Economic sanctions regulations administered by the United States Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) change frequently. As part of those changes, OFAC is often amending regulations to grant authorizations, revoke authorizations, offer policy statements, etc. At no time was this more apparent than when OFAC amended the Iranian Transactions Regulations on October 22, 2012, thereby renaming them the Iranian Transactions and Sanctions Regulations (“ITSR”) and extending numerous general licenses, expanding upon definitions contained in the regulations, and generally changing what is commonly thought of as the U.S. trade embargo targeting Iran. Despite these changes, financial institutions are still trying to keep pace with the changes and adjust their OFAC compliance programs accordingly. As a result it is often the case that those wishing to operate under the new general licenses issued by OFAC have been going to their banks to inform them of certain transactions which are now authorized only to have the bank turn them away saying they need an OFAC license.

The problem is that OFAC does not provide license authorizations for transactions which are either already authorized or exempt from the regulations. What can be sought, however, is an advisory opinion from OFAC which confirms that the transactions proposed, usually through the filing of a Request for Interpretative Guidance, are authorized. Such a document is not an authorization, it is merely a confirmation. The problem with such letters is that OFAC is not very specific as to the legality of the transactions, nor are they even very specific about the transactions proposed in the Request for Interpretative Guidance. As such, these advisory opinions in some cases provides assurances to the bank, and in other cases the banks deem them to be insufficient.

While it is unclear to this author what information OFAC’s Compliance Division is providing to U.S. financial institutions regarding the applicability of these general licenses, one thing is clear: somewhere a miscommunication is taking place as some banks are still wanting to see OFAC specific licenses for transactions which are now generally licensed. It may behoove OFAC to issue some of the new general licenses as separate individual announcements through its website. This will be easier for the banks to understand rather than some regulation contained in a larger set of regulations appearing in the Federal Register. Moreover, it will provide an easy to print piece of paper for those wishing to engage in certain generally licensed transactions to provide to their local bank branches.

The author of this blog is Erich Ferrari, an attorney specializing in OFAC matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrariassociatespc.com.