Understanding OFAC’s Newest General License Regarding Personal Communication Services in Iran

The Office of Foreign Assets Control (OFAC) recently released General License D regarding the exportation of certain services, software and hardware pertaining to personal communication exchange in Iran.  The release of this General License is extremely beneficial for companies specializing in personal communication services, including the big “Apple” and other software companies, looking to export their communication software or hardware devices to Iran.  The General License includes authorization for fee-based services for personal use involving internet communication.  The fee-based software must be compliant with the Department of Commerce Export Administration Regulations (EAR).  If exporting to Iran under General License D, it is imperative that you clear your item designated as an EAR99 item by the Department of Commerce.

It is important to note that this General License does not authorize transactions without having first met the compliance requirements of other federal agencies, such as the Department of Commerce and/or Department of State.  Therefore, since all business activity in Iran is heavily watched, it is important to confirm your EAR99 classification through the Department of Commerce Bureau of Industry and Security (BIS).  EAR99 items are items that are subject to the jurisdiction of the Export Administration Regulations (EAR) but are not located on the Commerce Control List. Even if your item is EAR99, it does not mean your exempt from obtaining a license prior to exporting.  In many instances, items with an EAR99 classification may be shipped under a No License Required designation.  However, if you are exporting to a sanctioned country, such as Iran, you may need to obtain a specific license to export.  This is where the General License kicks in. With regard to General License D, it removes having to wait and obtain a specific license from OFAC, but you still have to be vigilant about the following caveats:

  • Self-classifying your item as EAR99 may not be worth the risk when dealing with Iran (or any other sanctioned country). In which case you will need to go through a formal classification process or engage counsel to assist in classifying your item as EAR99.
    • Or have your item classified under export control classification number (“ECCN”) 5D992.C.
  • You must know your potential buyers and end-users.  This should involve a thorough due diligence and screening clearance process.
  • The exportation or reexportation of the services, software, or hardware specified in General License D for personal communication purposes must not be intended for the Government of Iran – directly or indirectly.
  • The General License does not authorize exporting “commercial-grade” Internet connectivity services or telecommunications facilties, or web-hosting services used for purposes other than personal communication.

One major takeaway – It is important to remember that although a General License may help to ease the exporting process for your company, you must remain compliant with the exporting requirements outlined by all federal agencies.  In this case, OFAC’s General License does not mean you are off the hook.  First, you have to ensure that you have met the export licenseing requirements of the Department of Commerce before utilizing the General License to export.