December 2, 2021
On Nov. 24, 2021 the Department of Treasury’s Office of Foreign Assets Control (OFAC) announced expansion of its General License for NPO activities in Syria. This is an encouraging sign that Treasury is following up on its sanctions review by assessing restrictions and exemptions for humanitarian and other activities by nonprofit organizations (NPOs) in order to “facilitate legitimate humanitarian activity while continuing to deny support to malign actors.” As of No. 26, the updated General License (found at 31 CFR 542.516) allows a wider scope of activities that include early recovery and reconstruction. It permits NPOs to engage in transactions with the government of Syria, make investments, export and reexport goods, and purchase petroleum of Syrian origin if in support of five previously authorized activities: humanitarian projects, democracy building, education, non-commercial development and preservation and protection of cultural heritage. The new General License specifically authorizes banks to transfer funds of U.S. or third country NPOs for these activities. Non-U.S. NPOs and financial institutions can also take advantage of the new policy.
General Licenses allow NPOs to go forward with otherwise prohibited transactions and activities without applying for a specific license from OFAC. Previously OFAC had issued General License 11, incorporated into the Syrian Sanctions Regulations, that permitted NPOs to engage in the five activity areas in Syria described above. It also limited transactions with the Syrian government to items such as payment of taxes, fees and import duties or purchase of public utility services necessary to carry out programs.
OFAC provided supplemental information in two new Frequent Asked Questions. FAQ 937 clarifies that the Syrian Government includes political subdivisions, agencies and the Central Bank Of Syria. New investments include transactions that commit or contribute funds or other assets, or loans that would otherwise be prohibited. These are intended to cover early-recovery-related transactions. Non-covered transactions would require a specific license from OFAC.
FAQ 937 also specifies that non-U.S. persons, “including NGOs and foreign financial institutions, do not risk exposure to U.S. secondary sanctions pursuant to the Caesar Syrian Civilian Protection Act of 2019 for engaging in or facilitating transactions and activities that are otherwise authorized…”
FAQ 938 provides more details on what is considered “early-recovery-related transactions” that NPOs can now engage in. When done in support of the five major categories listed above, they include restoration of health, education, agricultural, shelter and clean water facilities, as well as provision of equipment and supplies and training to support such facilities.
OFAC’s action follows a Nov. 8, 2021 clarification of policy for Syria in FAQ 934 that covers NPOs that are contractors or grantees of the UN or U.S. government. In those cases, the NPOs are permitted to conduct stabilization and early recovery activities in Syria under 31 CFR 542.513, when conducted in support of their official business. In both cases the NPOs must provide a copy of their contract or grant agreement to financial institutions prior to processing funds transfers. The FAQ also clarifies that this policy applies to non-U.S. persons, “including NGOs, private sector entities and foreign financial institutions facilitating or assisting in the aforementioned activities…”