On 7 February 2014, the U.S. Treasury Department's Office of Foreign Assets Control (OFAC) issued General License D-1 (General License) authorizing the exportation, re-exportation, or provision to Iran, directly or indirectly, of certain services, software, and hardware incident to personal communications. This authorization does not allow for the provision of "commercial grade Internet connectivity services or telecommunications transmission facilities (such as dedicated satellite links or dedicated lines that include quality of service guarantees)" or "web-hosting services that are for commercial endeavors or of domain name registration services." Aspects of the General License apply to both U.S. and non-U.S. origin items and to activities by U.S. and non-U.S. companies. The General License expands upon and replaces prior General License D, which was issued by OFAC on 30 May 2013. A copy of the General License is available at: http://www.treasury.gov/resource-center/sanctions/Programs/Documents/iran_gld1.pdf and the Frequently Asked Question guide on this topic published by OFAC is available at: http://www.treasury.gov/resource-center/sanctions/Programs/Documents/gl_d1_faqs.pdf.

Key Changes Implemented by the General License

The specific types of activities that are authorized under the General License are described below. While the General License significantly expands on the prior General License D, it remains focused on items and services related to personal communication over the Internet rather than commercial activity. The most significant changes in the General License as compared to the prior General License D include the following:

  • The General License now applies to activities such as in- country transfers of the relevant items within Iran. The General License now also applies to transfers by non-U.S. persons of items subject to the Export Administration Regulations (EAR). For example, a non-U.S. person located outside the United States now can use the General License to transfer to Iran a qualifying smartphone that was manufactured outside the United States but is subject to the EAR because it contains greater than de minimis U.S.-origin content.
  • The General License makes minor changes to the list of items that qualify for the General License. We note in particular that the list of qualifying items specifically now includes two-way residential consumer satellite terminals (rather than receive- only satellite terminals). The prior General License D specifically applied to items  subject to the EAR. The General License now includes an authorization for the export, re-export, or provision directly or indirectly to Iran by U.S. persons of certain hardware and software for personal communications that is not subject to the EAR (i.e., non-U.S. origin items located outside the United States) but that would be classified as EAR99 or under the other Export Control Classification Numbers (ECCNs) noted in the General License that are subject only to Anti-Terrorism (AT) controls (e.g., ECCNs 5A992 and 5D992).
  • The General License clarifies that the authorization applies to the hand-carry of eligible items (e.g., a smartphone classified under ECCN 5D992) by persons traveling from the United States to Iran.
  • The General License authorizes transfers to the government of Iran by U.S. persons or from the United States of specified free, publicly available software and services for personal communications.

Description of Authorizations under the General License

The General License provides for relatively broad authorizations related to the transfer to Iran of hardware, software, and services incident to personal communications. It is important to note that if hardware or software subject to the EAR is authorized for transfer to Iran under the General License, separate authorization under the EAR is not required. In addition, when an authorization under the General License applies to U.S. persons, it applies broadly to U.S. citizens and “green card” holders, persons located in the United States and entities organized under the laws of the United States, but also to non-U.S. companies that are owned or controlled by U.S. persons. Various aspects of the General License also apply to non-U.S. persons conducting activities involving items subject to U.S. law. The specific authorizations provided for in the General License fall into the main categories described below.

