New OFAC General Licenses Authorize Food Product Sales to Iran and Sudan

The U.S. Department of the Treasury Office of Foreign Assets Control (OFAC) published a notice in the October 12, 2011, Federal Register that should be of great significance for any U.S. company that sells or wishes to sell food products to two countries subject to U.S. trade sanctions, Iran and Sudan. The notice announced the issuance of new regulations that include two "General Licenses" authorizing sales of most types of food products to Sudan and Iran—sales that until now required specific one-year licenses. OFAC is amending its Sudanese Sanctions Regulations (SSR)* and Iranian Transactions Regulations (ITR), 31 CFR Part 538 and 31 Part 560, respectively, to add these new General Licenses. Companies selling covered food products to Iran and Sudan will no longer need to obtain specific one-year licenses for these sales. The General Licenses do not allow sales of certain food items, nor do they allow sales of any products to military or law enforcement purchasers. Sales to Iran and Sudan of excluded food products, medicine and medical equipment will continue to require specific licenses from OFAC.

The new General Licenses come at a time of heightened tension between the U.S. and Iranian governments, and against the backdrop of legislation that would increase rather than ease U.S. trade sanctions against Iran. In this context, the new General Licenses should not be viewed as relaxing the U.S. sanctions program; rather, they merely provide a reasonable means of authorizing legal trade in food products, to replace the specific licensing process that has been costly, burdensome and time-consuming for businesses, as well as for OFAC itself. Companies that take advantage of the new General Licenses are advised to pay careful attention to the exceptions and limits in the new General Licenses regarding covered products and the parties to whom sales can be made. Also, as with all transactions involving countries and regions subject to U.S. sanctions, careful screening of all parties involved in transactions continues to be essential.

*Note that the SSR, including the new General License, pertain to North Sudan; the new country of South Sudan generally has been exempted from U.S. sanctions since earlier this year.