On September 24, 2021, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued
General License 14 (GL-14) and
General License 15 (GL-15), authorizing certain types of humanitarian transactions involving Afghanistan that could relate to the Taliban or the Haqqani Network that would otherwise be prohibited by the Global Terrorism Sanctions Regulations (GTSR), the Foreign Terrorist Organizations Sanctions Regulations (FTOSR), or Executive Order (EO) 13224.
Both the Taliban and the Haqqani Network are designated by OFAC as Specially Designated Global Terrorists (SDGTs) pursuant to EO 13224. The Haqqani Network is also designated by the US Department of State as a Foreign Terrorist Organization (FTO) under section 219 of the Immigration and Nationality Act. Furthermore, several of the individual members of the Taliban and the Haqqani Network are designated by OFAC as SDGTs.
These groups have recently taken control of, and appointed officials (including at least one individual designated as an SDGT) to administer, the Government of Afghanistan and its associated agencies and organizations. As a result, there are concerns that interactions with the Government of Afghanistan could be prohibited to the extent they involve a person subject to US sanctions or expose parties to broader risks under US counter-terrorism financing laws.
OFAC’s recent actions were intended to alleviate these concerns by authorizing humanitarian activities in Afghanistan undertaken by certain groups such as nongovernmental organizations (NGOs) and the export or reexport to Afghanistan of agricultural commodities, medicine, and medical devices.
OFAC also
issued four new Frequently Asked Questions (FAQs) in conjunction with these licenses that confirm, among other things, that transactions involving Afghanistan are not subject to broad US sanctions, absent the involvement of an OFAC sanctions target. While these licenses and guidance are helpful for NGOs, US government contractors, exporters of humanitarian items, and other parties operating in Afghanistan, significant challenges remain. Effective compliance requires both factual due diligence and a close attention to the scope of remaining US legal restrictions, even when a transaction takes place under the auspices of the US government or an international organization.
General License 14
GL-14 authorizes most transactions involving the Taliban or the Haqqani Network (or any entity owned 50 percent or more by them) that are ordinarily incident and necessary to the provision of humanitarian assistance to Afghanistan or other activities that support basic human needs in Afghanistan, performed by any of the following:
- the US government;
- nongovernmental organizations;
- the United Nations (including UN programmes, funds, and other entities and bodies, and specialized agencies and related organizations of the UN);
- the International Centre for Settlement of Investment Disputes and the Multilateral Investment Guarantee Agency;
- the African Development Bank Group, the Asian Development Bank, the European Bank for Reconstruction and Development, and the Inter-American Development Bank Group (including any fund entity administered or established by any of the foregoing);
- the International Committee of the Red Cross and the International Federation of Red Cross and Red Crescent Societies; or
- the Islamic Development Bank.
GL-14 also authorizes transactions of employees, grantees, contractors, or other persons acting on behalf of any of the above governments or international organizations. However, private (for-profit) companies (e.g., those working with non-US governments and not acting under the auspices or contracts of any of the above organizations) may want to clarify whether GL-14 applies to them.
In
FAQ 929, OFAC provides examples of activities that qualify as “humanitarian assistance to Afghanistan” and “activities that support basic human needs.” These include, among other things, providing disaster relief services and healthcare and health-related services, protecting and assisting vulnerable or displaced populations, food security, water, and sanitation, and distributing articles intended to be used to relieve human suffering, as well as training and services related to the foregoing. Importantly, OFAC has clarified that the scope of this authorization goes beyond immediate humanitarian support and also includes certain “non-commercial development projects.”
FAQ 928 states that, “[f]or purposes of clarity, transfers of funds to or from Afghanistan that are ordinarily incident and necessary to give effect to the activities authorized in GL 14, including clearing and settlement involving banks in Afghanistan, are authorized under GL 14.”
General License 15
GL-15 authorizes most transactions involving the Taliban or the Haqqani Network (or any entity owned 50 percent or more by them) that are ordinarily incident and necessary to the exportation or reexportation to Afghanistan of agricultural commodities, medicine, or medical devices (including replacement parts and components and software updates), or to persons in third countries purchasing specifically for resale to Afghanistan.
The types of items covered by GL-15 are defined to include:
- Agricultural commodities as defined section 102 of the Agricultural Trade Act of 1978 that are intended for ultimate use in Afghanistan as food for humans or animals, seeds for food crops, fertilizers or organic fertilizers, or reproductive materials for the production of food animals;
- Medicines covered by the term “drug” in section 201 of the Federal Food, Drug, and Cosmetic Act; and
- Medical devices covered by the term “device” in section 201 of the Federal Food, Drug and Cosmetics Act.
Unlike GL-14, this general license does not limit its applicability to certain types of organizations, but rather focuses on the nature and purpose of the export.
FAQ 930 clarifies that “GL 15 also authorizes U.S. persons to engage in transactions or activities that are ordinarily incident and necessary to authorized export or reexports, including the processing of financial transactions and related clearing and settlement involving banks in Afghanistan.”
