US Companies Face Tough Choices on Palestinian Territory

As the United States continues to navigate its stance on the Israeli-Palestinian conflict, companies operating in the occupied territory are facing a daunting task: navigating the complex web of sanctions and regulations imposed by the Office of Foreign Assets Control (OFAC).

Understanding the Prohibitions

Since Hamas won control of the Palestinian Legislative Council in 2006, US persons have been prohibited from engaging in transactions with the Palestinian Authority unless authorized. But what does this mean for companies operating in the region?

• According to OFAC’s guidelines, the prohibitions are not territorial in nature but do apply to parts of the Palestinian Authority controlled by Hamas and other terrorist organizations.

Exceptions to the Rules

However, there are exceptions to these rules. OFAC has issued a series of “general licenses” authorizing certain transactions with the Palestinian Authority, including those related to:

• Humanitarian assistance
• Financial assistance to individuals

Companies operating in the region must also be aware of what constitutes a “prohibited transaction.” This can include trade or financial transactions that are not authorized by OFAC or exempted by statute.

Obtaining Licenses

To navigate these complex regulations, companies may need to obtain a license from OFAC. There are two types of licenses:

• General licenses: Authorize a particular type of transaction for a class of persons without the need to apply for a license.
• Specific licenses: Written documents issued by OFAC to a particular person or entity, authorizing a particular transaction in response to a written license application.

To obtain a license, companies must submit an application that includes all necessary information as required in the application guidelines or regulations pertaining to the particular embargo program. The mailing address for license applications is:

Office of Foreign Assets Control US Department of the Treasury

What if Your License Application is Pending?

OFAC will notify applicants in writing once a determination has been made on their application. Applicants are encouraged to wait at least two weeks before contacting the Licensing Division or Compliance Division to inquire about the status of their application.

Coordination with Other Agencies

As companies navigate these complex regulations, they must also be aware of the roles played by other agencies beyond Treasury. Many OFAC licensing determinations are guided by US foreign policy and national security concerns, which may require coordination with:

• The US Department of State
• Other government agencies

Tough Choices Ahead

In this uncertain environment, companies operating in the Palestinian territory face tough choices about how to proceed. Will they be able to obtain the necessary licenses to operate in the region? Only time will tell.