Issuance of Counter Terrorism and Iran-related General License 8 and Frequently Asked Questions
2/27/2020
The Department of the Treasury’s Office of Foreign Assets Control (OFAC) is issuing General License 8 “Authorizing Certain Humanitarian Trade Transactions Involving the Central Bank of Iran” and related FAQsin conjunction with the formalization of the Swiss Humanitarian Trade Arrangement (SHTA), which became fully operational today. A fact sheet detailing the terms of the SHTA can be found here.
Here are the new FAQs:
821. What does General License No. 8 (GL 8) authorize with respect to humanitarian-related transactions and activities involving the Central Bank of Iran (CBI)?
As a result of the CBI’s designation pursuant to Executive Order 13224, as amended (E.O. 13224), U.S. persons are prohibited from engaging in any transaction or dealing in the property or interests in property of the CBI under the Global Terrorism Sanctions Regulations, 31 CFR part 594 (GTSR), unless exempt or authorized by OFAC. In addition, U.S. persons and U.S.-owned or -controlled foreign entities are subject to broad prohibitions on transactions or dealings involving the CBI under the Iranian Transactions and Sanctions Regulations, 31 CFR part 560 (ITSR), unless exempt or authorized by OFAC.
GL 8 authorizes certain humanitarian-related transactions and activities involving the CBI prohibited by the GTSR or by the ITSR as a result of the CBI’s designation under E.O. 13224 that otherwise would have been authorized under the ITSR prior to the CBI’s designation. For example, if a U.S. person could have relied on general or specific licenses pursuant to sections 560.530(a) or (b), 560.532, or 560.533 of the ITSR to engage in certain activities prior to the CBI’s designation under E.O. 13224, GL 8 provides the additional authorization needed to engage in such activities.
Please note that GL 8 does not authorize humanitarian-related transactions involving Iranian financial institutions designated under E.O. 13224 other than the CBI. Please further note that the authorizations at sections 560.530, 560.532, and 560.533 remain otherwise applicable according to their terms. [02-27-2020]
822. I’m a U.S. person that relied on general or specific licenses pursuant to 560.530, 560.532, or 560.533 of the ITSR to conduct humanitarian-related transactions and activities involving the CBI prior to its designation under E.O. 13224. Is any further authorization needed to conduct such transactions following the designation of the CBI under E.O. 13224?
As detailed in FAQ 821, GL 8 authorizes certain humanitarian-related transactions and activities involving the CBI that would be prohibited by the GTSR or by the ITSR due to the exclusion at section 560.530(d)(5) of the ITSR. Further authorization from OFAC, beyond GL 8, is not required for such transactions and activities involving the CBI that would have been authorized pursuant to a general license in sections 560.530(a) or (b), 560.532, or 560.533 of the ITSR prior to CBI’s designation under E.O. 13224. Additionally, transactions and activities authorized under specific licenses issued pursuant to sections 560.530, 560.532, or 560.533 of the ITSR involving the CBI are also authorized pursuant to GL 8.
Any transactions otherwise prohibited by the ITSR or GTSR must be separately licensed pursuant to the ITSR or GTSR, as appropriate. [02-27-2020]
823. Do non-U.S. persons risk exposure to U.S. secondary sanctions for engaging in humanitarian-related transactions or activities involving the CBI that U.S. persons would be authorized to engage in under General License No. 8 (GL 8)?
Non-U.S. persons generally do not risk exposure under U.S. secondary sanctions relating to Iran for engaging in the sale of agricultural commodities, food, medicine, or medical devices to Iran, as such transactions are generally subject to exceptions in otherwise applicable authorities, provided the transactions do not involve persons designated in connection with Iran’s support for international terrorism or weapons of mass destruction (WMD) proliferation. Non-U.S. persons do not risk exposure under U.S. secondary sanctions for engaging in humanitarian-related transactions or activities involving the CBI that would be authorized under GL 8 if engaged in by a U.S. person, provided such transactions and activities do not involve any person designated in connection with Iran’s support for international terrorism or WMD proliferation, other than the CBI. [02-27-2020]
824. What is the Swiss Humanitarian Trade Arrangement (SHTA)?
On October 25, 2019, the U.S. Departments of State and the Treasury announced a new humanitarian framework to assist foreign governments and foreign financial institutions in establishing payment mechanisms to facilitate humanitarian exports to Iran that are subject to enhanced due diligence. While the United States maintains broad exceptions and authorizations for the conduct of humanitarian trade with Iran, this humanitarian framework presents an additional, voluntary option for facilitating payment for exports of agricultural commodities, food, medicine, and medical devices to Iran. The SHTA is the first operational channel to be established under this humanitarian framework, in partnership with the Swiss government. Initial pilot transactions were successfully conducted in late January 2020, and the SHTA was formally established on 27 February 2020. Under the SHTA, participating financial institutions commit to conducting enhanced due diligence to ensure that humanitarian goods reach the people of Iran and are not misused by the Iranian regime.
