Iranian Transactions and Sanctions Regulations

<RULE> DEPARTMENT OF THE TREASURY <SUBAGY>Office of Foreign Assets Control</SUBAGY> <CFR>31 CFR Part 560</CFR> <SUBJECT>Iranian Transactions and Sanctions Regulations</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Office of Foreign Assets Control, Treasury. <HD SOURCE="HED">ACTION:</HD> Final rule. <SUM> <HD SOURCE="HED">SUMMARY:</HD> The Department of the Treasury's Office of Foreign Assets Control (OFAC) is adopting a final rule amending the Iranian Transactions and Sanctions Regulations (ITSR) to incorporate a general license that was previously published on OFAC's website. In particular, the rule incorporates, with amendments, a general license relating to the export, reexport, and provision of certain services, software, and hardware incident to communications over the internet. This amendment also makes additional conforming changes. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> This rule is effective May 17, 2024. </EFFDATE> <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> OFAC: Assistant Director for Licensing, 202-622-2480; Assistant Director for Regulatory Affairs, 202-622-4855; or Assistant Director for Sanctions Compliance & Evaluation, 202-622-2490. </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">Electronic Availability</HD> This document and additional information concerning OFAC are available on OFAC's website <E T="03">https://ofac.treasury.gov.</E> <HD SOURCE="HD1">Background</HD> On October 22, 2012, OFAC issued a final rule that amended the former Iranian Transactions Regulations, 31 CFR part 560 (ITR), and reissued them in their entirety as the Iranian Transactions and Sanctions Regulations (ITSR or “the Regulations”) (77 FR 64664, October 22, 2012). Since then, OFAC has amended the Regulations on several occasions. As set forth in more detail below, OFAC is now amending the Regulations to incorporate, with certain amendments, a general license that previously was published on OFAC's website and to make additional conforming changes. <E T="03">Services, Software, and Hardware Incident to Personal Communications.</E> On March 10, 2010, in order to foster and support the free flow of information to individual Iranian citizens, OFAC issued a final rule amending the ITR to add a general license in § 560.540 authorizing the exportation of certain services and software incident to the exchange of personal communications over the internet, provided that, among other things, such services and software were publicly available at no cost to the user (75 FR 10997, March 10, 2010). The authorization under § 560.540 was preserved in the ITSR, as reissued in October 2012 (77 FR 64664). On May 30, 2013, OFAC, in consultation with the Departments of State and Commerce, issued General License (GL) D under the Regulations. GL D was made available on OFAC's website and the <E T="04">Federal Register</E> (78 FR 43278, July 19, 2013). GL D authorized the exportation or reexportation, directly or indirectly, from the United States or by U.S. persons, wherever located, to persons in Iran of additional services, software, and hardware incident to personal communications, including fee-based versions of the software and services authorized in § 560.540, subject to certain conditions. GL D also contained an Annex that listed items authorized for export or reexport to Iran that had been determined to be incident to personal communications. On February 7, 2014, OFAC issued GL D-1, which replaced and superseded GL D in its entirety. GL D-1 was made available on OFAC's website and the <E T="04">Federal Register</E> (79 FR 13736, March 11, 2014). GL D-1 clarified certain aspects of GL D and added new authorizations relating to the provision to Iran and importation from Iran of certain hardware, software, and services incident to personal communications. GL D-1 also updated the Annex from GL D with minor technical amendments. On September 23, 2022, OFAC issued GL D-2, which replaced and superseded GL D-1 in its entirety. GL D-2 was made available on OFAC's website and in the <E T="04">Federal Register</E> (87 FR 62003, October 13, 2022). GL D-2 updated and clarified GL D-1 by, among other things: removing the “personal” qualifier from the authorization for software and services incident to “personal communication”; providing additional examples of modern types of software and services that are incident to the exchange of communications, including social media platforms, collaboration platforms, video conferencing, e-gaming, e-learning platforms, automated translation, web maps, and user authentication services; explicitly authorizing cloud-based services and software in support of the foregoing software or services or of any other transaction that is authorized pursuant to the Regulations; clarifying the restrictions on the exportation of web-hosting services or domain name registration services; and expanding the specific licensing policy set forth in GL D-1. GL