UK and US regulators provide guidance on humanitarian assistance to Iran

11 Sep 2012

In light of the recent earthquakes in north-west Iran, HM Treasury (http://www.hm-treasury.gov.uk/d/fin_sanc_iran_notice_humanitarian_payments_170812.pdf) and the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) (http://www.treasury.gov/resource-center/sanctions/Programs/Documents/iran_guidance_earthquake.pdf) have published clarifying guidance on providing humanitarian assistance to Iran.

Pursuant to the various EU Regulations, HM Treasury has clarified that transfers of funds may be made to Iranian persons, entities and bodies without prior authorisation where the funds are for humanitarian purposes or activities. The Treasury must be notified in advance of any humanitarian transfers of over €10,000 but, even if the transfer is over €40,000, a licence will not be required. The position does, however, become more problematic where the transfer is from a UK credit or financial institution to an Iranian bank, as the Financial Restrictions (Iran) Order 2011 will be engaged. This prohibits UK credit and financial institutions from transacting with Iranian banks. However, there are certain general licences which are available.

General licence 1 allows the transfer of under €40,000 to an Iranian bank where those funds are for, or relate to, humanitarian activities or purposes (provided, first, that any transferor notifies the Treasury in advance if the sum is over €10,000, as required by Article 30 of the EU Regulation, and, second, that the Iranian recipient bank is not itself subject to an asset freeze). If the transfer is for €40,000 or more, a specific licence must be sought.

Similarly, general licence 2 allows UK financial and credit institutions to transact with (unlisted) Iranian banks to effect personal remittances (i.e. those unrelated to commercial or business activities) of under €40,000. If the transfer is for €40,000 or more, a specific licence must be sought.

In summary, therefore, humanitarian donations or personal remittances of €10,000 or less can be transferred by UK financial and credit institutions to unlisted Iranian banks without notifying or seeking further authorisation from the Treasury. Humanitarian donations of over €10,000 but less than €40,000 can only be made to an unlisted Iranian bank after notifying the Treasury. Humanitarian donations of €40,000 or more will require a licence under the 2011 Order if the transfer involves a transaction between a UK bank and an unlisted Iranian bank. Any transaction with a listed Iranian bank would require a licence.

OFAC has stated that donations of food and medicine designed to be used for humanitarian purposes are exempt from US sanctions so long as they are not being sent to the Iranian government or any individual or entity listed on the Treasury Department’s List of Specifically Designated Nationals and Blocked Persons. However, licences will be required in respect of any medical devices that are either sold or donated to Iran. Generally speaking, OFAC reiterates that personal remittances are permitted to Iran but charitable donations of funds to Iran require a specific licence from OFAC. OFAC will prioritise licence applications from nongovernmental organisations wishing to engage in earthquake relief efforts.