The Department of the Treasury's Office of Foreign Assets Control (OFAC) has issued general licenses authorizing a limited set of free internet-based communications with persons in Cuba, Iran and Sudan. [1] OFAC has simultaneously announced a policy to consider specific license requests for the export of communications-related services to Iran and Sudan. This move appears intended to close the gap between the letter of the law and advances in internet-based communications. It also highlights OFAC's focus on "smart sanctions" that reduce the collateral impact of sanctions on persons living in sanctioned countries. The focus on mobile communications also responds to concerns raised regarding the integrity of communications services in Iran available to Iranians protesting the June 2009 presidential elections. It is not yet clear whether OFAC and the Department of State are ready to expand the scope of licenses for internet-based communications that are offered on a subscription or pay-as-you-go basis in sanctioned countries, but the policy statement suggests that applications to provide such services would be taken seriously.

The General Licenses for Iran, Cuba and Sudan

OFAC has issued narrowly tailored general licenses [2] that authorize U.S. persons to export to Iran, Cuba and Sudan services incident to the exchange of personal communications over the internet. These services include instant messaging, chat and email, social networking, sharing of photos and movies, web browsing, and blogging. The general license applies so long as the services are publicly available and are provided at no cost to the user. It is clear from the list of activities that are not authorized [3] that these general licenses are only intended to close the gap between the letter of the law and the advances in internet-based communications.

In addition, OFAC has generally licensed the exportation from the United States or by a U.S. person, to persons in Iran and Sudan (but not Cuba), the limited types of software that enable the services described above. In order to qualify for the general licenses, exported software must be classified as EAR 99, not subject to the EAR at all, or classified as mass market software under export control classification number 5D992. Ultimately, this means that U.S. internet-based entities are now authorized to provide software downloads to persons in Iran and Sudan. This is an activity that, while technically prohibited prior to the March 8 action, was not, to our knowledge, ever enforced. OFAC has not issued a comparable license for exports of software to Cuba because exports are separately regulated by the Department of Commerce under the Export Administration Regulations (EAR).

Policy to Consider Specific License Requests

OFAC has also stated that it will consider, on a case-by-case basis, specific licenses for other exports of services to Iran, Cuba and Sudan; and of software to Iran and Sudan, where the software is EAR99, not subject to the EAR or is mass market software (ECCN 5D992).

The announcement of the general licenses described above could be interpreted as a straightforward effort by OFAC to align its regulations with advances in internet-based communications. We think that, in addition, this move indicates that OFAC is promoting "smart sanctions," i.e., sanctions that target the governments and chief economic entities in the sanctioned countries. Statements that it will consider applications for specific licenses to provide internet services to persons in Iran and Sudan implies that it desires to encourage communications by individuals within sanctioned countries and between those countries and the rest of the world, while ensuring that services are not inadvertently provided to the proper targets of sanctions. If our interpretation is accurate, this could be the perfect time for telecommunications and internet-based entities seeking to provide subscription or pay-as-you-go communications-based services in Iran, Sudan and Cuba to approach OFAC with requests for specific licenses.