This past Friday, the United States Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) released General License D-1. The effect of this new general license was to expand upon the authorizations provided for in General License D which authorized the export of certain hardware, software, and services incident to personal communications to Iran. The former General License D failed to address a number of areas that were critical for individuals and entities alike seeking to operate under that general license. The new General License D-1 resolves some of those issues, and creates a more practical and useful general license authorization. There was a lot that changed, but here are the Top 5 changes that I believe have the most practical impact:

1. Expansion to non-U.S. sources: One of the key changes in the new General License D-1 is that its authorizations now extend to non-U.S. persons or exports from non-U.S. sources. Prior to this change, the export would only be authorized if it were exported from the United States. This now opens up the possibility of re-exports of these products through third countries by non-U.S. persons. In other words, a U.A.E. resident residing in U.A.E. can now export these products under the authorization.

2. Expansion to non-U.S. origin hardware and software: In addition, the new General License D-1 allows U.S. companies to export foreign made hardware and software that is not subject to the Export Administration Regulations to Iran from locations outside of the United States.

3. Clarification on exports and imports by individuals: In the new General License D-1, OFAC included some clarifying language to assure that those parties leaving the U.S. for Iran with their personal electronics that qualify under this general license can return with those items. In other words, the new language allows for the importation of U.S. origin hardware and software previously exported to Iran under the general license authorization.

4. No determination on “incident to personal communication”: It is understood that those exporting under the authorizations contained in the new General License D-1 do not need to interpret whether or not the export or service is “incident to personal communication”. In short, if an article or service is listed in the general license’s annex then it is considered to be incident to personal communication. This is important to note, because in the sentencing of Omidreza Khademi last September, the Department of Justice argued that the exports did not qualify as being incident to personal communication because their intended end-user was a car company and the computer were for use in their manufacturing facilities. OFAC has seemingly clarified that it is not incumbent upon the exporter to make that determination, and that they can rest assured if the article or service is in the annex then it is indeed, “incident to personal communication.”

5. No employment of parties in Iran to facilitate sales: This is one that should go without saying, however, whenever any type of activity becomes generally licensed, we find that those parties seeking to partake in the authorization afforded by such general license believe they can engage the services of parties in Iran to serve as sales representatives, set up branches or offices in Iran, and/or market their products or services through Iranian-origin sources. This is simply not true, and as such steps need to be take to ensure that such type of conduct is not being engaged in by those operating under the authorization of General License D-1.

The applicability of general licenses to a specific set of facts is often needed to determine whether certain transactions indeed fall under those general licenses. While OFAC has greatly expanded upon the authorization formerly contained in General License D, it is not a catch all general license. As such, exporters and individuals alike should make sure that they are practicing strict adherence to the language of the general license to avoid running afoul of the Iranian Transactions and Sanctions Regulations.