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March 18, 2020

Help in a Time of COVID-19: Providing Humanitarian Assistance to Those in Need in Countries Subject to US Economic Sanctions

Coronavirus: Global Law & Public Policy Advisory

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Introduction

As COVID-19 spreads across the globe, some of the countries hit hardest by the virus or at grave risk, including Iran and Syria, are subject to the most stringent US economic sanctions. While there are concerns that US economic sanctions may exacerbate certain of these countries already struggling to respond to this crisis,1 the US government has longstanding mechanisms in place, which permit US and non-US individuals and companies to provide medicine, medical supplies and other humanitarian assistance under even the most restrictive US sanctions regimes. Even where the regulations themselves do not offer a clear path, it may be possible to obtain specific licenses to support humanitarian projects and programs.

Below we provide an overview of various provisions that permit the provision of aid to the people of Iran, Syria, Cuba, and Venezuela, consistent with US economic sanctions.

GENERAL OVERVIEW

Under various economic and trade sanctions regimes maintained by the Office of Foreign Assets Control (OFAC), the United States prohibits US persons from engaging in transactions or dealings that involve sanctioned individuals or entities—or in the case of a few comprehensive sanctions programs, entire sanctioned countries or territories (including Iran, Syria, North Korea, Cuba, and the Crimea Region of Ukraine). Dealings with the government of Venezuela are also significantly restricted. These prohibitions may extend to transactions involving non-US persons when there is a US nexus, such as the involvement of a US person (such as an employee or supplier), US dollars that are routed through the US financial system, or the US financial system more generally. OFAC also may impose secondary sanctions, such as limiting access to US markets, on non-US persons for engaging in certain types of prohibited transactions, even when there is no US nexus.

In addition to the sanctions regimes maintained by OFAC, the United States also regulates the export, reexport or transfer of items that are in or originate from the United States, and certain foreign items that may incorporate or are produced using US-origin items, through export controls, including the Export Administrations Regulations (EAR) which are maintained by the Bureau of Industry and Security (BIS), within the Department of Commerce.2 The export controls are highly item-specific and involve different restrictions based on the nature or classification of the item being exported, the end-user of the item and other factors. Depending on these factors, BIS may require an exporter to obtain a license before the item at issue may be transferred.

Importantly, many types of medicine and medical devices are classified as "EAR99" under the EAR, which means that they may be exported without a license to most destinations.3 However, with few exceptions, even items classified as EAR99 are likely to require a license or other specific authorization for export, reexport or transfer to certain embargoed countries, including Iran, Syria, Cuba, Sudan, and North Korea (as well as nationals of those countries who may be in a third-country). Given the fact-specific nature of most BIS licensing determinations, it is essential to check whether any particular item, whether classified as EAR99 or something more restrictive, requires a license for export or not.

Despite all of these restrictions, however, there are exceptions and authorizations that allow provision of certain medicine, medical devices, and humanitarian relief even to Iran, Syria, Cuba, and Venezuela, as described below.

IRAN

The United States maintains a comprehensive sanctions regime involving Iran, prohibiting almost all transactions or dealings involving Iran.4 However, there remain a number of ways to provide humanitarian goods and assistance to the Iranian people in the fight against COVID-19 consistent with US sanctions as discussed below. As US sanctions have become increasingly restrictive over the past several years, the United States has continuously made clear that its exception for humanitarian trade remained intact. In fact, OFAC recently issued several FAQs reiterating its commitment to this exception and outlining various paths through which humanitarian goods or assistance can be provided to Iran in response to the COVID-19 crisis.5

Humanitarian Donations. The making of noncommercial humanitarian donations to recipients in Iran from the United States or by US persons, including the donation of medicine intended to relieve human suffering, is generally exempt from US sanctions on Iran.6 However, this does not authorize donations made to the government of Iran or other individuals or entities subject to blocking sanctions or listed on OFAC's Specially Designated Nationals (SDN) List.

