Washington, D.C. – On Nov. 14, 2023, the Office of Foreign Assets Control (OFAC) issued a Compliance Communiqué, Guidance for the Provision of Humanitarian Assistance to the Palestinian People. The Communiqué states that “[t]he U.S. Department of the Treasury remains committed to denying Hamas access to funds following its heinous terrorist attacks against the people of Israel, while also ensuring legitimate humanitarian aid can continue to flow to the Palestinian people in Gaza.” The purpose of this guidance is to ensure that U.S. sanctions do not obstruct humanitarian assistance in Palestine. The Communiqué encourages donors to continue to donate to trusted organizations to support Palestinians.
Key OFAC Prohibitions and Authorizations Regarding Hamas and the Palestinian Islamic Jihad (PIJ):
- Under the Global Terrorism Sanctions Regulations (GTSR) (31 CFR Part 594) and the Foreign Terrorist Organizations Sanctions Regulations (FTOSR) (31 CFR Part 597), U.S. persons cannot transact with Hamas, the PIJ, and other blocked parties.
- Gaza and the West Bank are NOT embargoed or under jurisdictional sanctions by OFAC.
- OFAC general licenses (GLs) “authorize limited transactions with blocked persons” in support of humanitarian relief efforts so long as such transactions are “ordinarily incident and necessary to certain humanitarian activity.”
The NGO GLs: Found under sections 594.520 of the GTSR and 597.516 of the FTOSR, these authorize transactions that would be prohibited under U.S. sanctions for NGO humanitarian and non-commercial activities. However, despite these authorizations, certain conditions still apply. For instance, these conditions entail that authorizations only apply to transactions and activities with blocked individuals, groups, or organizations under the FTOSR and GTSR that “are ordinarily incident and necessary.” The Communiqué lays out the following example: to support civilians in a hospital in Gaza where Hamas is present, NGOs are authorized to give “life-saving medical assistance”.
According to OFAC, U.S. financial institutions “may rely on the statements of their customers that such transactions are authorized unless they know or have reason to know a transaction is not authorized.” (emphasis added). This language was included to provide assurances to financial sector actors in the updated OFAC Compliance Communiqué: Guidance for the Provision of Humanitarian Assistance to Syria after the Syria GL 23 for earthquake relief expired in August 2023. C&SN is hopeful that the financial sector similarly can rely on this guidance from OFAC to facilitate transactions for the purposes of humanitarian relief in Gaza without delay.
Further NGO activities that are allowed include:
- The NGO GLs authorize transactions with blocked persons “for the purpose of effecting the payment of taxes, fees, or import duties, or the purchase or receipt of permits, licenses, or public utility services.”
Further NGO activities that are not allowed include:
- The NGO GLs “do not authorize NGOs whose property and interests in property are blocked pursuant to the FTOSR or GTSR.”
- Financial transactions where there is prior knowledge or “reason to know” that the person or entity receiving the funds is blocked.
Agricultural Commodities, Medicine, and Medical Devices
Activities that are allowed to the West Bank or Gaza include:
- Under sections 594.521 of the GTSR and 597.517 of the FTOSR, authorized transactions include: medical devices, inclusive of components and replacement parts, and software updates; medicine; agricultural commodities; and food.
The caveat is all of these authorized items must be “in quantities consistent with personal, non-commercial use.”
U.S. Government (USG) Official Business
Activities that are allowed include:
- The USG GLs: Under sections 594.518 of the GTSR and 597.514 of the FTOSR, authorized transactions include: those “that are for the conduct of the official business of the United States government by employees, grantees, or contractors thereof, including the United States Department of State and the United States Agency for International Development (USAID).”
- USG-funded activities through assistance awards and third-party funded activities provided this funding comes via assistance awards as leveraged funds or a cost-share.
The Communiqué encourages USG implementing partners to work with their related federal funding agency for further clarifications or questions regarding USG-funded activities and programs.
International Organizations (IOs)
Activities that are allowed include:
- The IO GLs: Under sections 594.519 of the GTSR and 597.515 of the FTOSR, authorized transactions include: those “that are for the conduct of the official business of certain international organizations and for such conduct by employees, contractors, or grantees thereof.”
- The IO GLs also authorize transactions with blocked persons “for the purpose of effecting the payment of taxes, fees, or import duties, or the purchase or receipt of permits, licenses, or public utility services.”
Activities that are not allowed include:
- financial transactions where there is prior knowledge or “reason to know” that the person or entity receiving the funds is blocked.
