What Type of OFAC License Should I Use?
Generally when exporting from the United States an exporter must pay special attention to exemptions in regulations and sanctions while also understanding if a general or specific license is needed for their particular transaction. The Office of Foreign Assets Control (OFAC) of the US Department of Treasury is the sole governmental body that an exporter will be interacting with to make these determinations.
In regulations or sometimes a general license, there is an exemption written into the legislation that expressly exempts a certain type of transaction or entity from a general restriction that is otherwise placed on an entity or country by the regulation. Exemptions may allow a particular bank, business group, entity or industry in a country to do transactions with US exporters while all other transactions or entities in that group or country are restricted.
A general license is made available to everyone and often comes from an enabling legislation or act. Anyone is authorized to facilitate transactions within the scope of a general license without the approval of OFAC. OFAC issues general licenses that may include exceptions that restrict certain transactions in response to socio-political events in foreign countries. Conversely, a general license could also alleviate sanctions on particular entities abroad, allowing for ease of transactions with them. This is why it is very important to keep an updated and adaptable compliance program in any thriving export business.
A specific license is written authorization for particular transactions or the sale of certain goods granted by OFAC on a case by case basis. Whereas general licenses are publicized and readily accessible to the public, a specific license is granted to a particular business or entity and only that business and OFAC know of the ownership of the license. Common specific licenses requests are related to the following:
• Travel to and business in Cuba
• Agricultural and medical activities in Iran and Sudan
• Release of blocked funds, typically to collect money from a blocked person
When requesting a specific license OFAC wants the requesting party to be as detailed as possible, listing every person involved with the transaction, the shipment terms and schedule, end use of the products, which banks are being used and the payment mechanism that will be used.
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