Commercial Sale and Export. There are also broad exceptions and authorizations that allow for the commercial sale and export of humanitarian goods, such as food, medicine and medical devices, to Iran or the government of Iran. For example, OFAC maintains a general license (i.e., an exception to the sanctions) for the exportation or reexportation of certain food, medicine and medical devices to Iran, which incorporates a corollary authorization to engage in related transactions, including: arranging financing and payment; making shipping and cargo inspection arrangements; obtaining insurance; shipping the goods, receiving payment according to proscribed payment mechanisms; and entering into contracts (including executory contracts).7

The general license for humanitarian trade involving Iran does not allow for those transactions to involve individuals or entities listed on the SDN List, except SDNs that are identified only with the program tag "[IRAN]" on the SDN List, pursuant to Executive Order 13599. Therefore, persons who are considering commercial transactions involving Iran under the general license for medicine and medical devices must screen all parties involved in the transactions, directly or indirectly, to ensure that they are not on the SDN List with any program tag other than "[IRAN]."

Moreover, the general license for medicine and medical devices does not authorize transactions involving all medicine, medical devices or persons. Certain medicine, medical devices and persons are excluded from the ambit of the authorization. Specifically, the general license does not authorize the export or reexport of the following excluded medicines: non-NSAID analgesics, cholinergics, anticholinergics, opioids, narcotics, benzodiazapenes, and bioactive peptides.8 In addition, the general license does not authorize the export or reexport of certain excluded medical devices, the list of which can be found here.9 Lastly, the general license does not authorize the export or reexport of medicine or medical devices to military, intelligence or law enforcement purchasers or importers.10

Although the US government is committed to supporting humanitarian trade with Iran, it is essential for individuals and companies to ensure compliance with each of the conditions required for such trade. If any of these conditions are not present, such that the general license is not applicable, one could apply for a specific license from OFAC to sell and export to Iran certain medicine or medical devices not covered by the general license, through specified procedures under the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA).11

Transactions involving Central Bank of Iran. Recently, OFAC designated the Central Bank of Iran (CBI) as an SDN under sanctions programs beyond the "[IRAN]" tag only, including those indicating association with the Islamic Revolutionary Guard Corps ("[IRGC]" tag), and support of global terrorism ("[SDGT]" and "[IFSR]" tags).12 Therefore, as noted above, any humanitarian trade involving the CBI would not have qualified under the general license for the export and reexport of medicine and medical devices. However, on February 27, 2020, as the coronavirus became an increasing humanitarian crisis in Iran, OFAC issued General License 8, authorizing humanitarian trade transactions for the exportation and financing of food, medicine and medical devices to Iran, even if those transactions involved the CBI.13 Therefore, US and non-US persons may now conduct humanitarian trade with Iran, even if such trade involves the CBI in a direct or indirect allocation role. This new CBI-related general license is limited to the CBI; the prohibition remains with respect to any other Iranian financial institutions or parties that have been designated for support of global terrorism or other OFAC sanctions programs beyond Executive Order 13599.

Framework for Financial Channels to Facilitate Humanitarian Trade with Iran. Although the United States has consistently stood behind the general license for humanitarian trade with Iran, the broader restrictions on trade with Iran have made it increasingly difficult to send or receive payment in connection with humanitarian trade. To remedy this, OFAC recently implemented a financial framework to facilitate the flow of humanitarian goods to the Iranian people while safeguarding against the Iranian regime's diversion of humanitarian trade for malign purposes.14 The framework is designed solely for the purpose of commercial exports of agricultural commodities, food, medicine, and medical devices to Iran that are already authorized under a general or specific license. Through the framework, foreign governments and foreign financial institutions may seek written confirmation from OFAC that any proposed financial channel will not be exposed to US sanctions. In exchange for participating in this new mechanism (and in turn, for the benefit of receiving such written confirmation), foreign governments and financial institutions must commit to conducting enhanced due diligence and to report to OFAC certain extensive information on a monthly basis.

Nongovernmental Organizations (General License E). Lastly, OFAC's General License E authorizes certain services in support of nongovernmental organizations' activities in Iran, including export or reexport of services to or related to Iran in support of certain not-for-profit activities designed to benefit directly the Iranian people, such as the provision of donated health-related services and distribution of donated articles, including medicine.15 However, the transfer of funds in support of these activities may not exceed $500,000 in the aggregate over a 12-month period.16

SYRIA

A report recently published by the United Nations' Syria Office for the Coordination of Humanitarian Affairs (OCHA), in collaboration with the World Health Organization (WHO), noted that the risk of COVID-19 is very high in Syria due to the rapid spread of cases in nearby countries and the difficult living conditions of many Syrians given the ongoing conflicts in the country. Therefore, despite there being no confirmed cases of COVID-19 in Syria as of the time of writing, world health organizations anticipate that the virus will have a significant impact in Syria.17

The United States maintains a comprehensive sanctions regime involving Syria, which prohibits most transactions and dealings involving Syria, including making new investments in Syria and the export, reexport, sale, or supply of services to Syria.18However, there remain a number of ways to provide humanitarian goods or assistance regarding COVID-19 to the Syrian people, consistent with US sanctions as discussed below.

