The U.S. Treasury’s Office of Foreign Assets Control (OFAC) on Feb. 27, 2020 issued General License 8 “Authorizing Certain Humanitarian Trade Transactions Involving the Central Bank of Iran” and related FAQs in conjunction with the formalization of the Swiss Humanitarian Trade Arrangement (SHTA), which became fully operational the same day.
“The new license should reverse some of the complications created in September 2019 when OFAC designated the Central Bank of Iran (CBI) as a terrorist entity,” said Ryan Costello, policy director for the National Iranian American Council. “That designation did not carve out a humanitarian exemption, which was problematic because the CBI plays a large role in humanitarian trade in Iran.”
According to OFAC, the September 2019 designation of the CBI pursuant to Executive Order 13224, as amended (E.O. 13224), means that U.S. persons cannot engage in any transaction or deal in the property or interests in property of the CBI, pursuant to Global Terrorism Sanctions Regulations (GTSR), unless exempt or authorized by OFAC. U.S. persons and U.S.-owned or -controlled entities are also prohibited from transactions or dealings involving the CBI under the Iranian Transactions and Sanctions Regulations (ITSR), unless exempt or authorized by OFAC.
OFAC General License 8 now permits certain humanitarian transactions and activities involving the CBI that would have been allowed prior to the CBI’s designation last September. Many of those activities were previous permitted pursuant to general or specific licenses issued under the ITSR. General License 8 does not permit humanitarian-related transactions with financial institutions that are listed as terrorist entities by the U.S. other than the CBI.
“The public health sector in Iran has been under severe stress for months in large part due to crushing economic sanctions that have limited humanitarian trade in medical devices and medicine manufactured in the West,” Costello said, characterizing the license as an “important reversal” of the terrorist designation of the CBI.
The SHTA, a new framework created in partnership with the Swiss government, is intended to “further facilitate the flow of humanitarian good to the Iranian people while safeguarding against the Iranian regime’s diversion of humanitarian trade for malign purposes,” according to U.S. Treasury. It is the first operational channel established by under a framework announced by Treasury and the U.S. Department of State in October 2019. Treasury’s website explains that while licenses and regulations offer exemptions from the Iranian sanctions, the SHTA “presents a voluntary option for facilitating payment for exports of agricultural commodities, food, medicine, and medical devices to Iran in a manner that ensures the utmost transparency.” Under this new program, participating financial institutions commit to conducting enhanced due diligence to ensure that humanitarian goods reach the Iranian people and are not misused by the regime. A guidance document from U.S. Treasury gives additional explanation on the framework.