Adam Szubin, Director of the Office of Foreign Assets Control (OFAC) within the U.S. Department of the Treasury recently debuted General License D (“GLD”) which effectuates U.S. exports to Iran of services, hardware, and software incident to “personal communications.” Specific items are detailed on the Annex to the announcement, to include smart phones, tablets, etc. The first glance revealed by pulling aside the curtain might suggest GLD reflects a policy sea-change, as reflecting a departure from prior laws that hardened sanctions on most transactions.
But as was the case with the Metro-Goldwyn-Mayer film version of L. Frank Baum’s novel, the film classic Wizard of Oz, it is much more complex than that. This complexity requires that U.S. entities proceed with caution, as the following two issues show.
First, does General License D really reflect a sea-change? In reality, a review of ITSR shows that GLD is an extension of earlier policies regarding communications and the people of Iran. It should be noted, for example, that the previous iteration of ITSR allowed U.S. entities to export free, publicly-available software. See 31 C.F.R. § 540. Now, permission is being extended to the same items to include those that carry a price tag.
Second, as a practical matter, how can a U.S. company go about exporting services, software, and/or hardware while staying in compliance with the greater regulatory scheme? Remember, there are other laws and regulations in abundance with which U.S. entities and their partners must comply. One set of key laws governs banking transactions . So now GLD permits U.S. entities to export the above to Iran – but pragmatically, how will the U.S. entities manage the physical financial transaction, in light of the OFAC sanctions in place and the many Iranian banks on the SDN black-list.
GLD is certain to further the area’s reliance on the informal hawala money-transfer networks, a consequence that OFAC will presumably not find very desirable. But perhaps OFAC has liberalization of the SDN list in its sights: we will see.
For now, of course, U.S. entities and their partners must be careful to steer clear of the regulatory minefield as they follow the yellow brick road set forth in GLD.