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U.S. financial institutions have been given permission to process humanitarian payments that intersect with the Central Bank of Iran, days after the Islamic Republic began reeling from a deadly outbreak of the coronavirus disease.

A general license issued by the Treasury Department on Thursday restores U.S. lenders’ ability to handle funds for medicine, medical devices and other humanitarian goods bound for Iran that had been permitted until September 2019, when the White House targeted CBI with an especially strict counterterrorism authority, Executive Order 13224.

The exemption also allows foreign lenders to facilitate the same trade without risking the loss of access to the U.S. financial system, according to guidance that the department’s Office of Foreign Assets Control, or OFAC, published in conjunction with the general license.

All other financial dealings with CBI remain the target of sweeping restrictions triggered by E.O. 13224, as well as the institution’s addition to OFAC’s list of Specially Designated Nationals, or SDNs, in November 2018, after the U.S. withdrew from a global nuclear accord.

OFAC separately disclosed that it has formalized a mechanism with Switzerland through which Swiss banks will not incur U.S. secondary sanctions for transactions tied to shipments of food and medicine to Iran, as long as they conduct enhanced due diligence to ensure that those goods are not diverted to the benefit of the Iranian regime.

On Jan 27, an unidentified Alpine lender processed a €2.3 million payment for exports of anti-cancer medication to Iran in a test run of the mechanism, the Swiss Humanitarian Trade Arrangement, or SHTA. U.S. authorities said they are willing to develop similar mechanisms with other countries and financial institutions.

“It appears that CBI had to be involved somehow in SHTA and thus the GL [general license] was necessary,” said Erich Ferrari, a sanctions attorney in Washington, D.C. “I actually do believe this could move the needle substantially.”

OFAC on Thursday did not explicitly reference the COVID-19 epidemic in Iran, which has thus far infected more than 250 people, including two lawmakers and two senior government officials, and killed at least 26.

The timing of the license, however, suggests an attempt to dispel claims that U.S. sanctions have hamstrung Iran’s response to the crisis, as well as broader concerns that using E.O. 13224 against CBI unfairly impacts the Iranian people, said Farhad Alavi, an attorney with Akrivis Law Group in Washington, D.C.

The outcome of OFAC’s relaxation of the executive order depends on whether banks and exporters learn of the opportunity and take interest in it.

“Frankly, there are less reported but perhaps more serious internal issues in Iran,” Alavi wrote in an email to ACAMS moneylaundering.com. “Will they [Iranian authorities] reduce the red tape that also keeps a large part of these humanitarian goods out?”

On Feb. 21, the Financial Action Task Force reinstituted all of its previously suspended countermeasures against Iran—including its call for nations to ban the provision of correspondent accounts to Iranian lenders—after the country failed to address lapses in its anti-money laundering regime by the group’s deadline.

Contact Valentina Pasquali at vpasquali@acams.org