning licensed U.S. exports to Iran, we recommend that the 

Secretary of the Treasury ensure that the Department of the Treasury 

develop the capability to provide other agencies and Congress with 

complete and timely information concerning all licenses issued for the 

export of goods to Iran. 

Conclusions 

Recommendation for 

Executive Action 

 

30Additional information regarding Commerce’s verification efforts concerning Iran is 

included in a For Official Use Only version of this report. 

Page 19 GAO-10-375 Iran Sanctions
 

Treasury provided written comments regarding a draft of our report, 

which are reprinted in appendix III. With regard to our recommendation, 

Treasury stated that it is already able to access, review, and share 

information relating to TSRA licenses and that it “hopes” to enhance its 

abilities to process non-TSRA licensing information. It also indicated that 

it plans to share licensing data with CBP in the future through the 

Automated Commercial Environment (ACE) system. Treasury 

acknowledged that its ability to search some parts of its current licensing 

databases is limited and that its data systems could be improved. Treasury 

also acknowledged that it “has work to do” before it can provide CBP with 

the specific data CBP needs to validate licensed exports. While Treasury is 

able to access and share licensing information, it cannot do so in a 

complete and timely manner. As noted in our draft report, Treasury 

required more than 2 months to provide us with complete licensing data 

for agricultural and medical exports and more than 4 months to access 

and share 34 recent export licenses for other types of goods, including a 

dual-use good with potential military applications. The ACE system is still 

in development and is not ready to receive Treasury’s export data. We 

therefore have not changed our recommendation that Treasury develop 

the ability to provide complete and timely information regarding all export 

licenses for Iran. 

Agency Comments 

and Our Evaluation 

Treasury also stated that, contrary to the notion that the administration of 

the sanctions program had been weakened, nothing in our draft report 

indicated that enforcement actions regarding exports to Iran, or the 

implementation of the sanctions, had been impaired by incomplete and 

untimely licensing data. Treasury’s assertion is in contrast with a 2009 

internal Treasury budget request, in which Treasury officials stated that 

(1) Treasury’s information processes were hampering “the speed, efficacy, 

reliability and security” of its enforcement and compliance activities and 

(2) Treasury would be able to provide better information to law 

enforcement agencies if it upgraded its TSRA information system. Also, as 

noted in our report, limitations in Treasury’s information systems 

prevented it from responding to a request from U.S. Customs and Border 

Protection officials for more complete and timely licensing information to 

aid CBP agents at U.S. ports. 

Treasury also stated that it appreciated the report’s finding that Treasury 

is licensing the export of goods to Iran in accordance with the laws and 

regulations imposing sanctions on Iran. However, it expressed concern 

that our draft report title conveyed an impression that Treasury’s 

information systems were weakening the implementation of economic 

Page 20 GAO-10-375 Iran Sanctions
 

sanctions against Iran. We therefore modified the title of our report to 

clarify our message and reinforce our recommendation. 

The Department of Commerce provided formal written comments 

concerning the Census Bureau’s maintenance of U.S. export statistics. 

Commerce’s comments were technical in nature and did not address our 

findings or recommendation. We have incorporated Commerce’s 

comments in our text as appropriate and reproduced them in appendix IV. 

The other agencies cited in this report did not provide formal comments. 

CBP, U.S. Immigration and Customs Enforcement, and Treasury provided 

technical comments, which we incorporated as appropriate. 

We are sending copies of this report to the Departments of Commerce, 

Defense, Energy, Homeland Security, Justice, State, and the Treasury, as 

well as interested congressional committees. In addition, the report will be 

available at no charge on the GAO Web site at http://www.gao.gov. 

If you or your staffs have any questions about this report, please contact 

me at (202) 512-8979 or christoffj@gao.gov. Contact points for our Offices 

of Congressional Relations and Public Affairs may be found on the last 

page of this report. Key contributors are listed in appendix V. 