D-2 maintained the Annex as updated by GL D-1. OFAC, in consultation with the Departments of State and Commerce, is now amending the Regulations to incorporate the provisions of GL D-2 and certain additional amendments into the existing authorization at § 560.540. First, OFAC is amending § 560.540(a) to incorporate paragraphs (a)(1) and (2) of GL D-2, which authorize the exportation or reexportation to Iran of certain no-cost or fee-based services and software that are incident to, and software that enables services incident to, the exchange of communications over the internet, as well as cloud-based services in support of the foregoing services or of any other transactions authorized or exempt under the Regulations, subject to certain conditions. New § 560.540(a)(3) incorporates paragraph (a)(3) of GL D-2, which authorizes the exportation, reexportation, or provision of certain software, hardware, and related services not authorized by § 560.540(a)(1) or (2). OFAC is also publishing in the <E T="04">Federal Register</E> a list of the services, software, and hardware authorized by new § 560.540(a)(3) (the “List of Services, Software, and Hardware Incident to Communications under 31 CFR 560.540”), which includes the items previously listed in the Annex to GL D-2. However, concurrent with this rule, OFAC is publishing an update, effective 30 days after publication of this rule, that would amend the “List of Services, Software, and Hardware Incident to Communications under 31 CFR 560.540” to limit the computing power of laptops, tablets, and personal computing devices that are authorized for exportation or reexportation to Iran under category (5) of “List of Services, Software, and Hardware Incident to Communications under 31 CFR 560.540”, in order to address concerns about the use of multiple, connected computing devices with increased computing powers to create high-powered computers. The updated “List of Services, Software, and Hardware Incident to Communications under 31 CFR 560.540” is being published separately in the <E T="04">Federal Register</E> . New § 560.540(a)(4) through (6) incorporate paragraphs (a)(4) through (6) of GL D-2, which authorize: the exportation or reexportation of certain internet connectivity services and the provision, sale, or lease of telecommunications facilities incident to communications; the importation into the United States or a third country of hardware and software previously exported to Iran; and the exportation and reexportation of certain publicly available, no-cost services and software to the Government of Iran, respectively. OFAC is also expanding § 560.540 in two ways to address repair and replacement issues with respect to items exported pursuant to the ITSR. First, OFAC is revising the authorization at paragraph (a)(5) of GL D-2 and incorporating the revised text into § 560.540(a)(5), to authorize transactions for the importation of hardware or software into third countries, in addition to the United States, provided that the items were previously exported to Iran pursuant to an authorization issued pursuant to the ITSR. Second, OFAC is adding a new § 560.540(a)(7) to authorize the exportation or reexportation, of certain services conducted outside Iran to install, repair, or replace hardware or software authorized for exportation, reexportation, or provision to Iran by paragraph (a)(2) or (3) of that section. The new § 560.540(a)(7) authorizes such services only when the service provider is located outside Iran and does not authorize the service providers to engage in such services while in Iran. This final rule also revises § 560.540(b) to incorporate paragraph (b) of GL D-2, which includes restrictions on transactions authorized by § 560.540(a), with slight revisions. Section 560.540(b)(3) refines and clarifies the restrictions of paragraph (b)(4) of GL D-2 related to the provision of web-hosting services or of domain name registration services in Iran. Specifically, newly revised § 560.540(b)(3) excludes from authorization the exportation or reexportation of web-hosting services for websites of commercial entities located in Iran or of domain name registration services for or on behalf of the Government of Iran or another person whose property and interests in property are blocked pursuant to § 560.211. OFAC is revising § 560.540(c) to incorporate paragraph (c) of GL D-2 into § 560.540(c)(1), which provides that U.S. depository institutions and U.S. registered brokers or dealers in securities may process transfers of funds in furtherance of an underlying transaction authorized by § 560.540(a), provided the transfer does not involve debiting or crediting an Iranian account. U.S. depository institutions and U.S. registered brokers or dealers in securities may also continue to process transfers of funds that are ordinarily incident and necessary to authorized transactions purs ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 27k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━