General Note on the Relationship Between Various Forms of “Financing” and the Notion of an “Ordinarily Incident” Transaction

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TURBOFAC Commentary (1782 words)

General Note on the Relationship Between Various Forms of “Financing” and the Notion of an “Ordinarily Incident” Transaction

1) BACKGROUND

In general, it is fairly well established that payments for and “funds transfers” related to underlying exempt and licensed exports and imports are “ordinarily incident” to the underlying transaction at issue. See e.g., FAQ # 431 and section 2.1 of Examples of Transactions Deemed to be, and not to be, “Ordinarily Incident” to Underlying Licensed Activities.

Less clear is whether the “financing” of underlying exempt and licensed import and export transactions is “ordinarily incident” to the underlying transaction, and if so, why types of “financing” transactions are so considered. There is substantial evidence that OFAC does consider the “financing” of underlying exempt and authorized transactions to be, in principle, “ordinarily incident” to such transactions, but the precise contours of this...