Joseph A. Christoff 

Director, International Affairs and Trade 

Page 21 GAO-10-375 Iran Sanctions
Appendix I: Objectives, Scope, and 

Methodology 

Page 22 GAO-10-375 

Appendix I: Objectives, Scope, and 

Methodology 

To assess the extent to which U.S. statistics accurately depict U.S. exports 

to Iran, we analyzed the results of a Census Bureau review of records 

regarding all types of goods reportedly shipped to Iran from 2004 through 

2008 to determine the specific destinations of those goods. In reviewing its 

records, Census checked the shipping address of the ultimate recipient for 

each good. Based on the results of its review, Census provided us with the 

actual country of destination and the total dollar value of each type of 

good that was sent to a country other than Iran. We used that information 

to adjust the data found in the U.S. export statistics. We also reviewed a 

Census Web page listing corrections to U.S. export data concerning Iran to 

corroborate the posted corrections with those that Census had provided to 

us. We also met with Census officials to determine their methods and 

policies for assuring the accuracy of the statistics. 

To assess the Treasury Department’s licensing activities, we first reviewed 

U.S. laws and regulations that established sanctions on U.S. exports to 

Iran, including Treasury’s Iranian Transaction Regulations. We then 

reviewed a random sample of 58 licenses that were issued by Treasury to 

exporters from October 2006 to August 2009. With this probability sample, 

each member of the study population had a nonzero probability of being 

included, and that probability could be computed for any member. The 

random sample was taken from a list of 1,833 licenses provided to us by 

Treasury. On the basis of the sample, we estimate no more than 5 percent 

of the population contained errors, at a 95 percent confidence level,1

which we judged to be sufficiently reliable for our review. In the digital 

PDF copies of licenses we obtained, we verified that all licenses were for 

agricultural goods, medicines, and medical devices allowed under TSRA 

and the Iranian Transactions Regulations. We also looked at the intended 

end users in the license to verify that none were sponsors of international 

terrorism. The names of end users in the licenses were compared with a 

search of Treasury’s Specially Designated Nationals and Blocked Persons 

list, which is maintained and updated daily on Treasury’s Web site.2

 For 

non-TSRA goods, we reviewed all non-TSRA licenses provided by Treasury 

for January 2008 to June 2009. For dual-use items, we verified that a 

 

1

Because we followed a probability procedure based on random selections, our sample is 

only one of a large number of samples that we might have drawn. Since each sample could 

have provided different estimates, we express our confidence in the precision of our 

particular sample’s results as a 95 percent confidence interval (e.g., from zero to 5 percent). 

This is the interval that would contain the actual population value for 95 percent of the 

samples we could have drawn. 

2

http://www.ustreas.gov/offices/enforcement/ofac/sdn/t11sdn.pdf. 

 Iran Sanctions 
Appendix I: Objectives, Scope, and 

Methodology 

waiver had been obtained for the export of goods to Iran before a license 

was granted. We also interviewed officials from the Departments of the 

Treasury and State on their collaboration and joint decision-making for 

licenses granted for export to Iran that required a presidential waiver. To 

assess Treasury’s ability to provide complete and timely licensing data to 

other agencies and Congress, we obtained documents concerning 

Treasury information systems, including contracting and budget 

documents for a planned upgrade. We obtained a Treasury presentation on 

the TSRA Database and Foreign Assets Control Database systems used to 

store records of its licensing activities. We also obtained and reviewed all 

of the mandated biennial and quarterly reports for TSRA on Treasury’s 

Web site.3

 We compiled these reports into a comprehensive total of 

licenses issued by Treasury and then compared it with the list Treasury 

provided to us for the overlapping time periods. We also interviewed 

relevant Treasury licensing, information technology, and enforcement 

officials. We interviewed officials from the Departments of Commerce and 

Homeland Security and other entities who use Treasury licensing 

information. In addition, we requested detailed licensing data from 

Treasury and monitored its ability to comply with our request. 

To review the extent to which U.S. goods are being illegally transshipped 

to Iran, we obtained and analyzed lists of relevant criminal prosecutions 

from the Department of Justice. We also discussed transshipment issues 

with officials of the Departments of Commerce, Defense, Homeland 

Security, Justice, and the Treasury; the Federal Bureau of Investigation; 

and other government agencies. We relied on secondary sources for 

descriptions of foreign laws. 

 

3

http://www.ustreas.gov/offices/enforcement/ofac/licensing/agmed/index.shtml. 