For more information on the humanitarian mechanism as announced by the U.S. government, please refer to the guidance published on the Treasury’s website on October 25, 2019. Additional guidance for companies and financial institutions interested in participating in the SHTA can be found in the Treasury SHTA fact sheet and OFAC FAQs 825 and 826. [02-27-2020]
825. How can parties participate in the SHTA to export humanitarian goods to Iran?
The SHTA is overseen by Switzerland’s State Secretariat for Economic Affairs (SECO) and intended for use by U.S. and non-U.S. persons domiciled in Switzerland. Exporters within Swiss jurisdiction may reach out to SECO at SHTA@seco.admin.ch for further details on requirements and instructions for participating in the SHTA. In addition to any due diligence imposed under the SHTA, U.S. persons and their owned or controlled foreign entities must continue to comply with the Iranian Transactions and Sanctions Regulations, 31 C.F.R. part 560 (ITSR), when conducting exports of humanitarian goods to Iran. Certain exports and sales of humanitarian goods to Iran are authorized pursuant to sections 560.530, 560.532, and 560.533 of the ITSR. In addition, General License 8 provides additional authorization that may be necessary for such humanitarian-related transactions due to the Central Bank of Iran’s designation under Executive Order 13224, as amended. For further information regarding General License 8, please see associated FAQs 821, 822, and 823. [02-27-2020]
826. What options exist for exporting humanitarian goods to Iran outside the Swiss Humanitarian Trade Arrangement (SHTA)?
Transactions for the sale of agricultural commodities, food, medicine, and medical devices are not required to be processed through the SHTA. See FAQ 637 for guidance setting out existing exceptions to U.S. sanctions for the export of humanitarian goods to Iran.
Foreign governments and foreign financial institutions interested in establishing a humanitarian mechanism consistent with the guidance published on October 25, 2019, should reach out to the Department of the Treasury’s Office of Foreign Assets Control for more information or to provide a proposed framework for evaluation. Such proposals should demonstrate careful consideration of the illustrative list of enhanced due diligence and reporting expectations described in the October 25, 2019 guidance. [02-27-2020]
And here is Treasury’s press release about the SHTA:
PRESS RELEASES
United States and Switzerland Finalize the Swiss Humanitarian Trade Arrangement
WASHINGTON – The United States and Swiss Governments today finalized the terms of the Swiss Humanitarian Trade Arrangement (SHTA), which is now fully operational. The SHTA will further facilitate the flow of humanitarian goods to the Iranian people while safeguarding against the Iranian regime’s diversion of humanitarian trade for malign purposes. The SHTA is the first operational channel established under the framework announced by the U.S. Department of State and the Treasury in October 2019 to facilitate humanitarian trade with Iran. Initial transactions were successfully conducted in late January 2020 to demonstrate the viability and effectiveness of the SHTA.
“The Swiss Humanitarian Trade Arrangement will help ensure that humanitarian goods continue to reach the Iranian people without diversion by the regime,” said Secretary Steven T. Mnuchin. “We thank our Swiss counterparts for their dedicated efforts in establishing the SHTA and we look forward to our continued collaboration.”
While the United States maintains broad exceptions and authorizations for the conduct of humanitarian trade with Iran, the SHTA presents a voluntary option for facilitating payment for exports of agricultural commodities, food, medicine, and medical devices to Iran in a manner that ensures the upmost transparency. Under the SHTA, participating financial institutions commit to conducting enhanced due diligence to ensure that humanitarian goods reach the people of Iran and are not misused by the Iranian regime.
Companies within Swiss jurisdiction may reach out to Switzerland’s State Secretariat for Economic Affairs (SECO) at SHTA@seco.admin.ch for further details on requirements and instructions for participating in the SHTA. This includes entities that are owned or controlled by U.S. and third-country persons and domiciled in Switzerland. Parties may continue to avail themselves of existing exceptions and authorizations to conduct humanitarian trade with Iran outside of the humanitarian channel.
Foreign governments and foreign financial institutions interested in establishing a humanitarian mechanism consistent with the guidance published on October 25, 2019, should reach out to the Department of the Treasury’s Office of Foreign Assets Control for more information or to provide a proposed framework for evaluation. Such proposals should demonstrate careful consideration of the illustrative list of potential enhanced due diligence and reporting expectations described in the October 25, 2019 guidance.
Links: