OFAC

On March 19, 2014 in a gesture of rapprochement that may be timed to coincide with Persian New Year “Nowruz,” Deputy Director Barbara Hammerle introduced the debut of General License G (GLG). The new GLG reflects a warming of educational policy and high-lights are summarized below, but perhaps the most notable change is that it authorizes banks and private lenders to transact funds transfers and process student loan payments from persons in Iran. Notes 2 and 3.

Summary high-lights:

a. Accredited post-secondary institutions can enter into academic exchange programs with those in Iran;

b. Educational services.

1. U.S. academic institutions and their contractors are authorized to export their services:

(i) As to filing and processing applications and accepting payment for same, as well as for tuition, from persons in Iran (or residents of Iran);

(ii) To recruit, hire, or employ Iranian nationals as teachers so long as the proper visa is obtained;

(iii) Providing selected undergraduate coursework through online learning to Iranian nationals;

2. U.S. students may participate in coursework in Iran in selected fields or participate in noncommercial research.

3. In support of several charitable educational activities such as educational reform, access to education, and the cultivation of literacy.

4. U.S. persons are authorized to administer to Iranian nationals professional certificate exams as well as university entrance exams, to include standardized multiple-choice, and provide all ancillary services needed to matriculate a student at a U.S. institution.

The GLG likewise allows the exportation of software and hardware that supports personal communication (Note 5), which is already in place, but also authorizes U.S. persons to participate in publishing-related activities. Note 4. As always when it comes to OFAC matters, great care must be taken to comply with all rules; e.g., here it should be noted that exportation of technology in contravention with EAR99 are expressly prohibited.

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.

Happy Nowruz OFAC policy warms with new General License G

OFAC follows the yellow brick road with General License D.