Page 23 GAO-10-375 Iran Sanctions
Appendix II: U.S. Lega

For

Tech

l Tools for Sanctioning 

eign Companies That Transfer Sensitive 

nology 

Page 24 GAO-10-375 

Appendix II: U.S. Legal Tools for Sanctioning 

Foreign Companies That Transfer Sensitive 

Technology 

The U.S. government has a number of legal tools to exert pressure on 

foreign entities that transfer foreign sensitive technologies to Iran.1

 These 

tools allow the United States to penalize foreign entities by freezing their 

U.S. properties, limiting their ability to trade with the United States, 

prohibiting them from obtaining U.S. government procurement contracts, 

or otherwise impairing their ability to work with U.S. entities. Some of 

these tools are specifically focused on the transfer of technologies to Iran, 

while others can be applied to a wider range of actions. The laws 

presented below are discussed only in the context of non-U.S. entities 

transferring sensitive non-U.S. technologies to Iran from outside the 

United States. Please refer to the original text of the laws for the full 

content. 

Executive Orders 13382, 

12938, and 13094 

These executive orders establish criteria for the application of sanctions 

on foreign firms that provide sensitive technologies to Iran. The orders 

draw their authority from the International Emergency Economic Powers 

Act (IEEPA) and several other acts of Congress. 

• Executive Order 13382 allows the Secretary of State or the Secretary of the 

Treasury, in consultation with each other and other relevant agencies, to 

freeze the assets of persons designated as being engaged in the 

proliferation of weapons of mass destruction (WMD), as well as members 

of their support networks.2

 The order also states that frozen assets may 

not be transferred, paid, exported, withdrawn or otherwise dealt in and 

prohibits any transactions by a U.S. person or within the United States 

taken to evade or avoid such prohibitions.3

 Foreign persons can be 

designated under the order if they have engaged, or attempted to engage, 

in activities or transactions that have materially contributed to the 

proliferation of (or pose a risk of doing so) WMD or WMD delivery 

 

1

For the purposes of this appendix, sensitive technology includes technology relevant to 

nuclear and other weapons of mass destruction and advanced conventional weapons 

(including missiles), as well as any dual-use technologies (civilian technologies that have 

security applications). Three United Nations Security Council resolutions call on all United 

Nations member states to prevent transfer of sensitive technology to Iran. UNSCR 1737 

declares that member states should prevent dealings that further Iran’s nuclear and missile 

development and includes a list of entities involved in this development. UNSCR 1747 and 

UNSCR 1803 add to this list. See S.C. Res. 1737, U.N.Doc. S/RES/1737 (Dec. 27, 2006), S.C. 

Res. 1747, U.N. Doc. S/RES/1747 (Mar. 24, 2007), and S.C. Res. 1803, U.N. Doc. S/RES/1803 

(Mar. 3, 2008). 

2

Exec. Order No. 13,382, 70 Fed. Reg. 38,567 (June 28, 2005). 

3

Id. 

 Iran Sanctions 
Appendix II: U.S. Legal Tools for Sanctioning 

Foreign Companies That Transfer Sensitive 

Technology 

systems (such as missiles capable of delivering WMD). Such activities 

include efforts by any person or country of proliferation concern to 

manufacture, acquire, possess, develop, transport, transfer, or use WMD or 

WMD delivery systems. 

• Executive Order 12938 allows the Secretary of State to impose sanctions 

against foreign persons if the Secretary has made a determination that 

such persons have, on or after November 16, 1990, knowingly and 

materially contributed to the efforts of any foreign country, project, or 

entity to use, develop, produce, stockpile, or otherwise acquire chemical 

or biological weapons.4

 The United States government is prohibited from 

procuring goods or services from a designated person or importing 

products produced by a designated person, unless exempted from these 

sanctions by the Secretaries of State and the Treasury for certain reasons, 

such as U.S. military requirements or defense production needs. 

• Executive Order 13094 expanded Executive Order 12938 to impose 

sanctions when the Secretary of State determines that a foreign person on 

or after November 16, 1990, has materially contributed or attempted to 

contribute materially to the efforts of any foreign country, project, or 

entity of proliferation concern to use, acquire, design, develop, produce, or 

stockpile weapons of mass destruction or missiles capable of delivering 

such weapons.5

 The penalties that could be imposed under Executive 

Order 12938 remained the same. 

