OFAC Responds to COVID-19 in Iran
Monday,
May , 2020
On March 6, 2020 and in response to an outbreak of
coronavirus in Iran, the U.S. Department of
the Treasury’s Office of Foreign Assets Control (OFAC) issued guidance
pertaining to the manner in which humanitarian goods and assistance may be
provided to the people of Iran consistent
with U.S.
sanctions against Iran.
This two-part post examines, first, the form and content of
OFAC’s March guidance and, second, the related considerations any company or
non-governmental organization (NGO) wishing to export medicine and medical devices to Iran still
needs to bear in mind. Those considerations include ensuring the relevant
items qualify under an existing medical general license and assessing whether
their financial institutions will process related payments.
New FAQ
Notably, OFAC did not issue a new general license pertaining
to Iran. Rather,
it published one new Frequently Asked Question (FAQ), numbered 828, which
reiterates previously authorized exemptions with respect to humanitarian goods
and assistance. The most important substance is summarized below:
·
The FAQ restates that humanitarian donations to
recipients in Iran from the U.S. or by U.S. persons or
U.S.-owned or -controlled foreign entities are generally exempt from U.S. sanctions
against Iran, provided they
are not being made to the Government of Iran, blocked
persons blocked under the Iranian Transactions
and Sanctions Regulations (ITSR), or an individual or entity listed on OFAC’s Specially Designated
Nationals and Blocked Persons (SDN) List.
·
Additionally, the FAQ emphasizes that the U.S. has broad
exceptions and authorizations that allow for commercial sales of
humanitarian goods, including medicine and medical devices, to Iran or the
Government of Iran from the U.S. or by U.S. persons or
U.S.-owned or -controlled foreign entities.
·
Importantly, OFAC highlights that any such
business cannot involve unlicensed transactions with SDNs. This includes Iran’s Islamic Revolutionary
Guard Corps (IRGC), which was designated a foreign terrorist organization
by the United
States on
April 15, 2019. According to news
reports, the IRGC has taken a lead role in Iran’s response to
the recent outbreak of coronavirus.
·
For humanitarian transactions involving the Central Bank of Iran, the
FAQ refers readers to General License 8 issued pursuant to the Global Terrorism
Sanctions Regulations (GTSR) and the ITSR, as well as previously issued OFAC
FAQs 821, 822, and 823.
·
NGOs may export or re-export products or services in support of not-for-profit
activities that benefit the people of Iran, such as medicine.
However, any related funds transfers must be made by the NGOs themselves, and
not directly by U.S. individuals.
·
Finally, persons interested in providing humanitarian assistance to Iran in
light of coronavirus are reminded to review previously issued guidance and
regulations related to Iran. The FAQ provides
links to all such guidance and the pertinent sections of law.
·
The FAQ concludes that other types of humanitarian activities or exports by U.S. persons,
not previously contemplated, may be authorized pursuant to a specific license
from OFAC.
Additional Considerations
There is concern that non-U.S.
governments, companies, NGOs, and their banks, remain too apprehensive about
violating U.S. sanctions to provide needed assistance,
which is limiting access to medical supplies for a country that has
reported more than 100,000 cases and 6,600 deaths, including 40 doctors
and nurses according to the United Nations’ Global Humanitarian
Response Plan.
This situation prompted former U.S. Vice
President and 2020 Democratic Presidential candidate Joe Biden to publish
a statement imploring the U.S. to do more.
While acknowledging the previously authorized exemptions with respect to
humanitarian goods and assistance, Mr. Biden recommended:
1.
Issuing broad licenses to pharmaceutical and medical device companies;
2.
Creating a dedicated channel for international banks, insurers, transportation
companies and service firms to facilitate access to supplies; and
3.
Providing comfort letters to reassure parties they will not be subject to U.S. sanctions
if they engage in humanitarian trade with Iran to support its
COVID-19 response.
In a forthcoming supplemental
post, we will consider factors the international community should bear in mind
when seeking to export medical and other needed supplies to Iran.
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