Scope - What This Guide Covers
This guide focuses on managing the revocation of OFAC Iran General License X (GL X) and its replacement with the more restrictive General License X1 (GL X1). It outlines wind-down authorization parameters, payment handling requirements, and compliance actions required between July 7 and July 17, 2026.
Use this guide when:
- Assessing if existing transactions qualify for wind-down treatment under GL X1
- Determining payment routing requirements for blocked persons
- Documenting compliance rationale for transactions during the wind-down period
- Training your team on the distinction between authorized wind-down activities and prohibited new transactions
Key Concepts and Definitions
Wind-down authorization: A temporary license allowing only activities necessary to complete or terminate previously authorized transactions. It doesn't permit new activities.
Ordinarily incident and necessary: Standard activities required to fulfill existing contracts or safely end business relationships. This excludes discretionary actions or contract modifications.
Blocked persons: Individuals or entities on OFAC's Specially Designated Nationals and Blocked Persons List (SDN List) whose property and interests are blocked under US sanctions regulations.
General license: An OFAC authorization permitting certain transactions without case-by-case approval. Unlike specific licenses, general licenses apply broadly to all parties meeting stated conditions.
Requirements Breakdown
Timeline Requirements
July 7, 2026: GL X revoked. No new transactions authorized from this date.
Through 12:01 am EDT, July 17, 2026: Wind-down activities permitted under GL X1.
After July 17, 2026: Wind-down authorization expires. Continuing activities require a specific license from OFAC or fall under a different general license.
Transaction Scope Under GL X1
Authorized: Activities necessary to wind down transactions previously authorized by GL X. This includes finalizing deliveries, completing payment transfers for goods already sold, and terminating contracts.
Prohibited: Any new transactions, including purchases or loading of Iranian crude, petrochemical products, or petroleum products on or after July 7, 2026.
Payment Handling Requirements
New requirement: GL X1 mandates that payments to blocked persons be deposited into an interest-bearing account in the United States.
Implication: You can't route payments through non-US banks or settle directly to accounts outside US jurisdiction. Funds must remain accessible to OFAC and accrue interest while blocked.
Implementation Guidance
Step 1: Inventory Transactions Authorized Under GL X
Within 24 hours of the July 7 revocation, compile a list of all transactions processed or facilitated under GL X. Document:
- Transaction date and parties involved
- Products covered (crude, petrochemical products, petroleum products)
- Current status (completed, in transit, pending payment)
- Remaining obligations under the original authorization
This inventory is your defensible universe of transactions eligible for wind-down treatment.
Step 2: Classify Wind-Down vs. New Activity
For each transaction, determine if activities qualify as wind-down. Use this framework:
Wind-down activities:
- Completing delivery of products loaded before July 7
- Processing payments for goods delivered or in transit
- Executing final reconciliation and closing documentation
- Terminating contracts according to existing terms
Not wind-down (requires specific license or is prohibited):
- Negotiating contract extensions or modifications
- Purchasing or loading additional products after July 7
- Establishing new payment terms or schedules
- Creating new contractual relationships
If classification isn't clear, document your reasoning and escalate to your MLRO or sanctions counsel. Don't assume flexibility where the license text is silent.
Step 3: Reroute Payments to US Interest-Bearing Accounts
If your payment processing routes funds to blocked persons through non-US accounts, establish compliant payment channels by July 17. Work with your treasury operations team to:
- Identify a US financial institution to hold blocked funds
- Open interest-bearing accounts meeting OFAC requirements
- Update payment instructions for affected transactions
- Notify counterparties of new routing requirements
The interest-bearing requirement isn't optional. If you can't establish a compliant account structure, you can't complete the payment under GL X1.
Step 4: Document Your Compliance Basis
For every wind-down transaction, create a compliance file that includes:
- Reference to GL X as the original authorization
- Reference to GL X1 as the wind-down authorization
- Explanation of why the activity qualifies as ordinarily incident and necessary
- Evidence that no new transactions or post-July 7 loading occurred
- Confirmation of US interest-bearing account routing for blocked person payments
You're building the record OFAC will review if they examine your wind-down activities. Assume you'll need to defend every decision.
Common Pitfalls
Pitfall 1: Treating wind-down as a grace period for new business
Wind-down authorization doesn't give you 10 extra days to conduct business as usual. If you initiate a new purchase, negotiate a new contract, or load products after July 7, you're outside GL X1's scope, even if you complete the transaction before July 17.
Pitfall 2: Assuming oral guidance supersedes the license text
As of this publication, Treasury, State, and the White House haven't issued additional guidance on GL X1. Don't rely on informal interpretations from industry contacts or non-OFAC government officials. The license text controls.
Pitfall 3: Missing the payment routing requirement
The requirement to deposit payments to blocked persons into US interest-bearing accounts is new under GL X1. If you process a wind-down payment through your standard banking channels without confirming US account compliance, you've violated the license terms.
Pitfall 4: Failing to sunset your screening exceptions
If you configured your sanctions screening system to permit GL X transactions, remove or modify those exceptions by July 7. Your screening rules should block new Iranian crude and petrochemical transactions immediately, while allowing only documented wind-down activities through July 17.
Pitfall 5: Continuing activities after the wind-down deadline
July 17 at 12:01 am EDT is a hard cutoff. If you have wind-down activities you can't complete by that deadline, apply for a specific license from OFAC before the deadline expires. Don't assume you can finish "just one more payment" on July 18.
Quick Reference Table
| Element | GL X (Revoked) | GL X1 (Wind-Down) |
|---|---|---|
| Valid through | Would have expired August 21, 2026 | Expires July 17, 2026, 12:01 am EDT |
| New transactions | Authorized production, delivery, and sale | Explicitly prohibited |
| Scope | Iranian crude, petrochemical products, petroleum products | Activities ordinarily incident and necessary to wind down GL X transactions |
| Purchases/loading after July 7 | N/A (license revoked) | Prohibited |
| Payment routing | Not specified | Must use US interest-bearing accounts for blocked persons |
| Documentation required | Standard transaction records | Wind-down justification, GL X reference, compliance basis |
| Fallback after expiration | N/A | Specific license required |
When to escalate: If you're uncertain whether an activity qualifies as wind-down, can't establish compliant payment routing before July 17, or have continuing obligations beyond the wind-down deadline, escalate to your sanctions counsel immediately. The 10-day window doesn't leave room for wait-and-see approaches.
