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On January 11, 2023, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) issued a new Iran-related “Frequently Asked Question” (“FAQ”) (available here) regarding the implementation of Iran General License (“GL”) D-2, issued by OFAC on September 23, 2022.  In addition to this new FAQ, OFAC also amended over twenty already published Iran-related FAQs to address changes made in GL D-2.

GL D-2 supersedes the previously issued GL D-1, which addressed certain services, software, and hardware incident to personal communications.  However, as OFAC has recognized, since the issuance of GL D-1 in 2014, “the types of software and services that support communication over the internet have changed.”  GL D-2 reflects these technological developments and is intended to both expand and clarify what U.S. software and services are available to Iranians pursuant to OFAC’s sanctions program.

GL D-2’s Key Changes

GL D-2 is an attempt to “further support the provision of communication tools to ordinary Iranians and assist in their efforts to resist repressive internet censorship and surveillance tools deployed by the Iranian government.”  GL D-2 expands and clarifies authorizations related to the exportation and reexportation of certain software and services incident to communications over the internet from the United States or by a U.S. person.

FAQ 1110 highlights the following changes made by GL D-2:

  • Removes the qualifier of “personal” included in prior authorizations relating to “personal communications.” OFAC has recognized that this qualifier in prior authorizations resulted in compliance burdens for companies that sought to verify the nature of communications supported by their software or services.
  • Clarifies and expands on examples of authorized fee-based or no-cost services and software. Now explicitly authorized are, among other things: social media and collaboration platforms, video conferencing, e-gaming, e-learning platforms, automated translation, web maps, and cloud-based software and services supporting authorized or exempt activities.
  • Expands the authorization for fee-based or no-cost software incident to internet communications to include that which enables services incident to internet communications, such as cloud-based services.
  • Clarifies that the authorization for the export or reexport of non-commercial grade internet connectivity services includes cloud-based services.
  • Expands the case-by-case licensing policy for activities not generally authorized or exempt to also include services that support Iranian internet freedom. This includes activities related to the development and hosting of anti-surveillance software.

Additional Clarity is Offered Through Amended FAQs

In addition to FAQ 1110, OFAC also amended a multitude of prior FAQs to reflect GL D-2’s updates.  All amended FAQs can be found here, but highlights include:

  • FAQ 853, which provides that certain U.S. academic institutions and persons are authorized to provide certain services and software to students in Iran. Among these authorizations is GL D-2, which OFAC interprets to authorize video conferencing software and related services, as well as educational technology software and related services.
  • FAQ 441, which makes clear that GL D-2 authorizes the exportation of fee-based cloud computing services to Iran where such services support the exchange of internet communications.
  • FAQ 440, which makes clear that GL D-2 authorizes the exportation of certain “fee-based desktop publishing software and productivity software suites” to Iran. This authorization does not extend to enterprise management software.
  • FAQ 438, which clarifies that the exportation of parts or components for authorized hardware is not authorized by GL D-2.
  • FAQ 437, which makes clear that GL D-2 authorizes the exportation of certain mobile phone and computer accessories and peripherals.
  • FAQ 435, which makes clear that GL D-2 authorizes the exportation of certain anti-virus, anti-malware, anti-tracking, and anti-censorship software.
  • FAQ 434, which makes clear that GL D-2 authorizes the exportation of certain apps, including those downloaded via online app stores.
  • FAQ 348, which clarifies that U.S. persons may not employ agents in Iran to facilitate sales, create or fund a physical sales presence, or use Iranian commercial marketing services to further exports authorized by GL D-2. However, pre-existing exemptions for certain copy-ready advertising materials remain in effect.
  • FAQ 346, which provides that where companies sell authorized fee-based services, software, or hardware, such companies should take reasonable, risk-based measures to ensure their products are not exported to persons whose property or interests in property are blocked by an OFAC sanctions programs.
  • FAQ 341, which clarifies that GL D-2 also authorizes the exportation, reexportation, or provision of certain hardware and software subject to the Export Administration Regulations (“EAR”) by non-U.S. persons outside the United States.
  • FAQ 340, which makes clear that if a person is unsure if an item or service is authorized by GL D-2 they should contact OFAC’s Sanctions Compliance and Evaluation Division by phone or email or submit a request for guidance with OFAC’s Licensing Division online.
  • FAQ 337, which clarifies that all software and services that were authorized under GL D-1 remain authorized under GL D-2.

Impact on Companies Exporting or Reexporting Software and Services Incident to Internet Communications

In sum, GL D-2 expands authorizations, rather than remove or restrict any authorizations previously issued by OFAC.  For example, GL D-2 removes the previous requirement that authorized services, software, and/or hardware be incident to “personal” communications.  With these additional authorizations, which recognize the changes in internet communications over the last decade, OFAC has broadened the scope of internet communications that U.S. and non-U.S. companies could be authorized to provide in Iran.

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Jonathan Cross

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Christopher Boyd

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Brittany Crosby-Banyai

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Jonathan Cross photo

Jonathan Cross

Partner, New York

Jonathan Cross
Christopher Boyd photo

Christopher Boyd

Associate, New York

Christopher Boyd
Brittany Crosby-Banyai photo

Brittany Crosby-Banyai

Associate, New York

Brittany Crosby-Banyai
Jonathan Cross Christopher Boyd Brittany Crosby-Banyai