July 13, 2020

Volume X, Number 195

July 13, 2020

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July 10, 2020

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OFAC Responds to COVID-19 in Iran

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.

© Copyright 2020 Squire Patton Boggs (US) LLPNational Law Review, Volume X, Number 139

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About this Author

Richard Gibbon Criminal Defense Lawyer Squire Patton Boggs Dubai
Attorney

Rich Gibbon is a member of our Government Investigations & White Collar Practice and focuses on white collar criminal defense, regulatory enforcement and internal investigations. He has been based in the Middle East for eight years and has garnered extensive experience counselling boards of directors and senior management across the Middle East and Africa, Levant, Europe, and South Asia through multi-agency, multi-jurisdictional financial crime investigations and enforcement actions. This includes multinational corporates in connection with anticorruption regimes and...

+971-4-447-8715
Sassi Riar, attorney
Attorney

Sassi Riar is an associate in the Dubai office of Squire Patton Boggs. She represents clients in white collar criminal matters, government enforcement actions and internal investigations.

She is experienced in advising numerous different banks and financial institutions in the Middle East with respect to multi-agency inquiries, including conducting internal investigations into alleged OFAC sanctions violations and reporting to OFAC and the DOJ as to the same.

+971-4-447-8734