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 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.
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 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. Information about how to request a specific license or interpretive guidance can be found here and at 31 C.F.R. 501.801.