The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) has issued guidance on humanitarian exports and compliance challenges related to the COVID-19 pandemic.
Humanitarian Exports
On April 16, OFAC published a Fact Sheet providing consolidated guidance on authorizations for provision of humanitarian assistance and trade that already form part of the regulations and policies governing U.S. sanctions programs. Designed to counter reports that U.S. sanctions are impeding humanitarian relief to countries such as Iran and Venezuela that are facing exceptional challenges related to the ongoing COVID-19 pandemic, the Fact Sheet provides a one-stop compilation of links to relevant regulations, general licenses (GLs) and guidance.
The Fact Sheet is organized by sanctions program and includes sections on sanctions related to Iran, Venezuela, North Korea, Syria, Cuba and Ukraine/Russia. Each section includes links to the relevant Frequently Asked Questions (FAQs) published by OFAC and to the GLs, specific licensing policies and exemptions for humanitarian relief under each sanctions program, including FAQ 828 issued on March 6 regarding available authorizations for provision of humanitarian goods or assistance to the people of Iran.
The Fact Sheet does not implement any new authorizations. Instead, it makes clear that under existing exemptions and authorizations applicable to OFAC’s comprehensive sanctions against Iran, Venezuela, North Korea, Syria, Cuba and the Crimea region of Ukraine, most medicine and medical devices, including most personal protective equipment (PPE) and other items used for COVID-19 treatment, qualify for export and reexport. Although certain types of PPE and other items will still require a specific license, OFAC has stated that it will prioritize and expedite specific license requests that relate to humanitarian support, consistent with its stated objective of ensuring that sanctions do not impede humanitarian relief.
In addition to reviewing requirements under the OFAC-administered sanctions programs, those interested in providing COVID-19-related humanitarian support to the people of sanctioned countries should consider all other relevant regulations, guidance and rules, including those of the U.S. Department of Commerce’s Bureau of Industry and Security (BIS), which administers the Export Administration Regulations (EAR). Like OFAC, BIS imposes licensing requirements related to countries subject to OFAC sanctions, notably Cuba, North Korea, Syria and the Crimea region of Ukraine. While BIS has not issued consolidated guidance similar to the Fact Sheet, exporters will find that part 746 of the EAR provides a good summary of license exceptions and policies relevant to exports of humanitarian items to these embargoed destinations. Of course, exporters of items that have an Export Control Classification Number (ECCN) other than EAR99 must continue to observe any license requirements based on the reasons for control associated with the applicable ECCN and the destination of the intended export or reexport.
In addition, PPE exports are subject to restrictions implemented by the Federal Emergency Management Agency (FEMA). The FEMA restrictions are the subject of a separate alert, which can be viewed here.
Compliance Challenges
Although OFAC remains operational during the COVID-19 pandemic, it has taken steps to recognize challenges faced by businesses and has modified certain procedures accordingly.
On April 20, OFAC published a notice encouraging financial institutions and other firms to contact OFAC if they are facing challenges in timely complying with OFAC reporting requirements with respect to matters such as blocked funds, licenses and administrative subpoenas in light of the operational challenges posed by COVID-19-related restrictions.
In addition, like other agencies, OFAC now is encouraging electronic filing for voluntary self-disclosures, and the notice provides details on how to submit disclosures electronically.
The notice also conveys OFAC’s understanding “that the COVID-19 pandemic can cause technical and resource challenges for organizations” and that businesses may choose “as part of [a] risk-based approach to sanctions compliance, to account for such challenges by temporarily reallocating sanctions compliance resources consistent with that approach.” The notice states that “OFAC will evaluate this as a factor in determining the appropriate administrative response” if a violation occurs while such measures are in effect. Nevertheless, OFAC cautions that such determinations will continue to be made “on a case-by-case basis” and consistent with the risk-based approach to sanctions compliance reflected in its Economic Sanctions Enforcement Guidelines and Framework for Compliance Commitments. Therefore, companies considering reallocation of compliance resources should carefully weigh the risks posed by their current scope of operations in determining whether and to what extent such reallocation may be appropriate.