The listed IOs that are authorized by these GLs include:
- “The United Nations, including its Programmes, Funds, and Other Entities and Bodies, as well as its Specialized Agencies and Related Organizations (see FAQ 1107);
- The International Centre for Settlement of Investment Disputes (ICSID) and the Multilateral Investment Guarantee Agency (MIGA);
- The African Development Bank Group, the Asian Development Bank, the European Bank for Reconstruction and Development, and the Inter-American Development Bank Group, including any fund entity administered or established by any of the foregoing;
- The International Committee of the Red Cross and the International Federation of Red Cross and Red Crescent Societies; and,
- The Global Fund to Fight AIDS, Tuberculosis, and Malaria, and Gavi, the Vaccine Alliance.”
Questions & Answers
The Compliance Communiqué answers a series of questions that cover the following topics:
The NGO GL’s Authorized Activities:
Authorized activities under the NGO GLs include transactions with blocked persons for certain non-commercial activities developed by NGOs to benefit civilians, however, these transactions must be “ordinarily incident and necessary”. In alignment with the baseline GLs the U.S. Department of the Treasury implemented in December 2022, these activities include:
- “humanitarian projects that meet basic human needs;
- democracy-building activities;
- educational activities;
- noncommercial development projects directly benefiting civilians;
- environmental and natural resource protection;
- disarmament, demobilization, and reintegration (DDR) programs; and
- peacebuilding, conflict prevention, and conflict resolution programs.”
The above categories are also inclusive of clean water and shelter assistance activities and the provision of agriculture-related, health-related, and healthcare services.
- Notably, the Communiqué states that “incidental benefits to sanctioned entities are NOT a focus for OFAC sanctions enforcement”, which is an encouraging sentiment OFAC has echoed many times in the past.
Donations to NGOs in support of humanitarian efforts in Gaza or the West Bank
U.S. persons can donate to, and fundraise for, NGOs who provide authorized or permissible assistance in support of humanitarian efforts in Gaza and the West Bank. Donors should take all requisite precautions and undertake due diligence to ensure their funds are reaching their intended beneficiary organizations.
U.S. companies’ provision of goods and services to NGOs conducting humanitarian activities in Gaza or the West Bank
U.S. companies can provide goods and services to these NGOs in Gaza or the West Bank, as long the NGOs are not blocked persons.
Importation of fuel or gas by NGOs for authorized humanitarian projects in Gaza and West Bank
The NGO GLs permit “NGOs to import fuel or gas for authorized humanitarian projects,” so long as the ultimate beneficiary of the provision of fuel or the payment for the purchase of fuel is not to blocked persons such as Hamas.
The transfer of funds to a designated group or blocked person in connection with an activity authorized by the NGO GLs
The only authorized transactions with a designated group or blocked person in connection with an activity authorized by the NGO GLs are for the “payments for taxes, fees, or import duties, or the purchase or receipt of permits, licenses, or public utility services if ordinarily incident and necessary to activities authorized by these authorizations.” These exceptions allow NGOs to operate in areas where terrorist organizations or blocked entities operate and/or act as the de facto government or controlling authority. All other transactions outside of these exceptions with blocked persons are prohibited.
Interactions with governing institutions in which leading governing officials are blocked persons
Simply because a designated or blocked individual has a “leadership role in a governing institution” does not mean the institution itself is blocked as a whole. Therefore, “engaging in a routine interaction with an agency” where a blocked person works in an official capacity is permitted as long as the interaction does not involve the blocked person. This is crucial in the case of Gaza, as members of Hamas have official positions within the governing agencies and institutions here. This guidance from OFAC clarifies that interactions with governing institutions are not fully blocked solely because a member of Hamas works within the agency.
False Narratives Surrounding NPOs
The Charity and Security Network (C&SN) urges donors to continue to donate to trusted organizations, as the narrative that charities are generally susceptible to terrorist financing abuse by terrorist entities has both been proven false and damaging to charitable work over the years. Unfortunately, this narrative is perpetuated in the Compliance Communiqué, which states that “[g]roups such as Hamas raise funds through entities that present themselves outwardly as legitimate charities but are in fact fronts for Hamas’s illicit fundraising, often abusing the goodwill of donors.” This claim should only be made with ample, concrete, and conclusive evidence accompanying it, which OFAC did not provide.
This conclusive evidence is especially important as the U.S. Treasury Department itself and the Financial Action Task Force (FATF) have both stated publicly and routinely that NPOs historically face little to no risk of terrorist financing abuse. While donors should always strive to be aware of where their donations are going, they should not let this false narrative of charity susceptibility prevent them from seeking to provide aid and assistance to innocent civilians in Gaza and the West Bank. Charities operating in these crisis areas already conduct stringent and extensive due diligence and risk mitigation measures to prevent aid diversion.