Although the company's money was going to fund a known dictator and U.S.-designated sponsor of terrorism, it was not, as yet, breaking any laws, because Syria was not yet under sanctions. However, with the rise of the Arab Spring and Assad's bloody clampdowns on his population, on Aug. 10, 2011, the Office of Foreign Assets Control (OFAC) at the U.S. Treasury Department designated the Commercial Bank of Syria a Specially Designated National (SDN) and froze all property and assets of the bank. This prohibited U.S. persons from engaging in any transactions including payments, transfers, and "other dealings" in which the bank had an interest. A week later President Obama announced Executive Order 13582, which prohibited "investment in Syria by a United States person, wherever located."
Art.sy thought the timing of its purchase made it immune to these rulings—a position the company still maintains. They had renewed their domain name for two years through Marcaria for the sum of $800 in April 2011, well before sanctions were in place. However, NANS itself does not offer domain renewal for longer than one year at a time. To renew a domain name ending in .sy, a yearly subscription has to be paid. Although Art.sy thought they had renewed for two years, the NANS policy suggests that Marcaria was holding Art.sy's money and paying the Karawani Law Firm (which was in turn paying NANS) on an annual basis. With annual subscription fees being paid to NANS through the Commercial Bank of Syria, Art.sy appears to have been, quite by accident, breaking both the OFAC ruling and the executive order.
Mark Dubowitz, a sanctions specialist who has advised both Congress and the Obama administration, admits it can be tough for U.S. companies that are trying to figure out the peculiarities and nuances of U.S. sanctions laws. But Dubowitz, who is also the executive director of the Washington-based Foundation for Defense of Democracies, has little sympathy for Art.sy's situation: "If you're doing business with Syria and you've got a legal counsel and if he's worth the money you're paying him, the first thing he should say is 'Look, you're doing business with Syria, we've got sanctions against Syria, I've got to get you a commerce license.' "
The Treasury Department issues specific licenses to U.S. companies that want to deal with countries under sanctions on a case-by-case basis. Art.sy does not claim to have been issued one.
"Clearly," says Dubowitz, "every company should know that if you're doing business with Syria or Iran, these are countries that are considered state sponsors of terror and are on the State Department list. ... To call your company by that name, it's cute, but it's not that cute when you consider the country whose name you are using is responsible for killing Americans. I think if you work in the technology sector or work in the internet you should know that buying a domain name is doing business with that country."
Syria has been on the State Department's list of state sponsors of terrorism since 1979.