By: John M. Hynes
The U.S. Department of Treasury’s Office of Foreign Assets Control (“OFAC”) has issued welcome guidance for those wishing to provide personal communications services or software to individuals in Iran. On March 20, 2012, OFAC released interpretive guidance regarding the scope of the personal communications general and specific licenses found in Section 560.540 of the Iranian Transactions Regulations, 31 C.F.R. part 560 (“ITR”). On the same day, OFAC also revised the ITR definition of the term “entity owned or controlled by the Government of Iran”.
While the personal communications licenses remain limited in scope, OFAC’s new interpretive guidance should help exporters understand what specific services and software may be provided to individuals in Iran.
The Personal Communications Licenses
General License. Section 560.204 of the ITR generally prohibits the exportation of any goods or services to Iran or the Government of Iran. In March 2010, OFAC added a general license to the ITR authorizing the exportation to persons in Iran of services and associated software incident to the exchange of personal communications over the Internet (the “Personal GL”). The “services” covered by the Personal GL include instant messaging, chat, email, social networking, sharing of photographs and videos, web browsing, and blogging; the “software” within the scope of the Personal GL is that needed to enable such services.
The Personal GL applies only if the service or software is publicly available at no cost to the user. The Personal GL applies to software only if it is (1) classified as “EAR99” under the Export Administration Regulations (“EAR”); (2) not subject to the EAR; or (3) classified as mass market software under Export Control Classification Number (“ECCN”) 5D992 of the EAR.
The Personal GL does not apply if the exporter has knowledge or reason to know that the service or software is intended for the Government of Iran. Moreover, the license cannot be used for the exportation of (1) any goods or technology listed on the Commerce Control List of the EAR, except for EAR99 software and software that is (i) classified as mass market software and (ii) necessary to enable authorized services; (2) Internet connectivity services or telecommunications transmission facilities (e.g., satellite links or dedicated lines); (3) web-hosting services that are for purposes other than personal communications (e.g., web-hosting services for commercial endeavors); or (4) domain name registration services.
Specific License. ITR section 560.540 also provides that OFAC may issue specific licenses, on a case-by-case basis. Such licenses may be issued for exports to Iran of services and software incident to the sharing of information over the Internet that are not covered by the Personal GL so long as the service or software is (i) not subject to the EAR, (ii) classified as EAR99 or (iii) classified as mass market software under ECCN 5D992 (“Personal Specific License”).
Interpretive Guidance on the Personal Communications Licenses
As noted above, in March 2012, OFAC issued interpretive guidance on both the Personal GL and the Personal Specific License, as follows:
Personal GL. The guidance provides the following non-exhaustive list of services and software that fall within the scope of the Personal GL:
- Personal communications (e.g., Yahoo Messenger, Google Talk, Microsoft Live, non-fee based Skype)
- Updates to personal communications software
- Personal data storage (e.g., Dropbox)
- Browsers/updates (e.g., Google Chrome, Firefox, Internet Explorer)
- Plug-ins (e.g., Flashplayer, Shockwave, Java)
- Document readers (e.g., Acrobat Readers)
- Free mobile applications related to personal communications
- RSS feed readers and aggregators (e.g., Google Feed Burner)
Personal Specific License. In an effort to clarify the Statement of Licensing Policy (“SLP”) applicable to the Personal Specific License, OFAC’s interpretative guidance states as follows:
Consistent with current U.S. foreign policy to enable private persons in Iran to better and more securely access the Internet, OFAC is clarifying its existing Statement of Licensing Policy (“SLP”) that establishes a favorable licensing policy through which U.S. persons can request OFAC approval to export to Iran services and software not covered by section 560.540 of the ITR that directly benefit the Iranian people.
The guidance also highlights what the SLP applies to, as follows:
- Web-hosting services that allow individuals and entities to run web sites on the Internet
- Online advertising programs (e.g., AdSense and AdWords) that allow publishers to earn revenue by displaying relevant advertisements on their content
- Fee-based mobile applications, such as application stores and selected fee-based mobile applications related to personal communications, which allow for the distribution of applications, including news readers and mobile security software
- Fee based internet communications services, such as Skype Credit and Google Talk, that allow users to partially bypass the existing telephone system and engage in more secure conversations that occur exclusively over the Internet
Amendment to Definition of “Entity Owned or Controlled by the Government of Iran”
OFAC also has revised the definition of the term “entity owned or controlled by the Government of Iran.” Until this revision, an entity was considered to be “owned or controlled by the Government of Iran” if (1) the Iranian government owned a “majority or controlling interest” in the entity or (2) the entity was otherwise controlled by the government. The new definition replaces the “majority” interest condition with “50 percent or greater interest.” Thus, the definition now reads in its entirety: “The term entity owned or controlled by the Government of Iran includes any corporation, partnership, association, or other entity in which the Government of Iran owns a 50 percent or greater interest or a controlling interest, and any entity which is otherwise controlled by that Government.”
The recent interpretive guidance is useful to anyone seeking to export personal communications services or software to Iran. Exporters can now look to the guidance, and its illustrative lists, to more easily determine whether what they seek to export may be eligible under one of the licenses. This in turn may facilitate the export of helpful communications tools to people in Iran.
The amended definition of “entity owned or controlled by the Government of Iran” also provides clarity: it is now clear that any entity in which the Iranian government has a 50 percent interest will be treated as a part of the Government of Iran regardless of whether the government in fact controls the entity. Exporters must remain cognizant of this amended definition whenever they wish to export items to Iran, including when they seek to do so under one of the personal communications licenses, since such licenses do not apply if the exporter knows the service or software is intended for an entity owned or controlled by the Government of Iran.