Charitable giving in times of crisis: Lebanon

On August 4, a massive explosion tore through Beirut’s port and surrounding neighborhoods, killing over 200 people and displacing an estimated 300,000 from their homes. In the aftermath of the explosion, angry protesters took to the streets and the country’s cabinet resigned. In the days since the blast, countries around the world have pledged US$300m in humanitarian assistance for Lebanon and a number of charity drives have raised considerable funds. Initial estimates put the material cost of the explosion as high as US$15 billion. The purpose of this blog post is to provide some topline US sanctions and export control considerations for institutions and individuals considering the distribution of funds and/or goods or services to Lebanon. For organizations looking for specific advice on navigating US sanctions and export controls, including Steptoe’s pro bono engagements, contact a member of our Economic Sanctions or Export Controls teams. Sanctions & Export Control Considerations Lebanon is not subject to comprehensive US sanctions.  With the exception of targeted, list-based sanctions on certain persons in Lebanon, US persons are not prohibited by the Office of Foreign Assets Control (OFAC) from transactions involving Lebanon.  There are certain export control restrictions under the Export Administration Regulations (EAR) administered by the Commerce Department’s Bureau of Industry and Security (BIS). With appropriate, risk-based compliance measures, individuals and entities should be able to address sanctions and export controls risks associated with charitable giving or the provision of humanitarian support and development aid.  Generally speaking, contributions to UN bodies (e.g., UNICEF) or similar international organizations should not raise material US sanctions risk. However, donations to charitable groups may warrant risk-based due diligence to screen for possible sanctions risks. Sanctions OFAC has imposed blocking sanctions on a number of groups, entities and individuals in Lebanon that prohibit US persons from direct or indirect dealings with those persons.

• Executive Order 13224: Hizballah officials, agents, and financiers and alleged business associates (as well as subordinate offices and owned or controlled entities) are designated as Specially Designated Global Terrorists. Those designations include various Hizballah-affiliated charities and construction firms. (NB: Hizballah and certain other groups with a presence in Lebanon are also designated as Foreign Terrorist Organizations.)
• The Hizballah International Financing Prevention Act (as amended): The law restricts foreign financial institutions from facilitating significant transactions for Hizballah, and provides for the imposition of secondary sanctions on foreign persons who provide significant support to specified Hizballah-affiliated entities and persons.
• Executive Order 13441: OFAC has designated a handful of individuals for undermining Lebanon’s security.
• Caesar Syria Civilian Protection Act of 2019 (Caesar Act) and Executive Order 13894: The Caesar Act authorizes blocking sanctions against foreign persons that knowingly provide significant support to, or knowingly engage in a significant transaction with, the Syrian government or a senior Syrian “political figure”, and foreign persons that knowingly facilitate the government’s acquisition of goods, services, or technologies in support of key economic sectors. (NB: This law is not specific to Lebanon, but given the historic interconnectedness of the Lebanese and Syrian economies, parties should be aware of possible exposure under the Caesar Act.)
• Global Magnitsky Act: Media reports suggest that prominent Lebanese politicians and businessmen could soon face sanctions under OFAC’s Global Magnitsky Sanctions program for corruption.
• There are numerous other parties in Lebanon designated under OFAC’s Syria, Iran, foreign narcotics trafficking, and proliferation of weapons of mass destruction sanctions programs.

Based on the number of sanctioned persons in Lebanon, and the risk of future sanctions under the authorities discussed above, prospective donors should screen partners and recipients of aid in Lebanon or other countries in the region against OFAC’s List of Specially Designated Nationals and Blocked Persons (the SDN List), including their beneficial owners, representatives, agents and other related persons.  Any activities or agreements should allow for withdrawal or termination (and possibly other remedies) based on sanctions risk. Export Controls BIS administers export controls under the EAR covering exports and reexports to, and transfers within, Lebanon of certain US-origin goods, software and technology.  Basic humanitarian exports to Lebanon generally are not likely to trigger export controls under the EAR, but license requirements could apply to some types of equipment or technology depending on the country of destination, end use, or end user. As a preliminary matter, exporters should refer to the Commerce Control List to determine how their products or technologies are classified. Similarly, they should consider whether any restricted applications or restricted parties may be involved in export activity, including by consulting BIS’ restricted party lists. Beyond Beirut By all accounts Lebanon is in dire need of both immediate humanitarian assistance and sustained longer-term aid. Before the catastrophic port explosion, the country was already in the midst of a major political, economic, and banking crisis, which had seen the Lebanese pound depreciate by 80 percent since last October, and a health crisis stemming from the Covid-19 pandemic. Lebanon is host to an estimated 1.5 million Syrian refugees, roughly equivalent to a quarter of its population. And neighboring Syria continues to face conflict, humanitarian crisis and financial collapse.  While certain activities involving Syria are exempt from or authorized under US export controls and sanctions regulations, Syria remains subject to comprehensive OFAC sanctions prohibiting most activities involving US persons. OFAC blocking sanctions apply to the Syrian government and its officials, agents and instrumentalities, and entities under its ownership or control. Refer to this chart for information about general licenses and exemptions under US and EU sanctions for humanitarian activities in Crimea, Cuba, Iran, North Korea, Syria, and Venezuela. For specific advice on navigating US sanctions and export controls related to Lebanon and Syria, or other humanitarian activities, contact a member of Steptoe’s Economic Sanctions or Export Controls team.