OFAC General License Authorizes Fee-Based Services, Software and Hardware Incident to Personal Internet Communications

With the June 14 presidential election in Iran clearly in mind, the Office of Foreign Assets Control (“OFAC”) at the U.S. Department of the Treasury has broadened the authorization for the export and reexport of certain fee-based services, software and hardware for personal communications over the Internet. The new General License D, effective May 30, 2013, was issued under the authority of the Iranian Transactions and Sanctions Regulations (“ITSR”) and is available here.

A previous general license, issued March 10, 2010, authorized the export to Iran, Sudan and Cuba of services for personal internet communications, such as instant messaging, email, , file sharing, web browsing, blogging, and social networking, provided that these were publicly available at no cost to the user. The sale of fee-based services and software was only allowed through specific licenses on a case-by-case basis. Exports of related software to Iran and Sudan were also authorized under the previous general license provided that the software was either not subject to the Export Administration Regulations (“EAR”), was classified as “EAR99” (i.e., not subject to Commerce Department encryption or other Commerce Department list-based controls) or had been classified by the Commerce Department as “mass market” software, meaning software that is generally available to the public, designed for installation by the user without further substantial support from the supplier, and having cryptographic functionality that is not easily changed by the user.

The amended General License now expands the prior authorization to include export to Iran of fee-based services and software, as well as certain hardware, used for personal communications over the Internet. This opens the door for subscription, “pay as you go,” and other fee-based personal communications applications. Software, hardware and related services authorized for export and reexport under the new General License include certain:

  • Mobile phones, PDAs, and low-grade SIM cards;
  • Satellite Phones and Broadband Global Area Network;
  • Modems, radio equipment, routers and WiFi access points;
  • Low-grade consumer receiver equipment;
  • Low-grade computers and operating systems, and software for use of such hardware;
  • Anti-virus, anti-tracking and anti-censorship software;
  • Mobile operating systems and online app stores; and
  • Virtual Private networks including voice and video chats.
  • “Consumer-grade” Internet connectivity services or telecommunications transmission facilities for personal services (i.e., those with low cost, low capability and without high-level encryption built into the product).

Transfers of funds to or from Iran in furtherance of an authorized transaction may be processed by U.S. financial institutions, provided that none of the parties or banks involved are parties identified on the Specially Designated Nationals and Blocked Persons (“SDN”) List or are owned or controlled by any such entities.

The new General License does not authorize exportation or reexportation of (1) services, software or hardware intended for the Government of Iran or any SDN; (2) “commercial grade” Internet connectivity services or telecommunications transmission facilities (i.e., those with high cost, high capability, high-level encryption built in and that are not readily available to a consumer); or (3) web-hosting services used for purposes other than personal communication.

Anyone intending to export any of the now permissible fee-based services is advised to take steps to ensure that the purchaser is not an SDN or connected with the Government of Iran. Payments from SDNs may also result in blocking by U.S. financial institutions.