Ladies and gentlemen, the US Office of Foreign Assets Control (“OFAC”) has turned on the General License J sign, so fasten your seatbelt and prepare for take-off! If you are engaged in commercial passenger and/or cargo airline activity, and you are considering or already operating in Iran, please note the following update to US regulations.

General License J (“GLJ” or “Licence”) authorises the re-export of certain civil aircraft by non-US persons to Iran on temporary sojourn, provided that all listed criteria are met. Aircraft eligible for GLJ include certain US-origin aircraft as well as foreign-made aircraft that contain more than 10% US-controlled content, which are classified under 9A991.b on the US Commerce Control List (“CCL”) (“Eligible Aircraft”). The Eligible Aircraft must be in Iran for no more than 72 hours on each temporary sojourn.

Some of the key GLJ conditions include the following:

  • User restrictions - The authorisation applies only to non-US persons. Hence, non-US persons should take care to ensure that no US persons (or person from embargoed destinations) are involved in or otherwise facilitating any activities which fall under this Licence. Among other conditions, OFAC requires that the non-US re-exporter must retain the right to hire and fire the cockpit crew, dispatch the aircraft, determine its routes, and perform principal maintenance on the aircraft outside of Iran under the control of a non-Iranian person. 
  • Specific exemptions - GLJ specifically does not authorise, among other things:
    • Any transaction related to the sale, lease, or transfer of operational control of Eligible Aircraft to any individual or entity in Iran;
    • Any transaction by a US person; or
    • The re-exportation of a US-registered aircraft on temporary sojourn to Iran.
  • Goods, software and technology: GLJ also authorises non-US persons to re-export to Iran “usual and reasonable quantities” of necessary industry standard onboard supplies of civil aircraft equipment, spare parts, components, and technology for permanent use on the aircraft, classified under ECCN 9A991.c through 9A991.e or 9E991. However, all such aircraft equipment, spare parts, components, or technology licensed for re-export to Iran pursuant to GLJ must be stored on board the aircraft itself.

Please note, however, that this license does not cover the cargo content itself. The cargo must be individually classified accordingly, and exported under specific licenses, if applicable.

  • Maintenance and repair: Technology for purposes of emergency maintenance on, and repairs to, any aircraft re-exported to Iran will be authorised if it is “necessary to restore the aircraft to an airworthy condition.” Non-emergency technology will require separate licence authorisation. Note that when providing such services, there must not be a transfer of technology to an Iranian national ordinarily resident in Iran.

In light of this development, we recommend considering the following actions in order to determine potential License eligibility and minimise the risk of non-compliance:

  • Enhanced Third-party Screening: Ensure your business has a robust screening process in place, as GLJ does not authorise dealings with restricted/denied parties (including the beneficial ownership structure of these parties) or any transaction involving restricted end-uses or end-users under US export control laws. For example, the following Iranian carriers are still subject to restrictive measures and are therefore outside the scope of this Licence: Meraj Air, Caspian Airlines, Yas Air and Mahan Air.
  • Product Classification: Eligible aircraft and spare parts must be properly classified under export control regulations, as only explicitly referenced control entries will be allowed under this Licence. Further, as Eligible Aircraft must not be equipped with its controlled under certain ECCNs, including 600-series classifications, you must be able to evidence that these conditions are satisfied.
  • Policies and Procedures: Make sure you have a tailored compliance policy and procedures that address your corporate needs and provide guidance to the business on how to properly classify, use and comply with relevant licence conditions, and maintain relevant records - as well as identify any transactions that may be eligible for this Licence.
  • Monitoring and Assurance: Ensure you have mechanisms in place to review relevant transactions to ensure that Licence terms and conditions are being complied with, that policies and procedures are working in practice, and whether any adjustments to your operating model should be made.
  • Training and Awareness: Train affected business units and departments on the conditions of use so they are aware of any limitations and understand how to demonstrate compliance with these conditions.

If you have any questions about GLJ, whether you are eligible for its use, or identifying and mitigating compliance risk when using this Licence, please don’t hesitate to ask one of our crew members.

Stacey Toder Feldman is a Director in Deloitte’s Global Export Controls & Sanctions team
Concha Picón Muñoz is a Senior Associate in Deloitte’s Global Export Controls & Sanctions team