Iran, North Korea, and 

Syria Nonproliferation Act 

This act allows the President to sanction foreign persons with respect to 

whom there is credible evidence indicating that such persons transferred 

sensitive goods, services, or technology to Iran after a certain date.6

 Under 

the act, the President is required to report to the Senate Foreign Relations 

Committee and the House Foreign Affairs Committee every 6 months 

identifying foreign persons with respect to whom there is credible 

evidence that such persons have, on or after January 1, 1999, transferred 

 

4

Exec. Order No. 12,938, 59 Fed. Reg. 58,099 (Nov. 14, 1994). 

5

Exec. Order No. 13,094, 63 Fed. Reg. 40,803 (July 28, 1998). 

6

This law was enacted as the Iran Nonproliferation Act of 2000; Restriction on 

Extraordinary Payments in Connection with the International Space Station, Pub. L. No. 

106-178, 114 Stat. 38 (Mar. 14, 2000); Syria was added to the act by the Iran 

Nonproliferation Amendments Act of 2005, Pub. L. No. 109-112, §4, 119 Stat. 2366, 2369 

(Nov. 22, 2005); and North Korea was added by the North Korea Nonproliferation Act of 

2006, Pub. L. No. 109-2353, 120 Stat. 2015 (Oct. 13, 2006). 

Page 25 GAO-10-375 Iran Sanctions
Appendix II: U.S. Legal Tools for Sanctioning 

Foreign Companies That Transfer Sensitive 

Technology 

goods, services, or technology listed in specified multilateral export 

control lists to Iran.7

 The act allows the President to impose a number of 

measures to a foreign person appearing in the report, such as a ban of U.S. 

government procurement from the designated person, a ban of U.S. 

government arms sales to the foreign person,8

 or the denial or suspension 

of licenses to export dual-use items to the foreign person.9

Iran-Iraq Arms 

Nonproliferation Act of 

1992 

This act requires the President10 to sanction persons who, by transferring 

or retransferring goods or technology, “knowingly and materially” 

contribute to Iran’s efforts to acquire chemical, biological, or nuclear 

weapons, or destabilizing numbers and types of advanced conventional 

weapons.11 Mandatory sanctions under the act include (1) a ban on U.S. 

government procurement from sanctioned persons and (2) a ban on 

licenses for export to or by the foreign person.12 The sanctions are to be 

imposed and last for 2 years, unless the President issues a waiver on the 

basis that it is essential to U.S. national interests.13 The President is 

required to report to the Senate Armed Services, Senate Foreign Relations, 

House Armed Services, and House Foreign Affairs committees if the 

President determines that a person has made a transfer subject to sanction 

under the act.14 In the report, the President must identify the person, 

 

7

An example of such a list would be the Missile Technology Control Regime Equipment and 

Technology Annex of June 11, 1996, as revised. Pub. L. No. 106-178, as amended. 

8

This is a prohibition on United States Government sales of any item on the United States 

Munitions List as in effect on August 8, 1995, and a termination of sales of any defense 

articles, defense services, or design and construction services under the Arms Export 

Control Act, Pub. L. No. 90-269, as amended. 

9

Pub. L. No. 106-178, as amended. 

10All functions vested in the President under the act were delegated to the Secretary of 

State, in consultation with heads of other departments and agencies. See Memorandum of 

the President of the United States, 59 Fed. Reg. 50,685 (Sept. 27, 1994). 

11Enacted by the National Defense Authorization Act for fiscal year 1993, Pub. L. No. 102-

484, Title XVI, 106 Stat. 2315, 2571-75 (1992). 

12Pub. L. No. 102-484, § 1604, as amended. 

13Pub. L. No. 102-484, §§ 1604 and 1606, as amended. 

14Pub. L. No. 102-484, § 1607, as amended. 

Page 26 GAO-10-375 Iran Sanctions
Appendix II: U.S. Legal Tools for Sanctioning 

Foreign Companies That Transfer Sensitive 

Technology 

provide details of the transfer, and describe the actions taken or to be 

taken under the act.15

Iran Sanctions Act This act allows the President to sanction persons who provide Iran with 

goods, technology, or services if they know that doing so would contribute 

materially to Iran’s ability to acquire or develop (1) chemical, biological, or 

nuclear weapons or related technologies or (2) destabilizing numbers and 

types of advanced conventional weapons.16 The act requires the President 

to impose at least two of the following sanctions: 

• denying Export-Import Bank assistance for exporting to the foreign 

person; 

• banning licenses to export sensitive technologies to the sanctioned 

person; 

• banning U.S. financial institutions from loaning the sanctioned person 

more than $10 million in a 1-year period; 

• if the sanctioned person is a financial institution, banning that institution 

from dealing in U.S. debt instruments or serving as repositories for U.S. 

government funds; and 

• banning U.S. Government procurement, as well as other sanctions that fall 

under the powers of the International Emergency Economic Powers Act, 

including IEEPA-derived executive orders.17

The President may waive these sanctions if the President determines that 

doing so is important to the national interest of the United States.18

 

15Id. 

