What are the prohibitions on dealings with the Palestinian Authority?
As a result of elections held in January, 2006, representatives of HAMAS currently form the majority party within the Palestinian Legislative Council (PLC) and hold high-level offices within the Palestinian Authority (PA) including the position of Prime Minister. HAMAS is a target of three OFAC terrorism sanctions programs, resulting in the blocking of any property and interests in property of HAMAS that are in the United States or hereafter come within the United States , or that are in or hereafter come within the possession or control of a United States person. OFAC has determined that, as a result of the recent elections, HAMAS has a property interest in the transactions of the Palestinian Authority. Accordingly, pursuant to OFAC's terrorism sanctions programs, U.S. persons are prohibited from engaging in transactions with the Palestinian Authority unless authorized.
Are there any exceptions to these rules?
Yes. OFAC has issued a series of "general licenses" authorizing certain transactions with the Palestinian Authority, summarized below. These licenses can be found here.
Can a U.S company or individual continue to do business with private companies where the Palestinian Authority has a minority interest?
To our knowledge, the PA currently does not hold a minority interest in any private companies, outside of the PA's interest in the Palestine Investment Fund (PIF). The Treasury Department has authorized transactions involving the PIF under General License No. 4. Should the PA subsequently assume a minority interest in a company or business, U.S. companies or individuals may be permitted to conduct transactions with the private companies or businesses, depending on the circumstances. Please contact OFAC for additional information.
Can I still deal with private companies and individuals in the Palestinian Territory?
Yes. The prohibitions are not territorial in nature, but rather targeted against the parts of the Palestinian Authority controlled by representatives of Hamas and other terrorist organizations organizations.
Can U.S. financial institutions, nongovernmental organizations, or individuals transact with private companies where a minority or a majority shareholder, the CEO, or Chairman is a member of the PA?
The answer to this question depends on the particular facts and circumstances. Please contact OFAC.
Can financial institutions and Palestinian agents/distributors of U.S. corporations transact with the local governments, public utilities, municipality, etc. in the West Bank and Gaza ?
Local government authorities and municipalities are not part of the Palestinian Authority. However, the Palestinian Water Authority is a part of the PA Agriculture Ministry and is therefore subject to sanctions.
General License 4 seems to include a "White List" of parts of the Palestinian Authority that U.S. persons can deal with. Is this list comprehensive?
Yes. Dealings with any part of the Palestinian Authority not listed in the General License require a specific license from OFAC.
I am a financial institution. What do I do with transactions involving parts of the Palestinian Authority that are not on the "White List" ?
Absent a specific license from OFAC or the applicability of any general license, these transactions must be blocked.
Can U.S. firms sell to Palestinian universities through Palestinian agents/distributors despite the fact that the Palestinian Authority Ministry of Education may have partial financial and/or governing authority over universities in the West Bank and Gaza?
Many universities in the West Bank and Gaza are private and thus not subject to sanctions, even though the Palestinian Authority may provide some financial support or regulatory oversight over their functions. Incidental transactions with the Palestinian Authority in connection with provision of goods or services to a private/non-governmental university may be within the scope of General License No. 3. You should check with OFAC to determine whether that is the case. There are some government-owned and controlled universities in the West Bank or Gaza . U.S. persons may not engage in transactions with such entities unless authorized.
Can U.S. persons provide funding and perform services in connection with programs providing welfare and humanitarian assistance in the West Bank and Gaza?
Payments made directly to, and services performed directly for, individuals or community-based organizations and not through any Palestinian Authority office or staff member and not involving a debit to an account of the Palestinian Authority would not be prohibited and any incidental contact with the Palestinian Authority would be covered under General License 3. A specific license would be required for Projects involving infrastructure development or activities not permitted in the General Licenses. Projects covered by the General Licenses include the delivery of in-kind and financial assistance to individuals in the West Bank and Gaza.
What does one mean by the term "prohibited transactions"?
Prohibited transactions are trade or financial transactions and other dealings in which U.S. persons may not engage unless authorized by OFAC or expressly exempted by statute. Because each program is based on different foreign policy and national security goals, prohibitions may vary between programs.
Are there exceptions to the prohibitions?
Yes. OFAC regulations often provide general licenses authorizing the performance of certain categories of transactions. OFAC also issues specific licenses on a case-by-case basis under certain limited situations and conditions. Guidance on how to request a specific license is found below and at 31 C.F.R. 501.801.
What is a license?
- A license is an authorization from OFAC to engage in a transaction that otherwise would be prohibited. There are two types of licenses: general licenses and specific licenses.
- A general license authorizes a particular type of transaction for a class of persons without the need to apply for a license.
- A specific license is a written document issued by OFAC to a particular person or entity, authorizing a particular transaction in response to a written license application.
- Persons engaging in transactions pursuant to general or specific licenses must make sure that all conditions of the licenses are strictly observed.
- OFAC's regulations may contain statements of OFAC's specific licensing policy with respect to particular types of transactions.
Do I have to fill out a particular form to get a license to engage in a transaction?
Most license applications do not have to be submitted on a particular form. However, it is essential to include in the request all necessary information as required in the application guidelines or the regulations pertaining to the particular embargo program. When applying for a license, provide a detailed description of the proposed transaction, including the names and addresses of any individuals/companies involved. The mailing address for license applications is:
Office of Foreign Assets Control
U.S. Department of the Treasury
1500 Pennsylvania Avenue, NW
Washington , DC 20220
Attn: Licensing Division
Further contact information can be found under the "Contacts" section of OFAC's website. Depending upon the transaction, there may be specific guidance available on OFAC's website under relevant "Guidelines and Information" in "Sanctions and Country Program Summaries."
How can I find out the status of my pending license application?
OFAC will notify applicants in writing as soon as a determination has been made on their application. The length of time for determinations to be reached will vary depending on the complexity of the transactions under consideration, the scope and detail of interagency coordination, and the volume of similar applications awaiting consideration. Applicants are encouraged to wait at least two weeks before contacting the Licensing Division at (202) 622-2480 or the Compliance Division at (202) 622-2490 to inquire about the status of their application.
What agencies other than Treasury review OFAC license applications and what are the roles of these other agencies?
Many of OFAC's licensing determinations are guided by U.S. foreign policy and national security concerns. Numerous issues often must be coordinated with the U.S. Department of State and other government agencies, such as the U.S. Department of Commerce. Please note that the need to comply with other provisions of 31 C.F.R. chapter V, and with other applicable provisions of law, including any aviation, financial, or trade requirements of agencies other than the Department of Treasury's Office of Foreign Assets Control. Such requirements include the Export Administration Regulations, 15 C.F.R. Parts 730 et seq., administered by the Department of Commerce, and the International Traffic in Arms Regulations, 22 C.F.R. Parts 120-130, administered by the Department of State.