On February 27, 2020, the Department of Treasury issued General License No. 8 (“GL 8”) “Authorizing Certain Humanitarian Trade Transactions Involving the Central Bank of Iran (“CBI”).” GL 8 authorizes certain humanitarian-related transactions in food, medicine and agricultural products (and certain associated activities) involving the CBI that were prohibited under the Iranian sanctions regulations as a result of the CBI’s designation under E.O. 13224. Specifically, this new GL authorizes the following transactions and activities involving the CBI:
- The exportation or reexportation of agricultural commodities, medicine, and medical devices to the Government of Iran (“GoI”), to any individual or entity in Iran, or to persons in third countries purchasing these items specifically for resale to any of the foregoing only as authorized in a one-year specific license issued by OFAC.
- This authorization does not cover the exportation or reexportation of medical devices on OFAC’s List of Medical Devices Requiring Specific Authorization, medicine, or medical devices to military, intelligence, or law enforcement purchasers or importers.
- There are certain payment terms applicable to the above sales pursuant to 31 CFR § 560.532. (Otherwise, a specific license may be issued on a case-by-case basis. The authorization does not permit debits to blocked accounts or debits/credits to Iranian accounts with U.S. depository institutions).
- The provision of training necessary and ordinarily incident to the safe and effective use of medicine and medical devices exported or reexported pursuant to the above section to the GoI, an Iranian individual or entity, or to third country nationals purchasing such goods specifically for resale to the foregoing provided that: 1) payment terms and financing are authorized by the regulations; 2) any released technology is EAR99; 3) and the training is not provided to the military, intelligence, law enforcement, or any official or agent thereof
- The provision by U.S. persons of brokerage services on behalf of U.S. persons for the sale and exportation or reexportation by U.S. persons of agricultural commodities, medicine, and medical devices so long as the sale and exportation or reexportation is authorized by a one-year specific license as required. The authorization also covers any specific license granted to a U.S. person to broker services on behalf of non-U.S., non-Iranian persons for the foregoing activities with to the GoI or Iranian persons.
- Payment of a brokerage fee earned pursuant to the authorization may not involve debits/credits to an Iranian account, and there are also reporting requirements.
- Transfers of funds involving Iran by U.S. depository institutions or by U.S. registered securities brokers or dealers for the benefit of the CBI if the transfer arises from and is ordinarily incident and necessary to give effect to a transaction that has been authorized by the GL or a specific license referenced above. Again, debits or credits to an Iranian account are generally not permitted.
- Other transactions ordinarily incident to a licensed transaction and necessary to give effect thereto, with certain limited exceptions.
GL 8 does not authorize humanitarian-related transactions involving Iranian financial institutions designated under E.O. 13224 other than the CBI. A separate license is required for any transactions otherwise prohibited by the Iranian Transactions and Sanctions Regulations.
Regarding secondary sanctions, OFAC states in a Frequently Asked Question (FAQs) that there is generally no secondary sanctions risk for non-U.S. persons 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. Transactions must not involve persons designated for Iran’s support for international terrorism or weapons of mass destruction (WMD) proliferation, however. Also, non-U.S. persons generally do not face U.S. secondary sanctions exposure 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 the activities do not involve any person designated for Iran’s support for international terrorism or WMD proliferation, other than the CBI.