  • Services Incident to Exchange of Personal Communications over the Internet: The General License authorizes the provision of services from the United States or by U.S. persons to persons in Iran of fee- based services incident to the exchange of personal communications over the Internet. Such services include, for example, instant messaging, chat, email, social networking, sharing of photographs and video, web browsing, and blogging. The same authorization was included in prior General License D.
  • Transfer of Items Subject to the EAR: The General License authorizes the export, re-export, and provision to Iran of two groups of software subject to the EAR: (i) fee-based software classified as EAR99 or under ECCN 5D992.c that is necessary to enable services incident to the exchange of personal communications over the Internet (e.g., instant messaging, chat, email, social networking, sharing of photographs and video, web browsing, and blogging) and (ii) the additional hardware and software specified in the Annex to the General License. Note that these are two separate  authorizations, and software that qualifies as fee-based software classified as EAR99 or under ECCN 5D992.c that is necessary to enable services incident to the exchange of personal communications over the Internet does not need to also be listed in the Annex to qualify for the General License. Services related to the hardware and software listed in the Annex may also be provided to Iran.
  • Transfer of Items Not Subject to the EAR: For purposes of the U.S. economic sanctions against Iran, items that are not subject to the EAR include those that are manufactured outside the United States with less than 10 percent controlled U.S.-origin content. The General Licenses authorizes the export, re-export, or provision directly or indirectly to Iran by U.S. persons of the same type of software described above: (i) fee-based software that, if subject to the EAR, would be classified as EAR99 or under ECCN 5D992.c that is necessary to enable services incident to the exchange of personal communications over the Internet and (ii) the additional hardware and software specified in the Annex to the General License provided that such items would be classified as EAR99 or under the various export classifications noted in the Annex if the items were subject to the EAR. Certain software, including enterprise management software, does not fall within the scope of fee-based software related to the exchange of personal communications whose transfer is authorized by this General License.
  • Publicly Available Software: Certain software is not subject to the EAR because it is publicly available as described in Section 734.3(b)(3) of the EAR. If software is publicly available and is the type of software that is described in the Annex to the General License, it also may be transferred to Iran from the United States or by U.S. persons under the General License.
  • Hand -Carries to Iran: The General License authorizes individuals leaving the United States for Iran to take to Iran the types of hardware and software described above. As such, an individual traveling from the United States to Iran could hand-carry to Iran smartphones and laptops classified under ECCN 5A992. Hand-carries to Iran of such items previously were not permitted under either the EAR because neither License Exception Baggage (BAG) nor any other EAR license exception is available for Iran) or under U.S. economic sanctions against Iran. Prior to relying on the General License for the hand-carry to Iran of items described in the Annex, it should be confirmed that all software and other components of the items (i.e., software loaded on a laptop) qualify for the General License. Individuals entering the United States also are authorized under the General License to import into the Unites States items that were transferred to Iran under the provisions of the General License described above (or under Section 560.504(a) of the Iranian Transactions and Sanctions Regulations (ITSR)).
  • Internet Connectivity Services: As was the case under prior General License D, the General License authorizes the export or re-export to Iran from the United States or by U.S. persons of consumer-grade Internet connectivity services and the provision, sale, or leasing of capacity on telecommunications transmission facilities (such as satellite or terrestrial network connectivity) incident to personal communications. This provision is identical to that set forth in the prior General License D and remains limited to the relevant services “incident to personal communications” rather than broad commercial activities.
  • Transfer of Items to the government of Iran: To help “ensure that the sanctions on Iran do not have an unintended chilling effect on the willingness of companies to make available certain publicly available,  no cost personal communications tools to persons” in Iran, the General License now authorizes  transfers from the United States or by U.S. persons of limited types of services and software to the government of Iran. To qualify for transfer to the government of Iran, the services and software must be publicly available at no cost to the user and must be limited to those described in Section 560.540(a)(1) and (a)(2) of the ITSR (see below) or categories (6) through (11) of the Annex.
    • Section 560.540(a)(1) and (a)(2) of the ITSR applies to software and services that are “publicly available” at no cost to the user that are incident to the exchange of personal communications over the Internet, such as instant messaging, chat and email, social networking, sharing of photos and movies, web browsing, and blogging. Such software must be widely available to the public and classified as EAR99 or as mass market software under ECCN 5D992. As such, the definition of “publicly available” as used in this provision of the EAR is different than the definition of that term in the EAR. Under the EAR, “publicly available” software is limited to software that meets the unique requirements of this term as set forth in the EAR and such software technically is not subject to the EAR.

To facilitate the practical implementation of the General License, OFAC included a specific provision that allows U.S. financial institutions to process payments from Iran or from persons in Iran that arise from and are ordinarily incident and necessary to give effect to underlying transactions that are authorized by the General License.

Limitations on the General License

When reviewing the application of the General License to a particular transaction, it is important to review the additional restrictions imposed on the scope of the General License. In particular, the General License does not apply to transactions involving the government of Iran (except for those specifically described above for certain publicly available, no cost personal communications tools). In addition, the General License does not apply to transactions involving Specially Designated Nationals (SDNs), other than those who are blocked only under Executive Order 13599 as the government of Iran and does not apply to transactions involving certain end-users and end-uses that are restricted under the EAR.

In addition, OFAC continues to emphasize that the General License is intended specifically to authorize certain transactions related to personal communications over the Internet. As such, the General License does not authorize the export or re-export to Iran of “commercial-grade Internet connectivity services or telecommunications transmission facilities (such as dedicated satellite links or dedicated lines that include quality of service guarantees)” or “web-hosting services that are for commercial endeavors or of domain name registration services.”

Annex to the General License

The Annex to the General License is included in its entirety on pages 8 and 9 of the General License. The categories of hardware and software listed in the Annex include the following:

  • Mobile phones, Personal Digital Assistants (PDAs), and Subscriber Identity Module (SIM) cards, and accessories for such devices;
  • Satellite phones and Broadband Global Area Network (BGAN) hardware;
  • Consumer modems, network interface cards, radio equipment (including antennae), routers, switches, and WiFi access points designated for 50 or fewer concurrent users;
  • Residential consumer satellite terminals, transceiver equipment (including antennae, receivers, set-top boxes, and video decoders);
  • Laptops, tablets, and personal computing devices, and peripherals for such devices (including consumer disk drives and other data storage devices and accessories for such devices including keyboards and mice);
  • Anti-virus and anti-malware software;
  • Anti-tracking software;
  • Mobile operating systems and online applications for mobile operating system stores (including applications designed to run on mobile operating systems);
  • Anti-censorship tools;
  • Virtual Private Network (VPN) client software, proxy tools, and fee-based client personal communications tools (including voice, text, video, voice-over-IP telephony, video chat, and successor technologies); and
  • Provisioning and verification software for Secure Sockets Layers (SSL) certificates.

The Annex is similar in most respects to the Annex included in the prior General License D, but key differences include the following:

  • Inclusion of a specific reference to accessories for mobile phones.
  • Inclusion of a specific reference to apps designed to run on mobile operating systems.
  • Applies to two-way satellite terminals (rather than receive-only satellite terminals).
  • Applies to residential transceiver equipment rather than residential receiver equipment.
  • Includes a definition of “consumer” that is used to modify many of the different types of electronic equipment included in the Annex. As used in the Annex, the term “consumer” is defined as items that are: “(1) generally available to the public by being sold, without restriction, from stock at retail selling points by means of any of the following: (a) over-the-counter transactions; (b) mail order transactions; (c) electronic transactions; or (d) telephone call transactions; and (2) designated for installation by the user without further substantial support by the supplier