On April 16, 2020, the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) published a Fact Sheet providing a helpful consolidated summary of the various existing exemptions, exceptions, and authorizations relating to the provision of humanitarian assistance that are available under certain U.S. sanctions programs to leverage in response to the COVID-19 pandemic. Separately, on April 20, 2020, OFAC issued a notice encouraging the prompt communication to OFAC of concerns over potential delays in meeting compliance deadlines (e.g., blocked property reporting deadlines) due to technical and resource challenges related to the COVID-19 pandemic.
Fact Sheet on the Provision of Humanitarian Assistance and Trade to Combat COVID-19
The Fact Sheet provides a useful consolidated reference and reminder of the existing humanitarian assistance exemptions, general licenses, specific licensing policies and FAQs available under the OFAC sanctions programs targeting Iran, Venezuela, North Korea, Syria, Cuba, and Crimea that may be relevant to activities in support of combating the COVID-19 pandemic. It follows a recent OFAC FAQ publishing guidance specifically relating to the provision of humanitarian goods and assistance to Iran in response to the COVID-19 outbreak there (see our prior blog post on that here). The Fact Sheet does not authorize any additional humanitarian activities or trade for combating the COVID-19 pandemic in these countries.
That said, the Fact Sheet does confirm that persons manufacturing medicine, medical devices, or products used for sanitation, hygiene, medical care, medical safety, and manufacturing safety for use in Iran will not be subject to secondary sanctions under Executive Order (“E.O.”) 13902 for operating in the “manufacturing sector” of the Iranian economy. As discussed in a previous blog post, E.O. 13902 issued in January 2020 authorizes the imposition of secondary sanctions on certain transactions even outside U.S. jurisdiction involving, inter alia, the “manufacturing” sector of the Iranian economy. This Fact Sheet is the first official guidance as to the scope of what otherwise appears to be a broad targeting of the “manufacturing sector” in Iran.
Given the timing of its release, the Fact Sheet appears, at least in part, to have been issued in response to recent widespread calls to ease U.S. sanctions in light of the COVID-19 pandemic, in particular against Iran to allow for the provision and supply of medical equipment and aid to combat the severe outbreak of COVID-19 in Iran. The Fact Sheet reiterates that humanitarian activities to combat the COVID-19 pandemic are already generally authorized or licenseable under the Iran, Venezuela, North Korea, Syria, Cuba, and Crimea sanctions programs, although other restrictions may apply separately from OFAC’s requirements, such as export restrictions that may be applicable under the Export Administration Regulations or the recently enacted personal protective equipment (“PPE”) restrictions issued by the Federal Emergency Management Agency (“FEMA”) in response to the COVID-19 pandemic. Our blog posts about the FEMA PPE product restrictions are available here and here.
Notwithstanding the confirmation that certain COVID-19 related humanitarian assistance to U.S. sanctioned countries is generally permissible, practical obstacles continue to make funds transfers to or from sanctioned countries challenging. It remains to be seen whether the U.S. Government’s efforts to promote a humanitarian payment channel with foreign governments and financial institutions, for example, the recently announced Swiss Humanitarian Trade Arrangement (SHTA), may alleviate this in the face of a potential uptick in humanitarian trade.
Recent Actions Notice Encouraging Communication of Compliance Concerns Related to COVID-19
OFAC encourages persons affected by the COVID-19 pandemic to promptly contact OFAC if they anticipate delays in their ability to comply with deadlines established by OFAC’s regulatory requirements. Persons expecting delays in filing blocked property and rejected transaction reports, responses to administrative subpoenas, reports required by general or specific licenses, or other required reports should contact OFAC “as soon as practicable” if they anticipate being unable to meet the relevant deadline. OFAC is also encouraging electronic submissions of self-disclosures during the pandemic. Self-disclosures should be submitted to [email protected]. Persons submitting self-disclosures electronically should also refer to OFAC’s Data Delivery Standards for detailed guidance relating to OFAC’s electronic submission requirements.