OFAC’s Guidance On Software Exports To Iran

September 18th, 2012 by Stephen Jones Leave a reply »

Earlier this year , the U.S. Department of the Treasury’s Office of Foreign Assets Control issued interpretive guidance and a new licensing policy regarding its rule authorizing the export to Iran of certain services and software incident to the exchange of personal communications over the Internet.

 The new guidance makes explicit that certain free services and software for personal communications, data storage and browsers are within the scope of the general license. OFAC will grant licenses on a case-by-case basis for similar paid products not covered by the existing authorization.

In March 2010, OFAC published a rule authorizing exports to Iran, Cuba and Sudan of certain services “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.” The rule also authorized the export — to Iran and Sudan, but not Cuba — of software necessary to enable the services listed above, as long as the software was classified as EAR99 or ECCN 5D992 mass market software, or not subject to the Export Administration Regulations.

The general license was subject to several restrictions, including a requirement that the services and software must be publicly available for free. OFAC issued this rule to implement U.S. foreign policy that encouraged the free download to Iran of mass market software necessary for the exchange of personal communications and sharing of information over the Internet.

 OFAC therefore  issued interpretive guidance on the scope of the personal communications services and software license. Below is a nonexhaustive list of products that OFAC has determined are within the scope of the authorization (subject to the restrictions in the rule), with examples in parentheses:

  • personal communications (e.g., Yahoo! Messenger, Google Talk, Microsoft Live, Skype (nonfee-based));
  • 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 apps related to personal communications; and
  • RSS feed readers and aggregators (e.g., Google Feed Burner).

OFAC’s guidance makes clear that free Voice over Internet Protocol services and software are covered, along with other common Internet communications tools, and may be exported license-free to Iran under the rule. Despite the continued tightening of U.S. sanctions against Iran, OFAC issued this guidance to “ensure that the sanctions on Iran do not have an unintended chilling effect on the ability of companies to provide personal communications tools to individuals in that country.”

OFAC announced a favorable licensing policy for services and software including Web hosting, online advertising, fee-based mobile apps, and fee-based Internet communications services. OFAC expressly noted Skype Credit and Google Talk in the last category.

However, we understand that these OFAC licenses will generally include a restriction on dealing with designated Iranian banks. This restriction may limit the utility of such licenses as they are designed to allow exports to individual Iranians, who are not likely to maintain accounts at third-country banks.

 OFAC’s guidance and statement of licensing policy applies only to its Iran sanctions program, while its original rule applied to Cuba and Sudan as well. .

Exports to Iran that are licensed by OFAC do not require separate authorization from the U.S. Department of Commerce’s Bureau of Industry and Security under Section 746.7 of the EAR.

Second, Internet-based personal communication is one of the very few areas in which the U.S. government currently encourages exports to Iran. In the context of ever-tightening economic sanctions against Iran, OFAC presumably issued this guidance and licensing policy in an effort to promote the free flow of information to Iranian citizens through the export of Internet-based services and software and its action is consistent with U.S. foreign policy with respect to Iran.

 OFAC’s licensing policy is consistent with the U.S. State Department’s current approach to Internet freedom as a foreign policy tool.

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