Treasury’s Informational Licensing Guidance for Humanitarian NGOs Falls Short

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Date: 
October 24, 2014

On Oct. 17, 2014 the U.S. Treasury Department's Office of Foreign Assets Control (OFAC) released Guidance Related to the Provision of Humanitarian Assistnace by Not for Profit Non-Governmenal Organizations, intended to provide clarification for nonprofits seeking licenses for activities that would otherwise be prohibited by economic sanctions programs. The document states it “does not have the force of law” and does not include key proposals made by nonprofits, such as clear standards for nonprofit licenses and timelines for decisions on license applications.  It does not address the needs of development, peacebuilding, human rights or other types of nonprofit programs abroad.  The licensing process has been criticized by nonprofits for being slow and non-transparent.  The Guidance is a step in the right direction but more will need to be done to address problems nonprofits have experienced, most glaringly seen in the Somalia famine of 2011. For an analysis see the Charity & Security Network statement calling for stronger administration policy to facilitate U.S. nonprofits' ability to work in global hot spots.

The two-page document provides some clarification of the status quo in four areas:

1.)    States that economic sanctions programs are “not in opposition to” humanitarian assistance.

2.)    OFAC prioritizes applications and inquiries from nonprofits seeking to provide humanitarian assistance “consistent with U.S. foreign policy...”

3.)    No license is needed in countries that are not subject to sanctions “so long as they are not dealing with persons blocked by sanctions,” which are people or groups on Treasury’s terrorist list or “any entity owned 50% or more by blocked persons.” (Countries subject to sanctions Cuban, Iran, Sudan and Syria.)

4.)    In areas controlled by armed groups where the leader, but not the group, has been put on the list.  In these cases transactions, including taxes and access payments, with the group itself are not prohibited. However the guidance says due diligence should be employed to ensure the listed person is not profiting from the transactions.

Two additional paragraphs state OFAC’s policy on enforcement:

5.)    OFAC incorporates a policy from its 2011 Frequently Asked Questions on Somalia, saying incidental benefits to listed groups that are made unwittingly in times of urgent need and in the context of unstable and dangerous environments, “are not a focus for OFAC sanctions enforcement.”   This does not preclude imposition of sanctions, including asset freezes and being listed as a terrorist supporter, but it indicates the current administration is unlikely to pursue them where the nonprofit exercises due diligence and aid leakage is “unwitting.”

6.)    Where minimal, incidental payments of fees and taxes to listed groups are necessary to access civilians, OFAC says it will work with nonprofits to address the situation on a case-by-case basis. This will be an interagency process, and although OFAC promises it will be handled in “an expeditious manner” there is nothing concrete to indicate a change in the pattern of delays that nonprofits say hinders program implementation.

The Guidance came about after InterAction and several of its members engaged in a ten month long dialog with the State and Treasury Departments to address problems humanitarian organizations have experienced with the licensing system. The dialog began after release of a report that documented the way U.S. legal restrictions impaired the response to the Somalia famine in 2011. InterAction’s response to the resulting Guidance was to note that:

“Despite the positive steps that this new guidance represents, InterAction and our members believe that Treasury and State have not gone far enough to prevent a repeat of the Somalia catastrophe. We believe the guidelines should have included clear criteria for decisions and a firm time frame for review of our community’s OFAC license applications....” 

The Charity & Security Network submitted proposals to make the licensing process more accountable and transparent in July 2013, but despite several requests to meet and discuss the issues, Treasury never responded.

For background information see U.S. Civil Society Submission to the UN Human Rights Commission, Sept. 15, 2014, describing human rights problems with the licensing system.