Provision of Medicine and Medical Services. The US sanctions regime involving Syria does not prohibit US persons from sending US-origin food and/or medicine to Syria, provided that the transaction does not involve individuals or entities subject to US sanctions.19 Although there are certain export control restrictions on what items may be sent to Syria, most medicines do not require a license for export to Syria.20 In addition, there is a general license under the Syria-related sanctions that authorizes the provision of nonscheduled emergency medical services—even to persons on the SDN List.21 However, it should be noted that the receipt of payment for such emergency medical services requires specific license from OFAC.22

Nongovernmental Organizations. In addition, a general license authorizes certain services in support of nongovernmental organizations' activities, including export or reexport of services to or related to Syria in support of certain not-for-profit activities designed to benefit directly the Syrian people, such as the provision of donated health-related services and distribution of donated articles, including medicine.23

CUBA

The United States has maintained a broad and comprehensive sanctions program involving Cuba since the 1960s, prohibiting nearly all transactions and dealings involving Cuba and Cuban nationals.24 Unlike other US sanctions regimes, the US sanctions involving Cuba include a travel prohibition. Although there was some easing of Cuba-related sanctions laws in 2014,25 most of the general restrictions remain in place today. Despite these restrictions, there remain a number of ways to provide humanitarian goods and assistance to the Cuban people in the fight against COVID-19, consistent with US sanctions as discussed below.

Donations and Remittances to Cuba. Although OFAC withdrew a general license that had authorized certain donative remittances involving Cuba in a September 9, 2019 amendment to the Cuba-related sanctions regulations, there remain a number of categories of remittances that persons subject to US jurisdiction are authorized to make to persons in Cuba.26 For example, OFAC allows making remittances to nationals of Cuba who are close relatives of the remitter, provided that the remitter's total family remittances to any one Cuban national do not exceed $1,000 in any consecutive three-month period.27 In addition, US persons may make remittances to certain individuals and independent nongovernmental organizations in Cuba to support humanitarian projects (including medical and health-related projects) in or related to Cuba that are designed to directly benefit the Cuban people.28

Commercial Sale and Export. The commercial sale and export of food, medicine and medical devices to Cuba are still subject to restrictions under both OFAC's sanctions regulations and the EAR. However, there are several licenses, or at least favorable licensing policies, on which US persons and others subject to US jurisdiction may rely in order to send items such as medicine to Cuba. Importantly, in most—but not all—instances in which an item is authorized by BIS for export or reexport to Cuba, no separate OFAC authorization is necessary with respect to payment and financing for those exports.29 Given that this dual-authorization does not apply to all exports, however, it is important to check both the OFAC and EAR restrictions for any particular export to Cuba, even in the context of humanitarian assistance.

As an initial matter, although there is one license exception under the EAR—License Exception Support for the Cuban People (SCP)—that allows for the export or reexport of certain EAR99 items that are intended to improve the living conditions in Cuba, License Exception SCP does not authorize the export or reexport of agricultural commodities, medicines or medical devices to Cuba.30 Agricultural commodities may be exported or reexported to Cuba under a different EAR exception—License Exception Agricultural Commodities—provided that certain conditions (e.g., the item must be EAR99, the export or reexport must be done within 12 months of signing a written contract, BIS is notified of the export) are met.31 On the other hand, medicine and medical devices are not covered by any BIS license exception; however, those items are eligible for a general policy of approval that BIS announced in 2014, which applies to items exported or reexported to Cuba for disaster preparedness, relief and response, public health and sanitation, and more. Indeed, BIS has specifically advised that license applications for the export and reexport of medicines and medical devices to Cuba, whether sold or donated, are generally approved.32

Finally, we note that although OFAC has a prohibition barring any vessel from entering any US port for 180 days if that vessel entered a port or place in Cuba to engage in the trade of goods or the purchase or provision of services there, there are certain exceptions to this "180-day" rule that would apply in the context of humanitarian aid. For instance, the 180-day rule would not apply to vessels that had entered a port or place in Cuba to engage in the export or reexport from a third country to Cuba of agricultural commodities, medicine, or medical devices that, were they subject to the EAR, would be designated as EAR99.