16This act was originally enacted as the Iran-Libya Sanctions Act of 1996, Pub. L. No. 104-

172, 110 Stat. 1541; Libya was removed from the law in 2006 by the Iran Freedom Support 

Act, Pub. L. No. 109-293, 120 Stat. 1344. Proliferation-related sanctionable activities were 

added to the law in 2006. 

17Pub. L. No. 104-172, § 5, as amended. 

18Pub. L. No. 104-172, § 9, as amended. 

Page 27 GAO-10-375 Iran Sanctions
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Foreign Companies That Transfer Sensitive 

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This act directs the President, with exceptions, to sanction persons if the 

President determines in writing that such persons have “materially and 

with requisite knowledge” contributed, through the transfer of certain 

specified goods or technology,19 to the efforts of any individual, group, or 

non-nuclear-weapon state to (1) acquire unsafeguarded special nuclear 

material or (2) to use, develop, produce, stockpile, or otherwise acquire 

any nuclear explosive device.20 The penalty is a ban on United States 

government procurement from the sanctioned person lasting at least 1 

year. The President may waive the penalty after the sanction has been 

imposed for a year if the President determines, and certifies in writing to 

Congress, that continuation would have a serious adverse effect on vital 

United States interests. The act further requires the President to sanction 

persons if the President determines in writing that a United States person 

or a foreign person has (by providing financing) knowingly, materially, and 

directly contributed or attempted to contribute to an individual, group, or 

non-nuclear weapon state’s (1) acquisition of unsafeguarded special 

nuclear material or (2) the use, development, production, stockpiling, or 

other acquisition of any nuclear explosive device.21 For at least 1 year, 

sanctioned persons may not be primary dealers in U.S. government debt 

instruments, serve as depositories of U.S. government funds, directly or 

indirectly commence any line of business in the United States, or directly 

or indirectly conduct new business from a new location in the United 

States. The President may waive these sanctions after a year if the 

President determines in writing, and certifies to Congress, that their 

continuation would have a serious adverse effect on the on the safety and 

soundness of the domestic or international financial system or on 

domestic or international payments systems. 

Nuclear Proliferation 

Prevention Act of 1994 

 

19The act defines “goods or technology” as (1) nuclear materials and equipment and 

sensitive nuclear technology as such terms are defined in 22 U.S.C. § 3203, all export items 

that could be of significance for nuclear explosive purposes and designated by the 

President as under the control of the Department of Commerce pursuant to section 

2139a(c) of Title 42, and all technical assistance requiring authorization under section 

2077(b) of Title 42, and (2) in the case of exports from a country other than the United 

States, any goods or technology that, if exported from the United States, would be goods or 

technology described in (1). 

20Nuclear Proliferation Prevention Act, Pub. L. No. 103-236, Title VIII, §§ 801-851, 108 Stat. 

382, 507-525 (1994), codified as amended at 22 U.S.C. §§ 6301-6305. 

2122 U.S.C. § 6303. 

Page 28 GAO-10-375 Iran Sanctions
Appendix II: U.S. Legal Tools for Sanctioning 

Foreign Companies That Transfer Sensitive 

Technology 

Portions of the Arms Export Control Act (AECA) require the President to 

sanction foreign persons that the President has determined to have (1) 

provided to certain countries missile equipment or technology or (2) 

contributed to certain countries’ acquisition of chemical or biological 

weapons. 