Challenges and Due Diligence
Even in the wake of these licenses and guidance, there remain considerable complexities and potential risks when operating in Afghanistan in many cases. Due diligence and a compliance/risk assessment are generally warranted for all activities involving Afghanistan, given the potential challenge of identifying links to sanctioned parties, not to mention the nuances of OFAC’s regulations and the newly issued humanitarian general licenses.
Due Diligence
In
FAQ 928, OFAC has confirmed that US sanctions do not generally prohibit exports or reexports of goods or services to Afghanistan (including those related to humanitarian activities), provided that the activity does “not involve sanctioned individuals or entities, or property in which a blocked person has an interest unless exempt from regulation or authorized by OFAC.”
FAQ 931 confirms that non-US persons that engage in transactions that would be covered by GL-14 or GL-15 if undertaken by a US person would not be exposed to US sanctions risk (including US “secondary sanctions”).
This guidance highlights the key challenges under US law when operating in Afghanistan—determining whether one’s direct or indirect counterparties, intermediaries, ultimate beneficiaries, or other related parties, may be associated with a sanctioned party (and, if so, whether all such activities are authorized or exempt under OFAC’s regulations).
Even in cases where an OFAC authorization does not squarely apply, there are open questions about whether particular interactions would be restricted (e.g., individuals appointed to official positions by the Taliban who are acting in a governing or administrative capacity as part of the Government of Afghanistan and not explicitly or specifically on behalf or for the benefit of the Taliban or any other sanctioned person or group).
GL-14 and GL-15 do not authorize dealings with individuals who are specifically designated as SDGTs, including officials in the Government of Afghanistan. A transaction involving a government official who has been designated as an SDGT individually would likely require further authorization from OFAC, even if it otherwise falls within the scope of the licenses. As practical matter, it is prudent to screen the names of individual counterparties (particularly those in more senior positions) against relevant US sanctions lists.
Financial Transactions
The authorizations in GL-14 and GL-15 exclude, among other things, any financial transfers to the Taliban or Haqqani Network, or associated sanctioned entities, “other than for the purpose of effecting the payment of taxes, fees, or import duties, or the purchase or receipt of permits, licenses, or public utility services.” This is an important limitation that should be considered, and, if any other types of financial transfers may be required (e.g., programmatic cost reimbursements, purchases of goods/services, and so on), a specific license from OFAC may be required. (In this respect GL-14 and GL-15 are narrower than the analogous general licenses authorizing NGOs’ transactions involving the Government of Venezuela.) Moreover, given the nascent stage of Taliban administration, efforts should be made to the extent feasible to confirm the nature of official requirements in Afghanistan in order to substantiate the lawfulness of particular payments and the associated official purpose of each payment.
Additionally, transactions that are otherwise prohibited under OFAC regulations or requirements of other US federal agencies or laws are outside the scope of these humanitarian general licenses. This could include, for instance, a transaction that involves an interest of a blocked party other than the Taliban or the Haqqani Network (or an entity owned 50 percent or more by them). These other blocked parties include individual members of the Taliban or the Haqqani Network who have been designated by OFAC, and there are also numerous parties in Afghanistan (and in the surrounding region) that are sanctioned by OFAC under other authorities not covered by these licenses, such as narcotics trafficking sanctions. Interactions with such parties would not be authorized under these humanitarian general licenses.
Additionally, there are a number of SDGT and FTO groups in Afghanistan and the region, including al-Qaeda and ISIS affiliates, and others to whom the general license would not apply. Furthermore, activity in Afghanistan (particularly in the western region) may involve Iran, and may therefore still be subject to US sanctions.
Conclusion
The new general licenses come nearly six weeks after the fall of the previous Afghan government and the establishment of a Taliban-controlled government in Afghanistan. A coalition of nongovernmental organizations had lobbied the US government to issue general licenses out of fear that US sanctions could hamper their efforts in the country. In light of the situation, on August 25, 2021, OFAC issued a specific license to the US State Department authorizing humanitarian-related transactions by the US government and persons acting on its behalf in Afghanistan. These general licenses broaden the scope of those previous (privately-issued) authorizations to include transactions by NGOs and the specified international organizations.
While significant risks may remain in some cases, the broad wording of the new GL-14 and GL-15—which apply to a wide range of humanitarian activities and organizations, as well as persons acting on their behalf—should alleviate some concerns and permit the flow of US and non-US humanitarian goods and services to Afghanistan to continue, subject to the availability of financial, logistics, and other support services. However, due diligence and an analysis of the scope of authorized, and any non-authorized, activity are important steps prior to commencing or continuing engagement with Afghanistan.
To the extent there are any doubts about whether certain activities may be authorized or exempt by OFAC, specific licenses may be issued on a case-by-case basis, upon a showing that the activity is consistent with US foreign policy and national security interests.
For more information on how these developments may impact your organization, contact a member of
Steptoe’s Economic Sanctions team.
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