Humanitarian Projects in Cuba. Even though the US sanctions involving Cuba prohibit travel to Cuba, the regulations also incorporate a number of general licenses that authorize some travel to Cuba for certain specific purposes. One of those general licenses, issued in early 2014, allows US persons to travel to Cuba for humanitarian projects, including establishing a physical presence in Cuba in order to engage in noncommercial activities and humanitarian projects in support of the Cuban people.33 OFAC has defined authorized humanitarian projects to include, for instance, medical and health-related projects, disaster preparedness, relief and response, projects to meet basic human needs, and others.34 Persons subject to US jurisdiction are also authorized to engage in any transactions necessary to provide air ambulance and related medical services, including medical evacuation from Cuba, for individual travelers in Cuba, regardless of nationality or the purpose of the individual's travel to Cuba.35

It is important that any travel to Cuba undertaken for such purposes comply with certain conditions OFAC has imposed with respect to authorized travel, including that the traveler's schedule of activities must not include free time or recreation in excess of that consistent with a full-time schedule in Cuba.

Assistance to Cuban Nationals in the United States. Although the US sanctions involving Cuba even extend to the provision of goods and services to Cuban nationals in the United States, there is a general license that allows for the provision of nonscheduled emergency medical services, such as emergency room services, in the United States to Cuban nationals.36

VENEZUELA

The United States maintains a sanctions regime involving Venezuela that prohibits certain transactions and dealings with sanctioned individuals and entities, including the Maduro Regime.37 Although the United States has blocked all property and interests in property of the Venezuelan government,38 the sanctions are "designed to ensure that the flow of humanitarian goods and services to the Venezuelan people is not prohibited by US sanctions."39 Therefore, US persons are permitted to export or reexport certain items to Venezuela consistent with this policy.40

Provision of Medicine. The Venezuela sanctions regime does not prohibit US persons from sending US-origin medicine to Venezuela, provided that the transaction would not involve individuals or entities subject to US sanctions.41 In addition, General License 4 authorizes all financing and other dealings in new debt related to the exportation or reexportation of agricultural commodities, medicine, medical devices, components, or replacement parts for medical devices to Venezuela, or to persons in third countries purchasing specifically for resale to Venezuela, provided that the exportation or reexportation is licensed or otherwise authorized by BIS.42 Moreover, General License 4C authorizes further transactions ordinarily incident and necessary to the exportation or reexportation of agricultural commodities, medicine, medical devices, replacement parts and components for medical devices, or software updates for medical devices to Venezuela, or to persons in third countries purchasing specifically for resale to Venezuela.43 Although there are certain export control restrictions on what items may be sent to Venezuela, most medicines do not require a specific license for export to Venezuela.

Provision of Medical Services. In addition, General License 26 authorizes provision of nonscheduled emergency medical services that are otherwise prohibited under Venezuela sanctions regime.44 Moreover, General License 26 authorizes provision of other medical services involving government of Venezuela.45 However, it should be noted that the receipt of payment for such medical services may require specific license from OFAC.46

Nongovernmental Organizations. Moreover, General License 29 authorizes certain services in support of nongovernmental organizations' activities, including export or reexport of services to or related to Venezuela in support of certain not-for-profit activities designed to benefit directly the Venezuelan people, such as the provision of donated health-related services and distribution of donated articles, including medicine.47

International Organizations. Lastly, General License 20A authorizes official activities of certain international organizations involving government of Venezuela.48 General License 20A contains a list of specific international organizations whose official activities are authorized by the license; the list includes International Federation of the Red Cross and Red Crescent Societies and various United Nations agencies, such as OCHA and WHO.49

*          *          *

The COVID-19 pandemic is one of the most challenging global crises of the 21st century, and overcoming it will ultimately require worldwide collaboration on a scale not seen since perhaps the Second World War. Despite the significant barriers that US trade sanctions impose around embargoed countries and regions, US policy favors humanitarian intervention in general. Beyond the specific provisions highlighted in this Advisory, additional specific projects and efforts may be authorized by the many other general licenses and authorizations that exist under OFAC sanctions and the EAR. Where no general authorizations exists, it may be possible to obtain a specific license on an expedited basis, where the specific effort is necessary to fight the pandemic.