Arms Export Control Act 

• Section 73 (22 U.S.C. § 2797b): Under this section, subject to exceptions, 

the President shall impose sanctions when the president determines that a 

foreign persons have knowingly exported, transferred, or otherwise 

engaged in the trade of missile equipment or technology controlled under 

the Missile Technology Control Regime (MTCR)22 that contributes to the 

acquisition, design, development, or production of missiles in a country 

that is not an MTCR adherent. The President shall also apply sanctions 

when he has made a determination with respect to a foreign person under 

section 2410b(b)(1) of Title 50, Appendix (discussed later). Depending on 

the nature of the equipment and technology involved, sanctions could 

include (1) denying the foreign persons U.S. government contracts related 

to missile equipment or technology, (2) denying the foreign persons any 

U.S. government contracts, (3) denying licenses for transfers of missile 

equipment or technology controlled under the Arms Export Control Act to 

the sanctioned persons, (4) denying licenses for the transfer of all items on 

the United States Munitions List to the sanctioned persons, or (5) 

prohibiting the importation of products produced by the sanctioned 

persons into the United States. The President may waive these sanctions in 

certain cases specified in the act. The President may also decide to apply a 

waiver with respect to a product or service if the President certifies to 

Congress that (1) the product or service is essential to the national 

security of the United States and (2) such person is a sole source supplier 

of the product or service, and an alternative is not available and cannot be 

made available in a timely manner. 

• Section 81 (22 U.S.C. § 2798): Under this section, the President is required 

to sanction, subject to certain exceptions, foreign persons the President 

determines to have knowingly and materially contributed, through the 

export of certain goods or technology or any other transaction not already 

subject to sanctions under the Export Administration Act, to the efforts of 

certain foreign countries to use, develop, produce, stockpile, or otherwise 

acquire chemical or biological weapons. The sanctions are a ban on U.S. 

government procurement from the foreign person and a ban on imports 

 

22The equipment and technology must be types that would be subject to U.S. jurisdiction 

under the Arms Export Control Act if it were U.S.-origin equipment or technology. 

Page 29 GAO-10-375 Iran Sanctions
Appendix II: U.S. Legal Tools for Sanctioning 

Foreign Companies That Transfer Sensitive 

Technology 

into the United States from the foreign person for at least 12 months. After 

a year of imposing the sanctions, the President may waive the sanctions by 

certifying to Congress that doing so is important to the national security 

interests of the United States. 

Export Administration Act Portions of this act require the President to sanction foreign persons that 

are determined to have (1) provided to certain countries missile 

equipment or technology or (2) contributed to certain countries’ 

acquisition of chemical or biological weapons. 

• Section 11B (50 app. U.S.C. § 2410b): Subject to certain exceptions, the 

President shall impose sanctions when the President determines that a 

foreign person has knowingly exported, transferred, or otherwise engaged 

in the trade of any MTCR equipment or technology that contributes to the 

design, development, or production of missiles in a non-MTCR country.23

The section also calls for sanctions on persons who have conspired or 

attempted to engage in or facilitated such export, transfer, or trade. The 

President shall also impose sanctions under this act if the President makes 

a determination with respect to a foreign person under section 73(a) of the 

Arms Export Control Act (22 U.S.C. § 2797b(a)) (discussed above). 

Depending on circumstances specified in this section, sanctions could 

include a 2-year denial of specified licenses for the transfer to the 

sanctioned person of AECA-controlled missile equipment or technology 

and a 2-year ban on imports into the United States of products produced 

by the foreign person. The President may waive these sanctions in certain 

specified cases. 

• Section 11C (50 app. U.S.C. § 2410c): This section requires the President to 

impose sanctions, subject to certain exceptions, on foreign persons 

determined to have “knowingly and materially” contributed to the efforts 

of state sponsors of terrorism24 and certain other countries25 to use, 

 

23The equipment and technology must be types that would be subject to U.S. jurisdiction 

under the Arms Export Control Act if it were U.S.-origin equipment or technology. 

24As designated under section 6(j) of the Export Administration Act. 

25The designated countries are any that (1) the President determines has, after January 1, 

1980, used chemical or biological weapons in violation of international law, used lethal 

chemical or biological weapons against its own nationals, or made substantial preparations 

to engage in such activities, (2) has been designated a state sponsor of terrorism under 

section 6(j) of the Export Administration Act; or (3) any other foreign country, project, or 

entity designated by the President for purposes of the act. 

Page 30 GAO-10-375 Iran Sanctions
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Foreign Companies That Transfer Sensitive 

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develop, or acquire chemical or biological weapons through certain 

exports from a foreign country. The exported goods or technology must be 

items that the United States would control under the Export 

Administration Act if the items were of U.S. origin. Foreign persons are 

subject to bans of at least 1 year on U.S. government procurement and on 

imports into the United States from the foreign person. The President may 

issue a waiver after 12 months by certifying to Congress that doing so is 

important to the national security interests of the United States. 

