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1106. Are financial institutions permitted to provide banking services, including processing funds transfers, related to activities authorized under the four categories of the general licenses (GLs) outlined in FAQ 1105? What are OFAC’s diligence expectations of financial institutions seeking to engage in such activities?
U.S. financial institutions may operate accounts, including processing funds transfers, for persons engaging in activities authorized by the GLs related to: (i) the official business of the U.S. government, (ii) official business of certain international organizations and entities, (iii) certain humanitarian and other specified activities by nongovernmental organizations (NGOs), and (iv) the provision of agricultural commodities, medicine, medical devices, replacement parts and components, or software updates for medical devices for personal, non-commercial use. In assessing whether a particular transaction is in compliance with such GLs, financial institutions may reasonably rely upon the information available to them in the ordinary course of business, provided...
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1) “ORDINARILY INCIDENT”
This FAQ provides important guidance concerning the 100+ GLs implemented into OFAC’s regulations on 12-21-22. On 12-21-22, OFAC published two FR notices implementing, in virtually all sanctions programs that did not already have them, “GLs related to: (i) the official business of the U.S. government, (ii) official business of certain international organizations and entities, (iii) certain humanitarian and other specified activities by nongovernmental organizations (NGOs), and (iv) the provision of agricultural commodities, medicine, medical devices, replacement parts and components, or software updates for medical devices for personal, non-commercial use.”
[1] https://web.archive.org/web/20221220195513/https://home.treasury.gov/system/files/126/usg_io_official_business_regulations_amendment.pdf and https://web.archive.org/web/20221220181638/https://home.treasury.gov/system/files/126/humanitarian_standardization_regulations_amendment_ngo_ag_med.pdf
With this FAQ, OFAC implies that funds transfers are authorized as “ordinarily incident” to underlying transactions authorized by the GLs. This is not particularly newsworthy, but it is also notable that OFAC says that “U.S. financial institutions may operate accounts… for...