© Arnold & Porter Kaye Scholer LLP 2020 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.

 

  1. See, e.g., Angus Berwick, Mariela Nava & Sarah Kinosian, Venezuela Confirms Coronavirus Cases Amid Public Health Concerns, Reuters (Mar. 13, 2020); Esfandyar Batmanghelidj & Abbas Kebriaeezadeh, As Coronavirus Spreads, Iranian Doctors Fear the Worst, Foreign Policy (Mar. 3, 2020).

  2. See 15 CFR § 734.2.

  3. See BIS, BIS List of EAR99 Medical Devices (May 21, 2013).

  4. See, e.g., 31 CFR Part 560.

  5. OFAC, Resource Center, OFAC FAQs: Iran Sanctions, FAQ # 828 (Mar. 6, 2020).

  6. See 31 CFR § 560.210(b).

  7. See 31 CFR §§ 560.530(a)(3), 560.532.

  8. See 31 CFR § 560.530(a)(3)(iii).

  9. See 31.CFR § 560.530(a)(3)(ii).

  10. See 31 CFR § 560.530(a)(3)(iv).

  11. See OFAC Resource Center, TSRA Program Background and License Application Process.

  12. Press Release, OFAC, Treasury Sanctions Iran’s Central Bank and National Development Fund (Sept. 20, 2019).

  13. See OFAC General License 8 (Feb. 27, 2020).

  14. See OFAC, Financial Channels to Facilitate Humanitarian Trade with Iran and Related Due Diligence and Reporting Expectations (Oct. 25, 2019).

  15. See OFAC General License E (Sept. 10, 2013).

  16. See id. § (b).

  17. See OCHA Syria & WHO Syria, Syrian Arab Republic: COVID-19 (Mar. 11, 2020).

  18. See 31 CFR Part 542.

  19. See OFAC, Resource Center, OFAC FAQs: Other Sanctions Programs, FAQ # 229 (Aug. 17, 2011).

  20. See id.

  21. See 31. CFR § 542.531.

  22. See id.

  23. See 31 CFR § 542.516.

  24. See 31 CFR Part 515 et seq.

  25. See, e.g., Arnold & Porter Advisory, Obama Administration Continues Loosening Cuba Sanctions (Feb. 18, 2016).

  26. See OFAC, Resource Center, OFAC FAQs: Other Sanctions Programs, FAQ # 732.

  27. See 31 CFR § 515.570(a).

  28. See 31 CFR § 515.570(g).

  29. 31 CFR §§ 515.533, 515.559.

  30. See BIS, Country Guidance: Cuba, (last visited Mar. 17, 2020).

  31. See id.

  32. See id.

  33. See 31 CFR § 515.575.

  34. See OFAC, Resource Center, OFAC FAQs: Other Sanctions Programs, FAQ # 708 (Sept. 6, 2019).

  35. 31 CFR § 515.548(b).

  36. Id. § 515.589.

  37. See 31 CFR Part 591.

  38. See OFAC, Resource Center, OFAC FAQs: Other Sanctions Programs, FAQ # 519 (Aug. 6, 2019).

  39. OFAC, Guidance Related to the Provision of Humanitarian Assistance and Support for the Venezuelan People (Aug. 6, 2019).

  40. See id.

  41. See OFAC, Resource Center, OFAC FAQs: Other Sanctions Programs, FAQ # 520 (Aug. 6, 2019).

  42. See OFAC General License 4 (Aug. 5, 2019).

  43. See OFAC General License 4C (Aug. 5, 2019).

  44. See OFAC General License 26 (Aug. 5, 2019).

  45. See id. § (b)(1).

  46. See id. § (b)(2).

  47. See OFAC General License 29 (Aug. 5, 2019).

  48. See OFAC General License 20A (Aug. 5, 2019).

  49. See id

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