Page 31 GAO-10-375 Iran Sanctions
Appendix III: Comments from the Department Appendix III: Comments from the of the Treasury 

Department of the Treasury 

Note: GAO comments 

supplementing those in 

the report text appear at 

the end of this appendix. 

See comment 1. 

Page 32 GAO-10-375 Iran Sanctions 
Appendix III: Comments from the Department 

of the Treasury 

See comment 2. 

See comment 3. 

See comment 4. 

Page 33 GAO-10-375 Iran Sanctions
Appendix III: Comments from the Department 

of the Treasury 

Page 34 GAO-10-375 

The following are GAO’s comments on the Department of the Treasury’s 

letter. 

1. Treasury’s statement is in contrast with statements contained in a 2009 

Treasury internal budget request. As cited in our draft report, the 

request stated that OFAC’s information processes were hampering “the 

speed, efficacy, reliability and security” of OFAC’s “enforcement and 

compliance activities.” Our draft report also noted that a Treasury 

official had informed U.S. Customs and Border Protection officials that 

Treasury’s licensing information systems could not provide CBP with 

more complete and timely Treasury licensing information. CBP 

officials stated that they had asked for the information to help CBP 

agents at U.S. ports validate licenses for exports to Iran. However, for 

the sake of clarity, we have modified the title of our report. 

GAO Comments 

2. While Treasury is able to access and share information on licenses for 

medical and agricultural exports to Iran to some degree, it cannot do 

so in a timely and complete manner. For example, Treasury required 

more than 2 months to provide us with requested data on medical and 

agricultural export licenses. It required more than 4 months to provide 

us with 34 licenses for the export of other types of goods issued over 

the preceding 18 months. These licenses included a license for the 

export of aircraft equipment with potential military applications. 

3. ACE is a trade processing system that has been in development by 

CPB since 2001. Intended to automate border processing, ACE is being 

deployed in phases. As Treasury notes in its comments, ACE is not 

ready to accept export data that would be of use to enforcement 

agencies. 

4. As noted above, we have modified the title of our report for the sake of 

clarity. 

 Iran Sanctions 
Appendix IV: Comments from the Department Appendix IV: Comments from the of Commerce 

Department of Commerce 

Note: GAO comments 

supplementing those in 

the report text appear at 

the end of this appendix. 

Page 35 GAO-10-375 Iran Sanctions
Appendix IV: Comments from the Department 

of Commerce 

Page 36 GAO-10-375 Iran Sanctions
Appendix IV: Comments from the Department 

of Commerce 

Page 37 GAO-10-375 Iran Sanctions
Appendix IV: Comments from the Department 

of Commerce 

Page 38 GAO-10-375 Iran Sanctions
Appendix IV: Comments from the Department 

of Commerce 

See comment. 

Page 39 GAO-10-375 Iran Sanctions
Appendix IV: Comments from the Department 

of Commerce 

Page 40 GAO-10-375 Iran Sanctions
Appendix IV: Comments from the Department 

of Commerce 

Page 41 GAO-10-375 

The following is GAO’s comment on the Department of Commerce’s letter 

dated February 24, 2010. 

The Bureau of Industry and Security’s comments on pages 39 and 40 are 

not directed at our draft report, but are instead directed at the preceding 

comments, which were submitted by the Bureau of the Census. The 

Bureau of Industry and Security and the Bureau of the Census are separate 

bureaus within the Department of Commerce. 

GAO Comment 

 Iran Sanctions 
Appendix V: GAO Contact and Staff Appendix V: GAO Contact and Staff Acknowledgments 

Acknowledgments 

Joseph A. Christoff, (202) 512-8979 or christoffj@gao.gov

In addition to the contact named above, Tet Miyabara (Assistant Director), 

Patrick Breiding, Joseph Clifton, Lynn Cothern, Etana Finkler, Grace Lui, 

Lauren Membreno, and Pierre Toureille made key contributions to this 

report. Martin De Alteriis and Justin Fisher provided technical assistance. 

Page 42 GAO-10-375 Iran Sanctions

GAO Contact 

Staff 

Acknowledgments 

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