7. If I want to engage in a transaction or activity prohibited by OFAC, how can I do so? Can I rely on a general or specific license to engage in a transaction involving a sanctioned jurisdiction or person?
OFAC issues general licenses to authorize certain transactions that would otherwise be prohibited pursuant to a particular sanctions program. These general licenses are self-executing, meaning they allow persons to engage in certain transactions involving the United States or U.S. persons without needing to apply for a specific license, provided the transactions meet certain terms and conditions as described in the general license. In addition, some categories of activities, such as personal communications and transactions ordinarily incident to travel, may be exempt from sanctions in certain programs. Subject to sanctions program-specific considerations, non-U.S. persons do not generally risk being sanctioned for engaging in or facilitating transactions for which a U.S. person would not require a specific license.
If you seek to engage in a prohibited transaction involving a U.S. person or blocked property and there is no applicable general license or exemption, you may apply for a specific license from OFAC by submitting a license application. OFAC may grant, on a case-by-case basis, a specific license to authorize a person to engage in a transaction, or series of transactions, that otherwise would be prohibited by sanctions. For guidance on how to request and apply for a specific license, please see 31 CFR § 501.801 and the License Application page on OFAC’s website.
Date Updated: August 21, 2024.
Updated on Aug 21, 2024
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7. Can I get permission from OFAC to transact or trade with an embargoed country?
OFAC usually has the authority by means of a specific license to permit a person or entity to engage in a transaction which otherwise would be prohibited. In some cases, however, legislation may restrict that authority.
To apply for a specific license, please go to our License Application Page.
[Ed Note: see original FAQ for hyperlinks]
1) FAQ amended on 8-21-24 concurrent with Modernizing Treasury’s Office of Foreign Assets Control (Press Release), detailing several modernization efforts, including the updating of a number of general interest FAQs containing dated language.
This FAQ was amended to, among other less notable statements, offer assurances that “[s]ubject to sanctions program-specific considerations, non-U.S. persons do not generally risk being sanctioned for engaging in or facilitating transactions for which a U.S. person would not require a specific license.” This is an extremely consequential statement, and it appears to come out of nowhere in the broader context of an FAQ otherwise dealing with primary sanctions only (see comment 4 to Jul 3/Jun 5, 2024 Informal West Bank-Related Guidance [Application included], and Comments on Related Litigation, raising the possibility that this was inserted into the FAQ for eventual litigation purposes).
2) Refer generally to General Note on "Counterfactual Secondary Sanctions and Derivative Designation Safe Harbors" in Certain OFAC Guidance and FAQs (System Ed. Note). OFAC has issued many statements worded similar to the statement quoted above, but this is the first time OFAC has done so in a (nearly) across-the-board, cross-programmatic fashion.
3) As it relates to the (nearly), query what OFAC means by “[s]ubject to sanctions program-specific considerations”. Does this mean that, unless OFAC has issued guidance deviating from the “for which a U.S. person would not require a specific license” general principle, the general principle applies and can be relied on without seeking confirmation from OFAC concerning its secondary sanctions enforcement policy? This would appear to apply at least in the context of blocking prohibitions, where all transactions involving blocked persons are prohibited in principle for U.S. persons, and possibly in all other cases except where OFAC has issued guidance to the contrary, but this is still unclear.
4) The most notable example of OFAC doing so is in the Russia-related secondary sanctions and targeting context (see Updated Guidance for Foreign Financial Institutions on OFAC Sanctions Authorities Targeting Support to Russia’s Military-Industrial Base), where it is suggested (but not stated explicitly) that there is a broad range of sanctionable conduct for which U.S. persons would not require a specific license (i.e. because the conduct is outside the scope of OFAC’s prohibitions). More specifically, OFAC says that “[f]oreign persons do not risk the imposition of sanctions for engaging in transactions authorized for U.S. persons under general licenses” (e.g. “Updated Guidance for Foreign Financial Institutions”), that statement serves as notice that the safe harbor is narrower than it would be otherwise if FAQ # 7 applied, because there many sanctionable types of transactions in the Russia context, in particular those based on the designation criteria for “operating in” specified Russian sectors, where non-U.S. persons are sanctioned for conduct that would not qualify for a general license if engaged in by a U.S. person, but are also not necessarily transactions for which a U.S. person would require a specific license (i.e. because there are no broad prohibitions against “operating in” any given sector of the Russian economy).