The Office of Foreign Assets Control (“OFAC”) of the U.S. Department of the Treasury currently imposes comprehensive sanctions on Syria pursuant to the Syrian Sanctions Regulations, 31 C.F.R. Part 542 (“SySR”). On May 12, 2022, OFAC issued General License (“GL”) No. 22, “Authorizing Activities in Certain Economic Sectors in Non-Regime Held Areas of Northeast and Northwest Syria” (“GL 22”), which effectively carves out a part of Syrian territory from the broad ban imposed by OFAC and authorizes a number of activities involving specific areas, as outlined below.
GL 22 authorizes transactions that are ordinarily incident and necessary to activities that occur in specific areas of northeast and northwest Syria (listed in an Annex to GL 22, collectively the “Areas”) in the following economic sectors: agriculture; information and telecommunications; power grid infrastructure; construction; finance; clean energy; transportation and warehousing; water and waste management; health services; education; manufacturing; and trade (the “Economic Sectors”). New OFAC FAQ 1043 provides examples of transactions and activities within these sectors, including:
- the provision of agricultural-related services (such as the production of agricultural inputs, agricultural processing facilities, and the distribution of equipment and spare parts for machinery used in crop and livestock production);
- the provision of information and telecommunications-related services (such as reestablishment of telecommunications infrastructure, the promotion of internet connectivity for the Syrian people, and support for media and journalists);
- the provision of financial-related services in support of the sectors outlined in Syria GL 22 (such as the provision of grants and loans, and entry into contracts to support private capital investments and trade);
- the provision of healthcare and health-related services (such as the distribution of medical equipment, supplies, and pharmaceuticals; and technical training for and supervision of healthcare workers); and
- the provision of educational-related services (such as the rehabilitation of schools; the provision of training and equipment support to local educators; training and equipment support to local officials on the operations and management of critical infrastructure; the provision of vocational and business management training; and the preservation and protection of cultural heritage sites).
GL 22 also authorizes the purchase of refined petroleum products of Syrian origin for use in Syria – originally prohibited by § 542.209 of the SySR – that is ordinarily incident and necessary to the activities in the Economic Sectors in the Areas. However, OFAC still prohibits the importation of petroleum or petroleum products of Syrian origin into the United States pursuant to § 542.208 of the SySR.
Transactions authorized by this new GL include the processing or transfer of funds on behalf of third-country entities to or from Syria in support of the transactions discussed above. With respect to such processing and transfer of funds pursuant to GL 22 and new OFAC FAQ 1044, U.S. financial institutions and U.S. registered money transmitters may reasonably rely upon the information available to them in the ordinary course of business from the originator of a funds transfer with regard to compliance with GL 22 – thus lowering the compliance costs for these institutions – provided that the institution does not know or have reason to know that such transfer is not in compliance with GL 22.
Revised OFAC FAQ 884 and aforementioned OFAC FAQ 1044 state that non-U.S. persons (including foreign financial institutions) do not risk exposure to U.S. secondary sanctions for engaging in or facilitating transactions and activities authorized pursuant to GL 22, or transactions that are ordinarily incident and necessary to give effect to the activities authorized in Syria GL 22 (or any other GL issued pursuant to the SySR).
Finally, GL 22 does not authorize any transactions involving any person, including the Government of Syria, whose property or interests in property are blocked pursuant to the SySR or the Caesar Syria Civilian Protection Act of 2019. Generally, persons blocked pursuant to the SySR are labeled on the Specially Designated Nationals List (“SDN List”) pursuant to the [SYRIA] tag and persons blocked pursuant to the Caesar Syria Civilian Protection Act of 2019 are tagged pursuant to the [SYRIA-CAESAR] program. In other words, GL 22 does not authorize transactions involving Specially Designated Nationals (“SDNs”) who are tagged under the [SYRIA] program or the [SYRIA-CAESAR] program.
However, certain other GLs in the SySR do authorize activities involving persons whose property or interests in property are blocked pursuant to the SySR (but not the Caesar Syria Civilian Protection Act of 2019). For example, certain consumer and life sciences clients may rely on the GL at 31 C.F.R. § 542.510 to authorize transactions related to the sale of U.S.-origin food or medicine to Syria that involve the Government of Syria or other persons tagged under the [SYRIA] program, as long as the medicine is licensed or otherwise authorized by the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”). EAR99 food and medicine do not require a license for export or reexport to Syria. Transactions involving sales of U.S.-origin medical devices may also rely on this GL, as long as the medical devices are licensed by BIS. The GL at 31 C.F.R. § 542.525 authorizes transactions related to the sale of non-U.S.-origin food, medicine, or medical devices that involve the Government of Syria or persons tagged under the [SYRIA] program. Other GLs in the SySR do not authorize activities involving the Government of Syria or persons tagged under the [SYRIA] program. For example, the GL authorizing export of certain services incident to “Internet-based communications” (31 C.F.R. § 542.511) does not authorize services intended for the Government of Syria and persons tagged under the [SYRIA] program. Finally, the GL authorizing transactions related to telecommunications and mail (31 C.F.R. § 542.519) does not authorize involvement of persons tagged under the [SYRIA] program.
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Authored by Anthony Capobianco, Aleksandar Dukic, Ajay Kuntamukkala, Beth Peters, Stephen Propst, Julia Diaz, Ashley Roberts, Deborah Wei, and Hao-Kai Pai.