Sanctions Compliance: Dual Constraints of US OFAC General Licences and Chinese Export Control Law

1. Key takeaways

Medical device business involving Iran is subject to the constraints of two independent legal systems at the same time: the general licences and the specific authorisation lists under the United States Iranian Transactions and Sanctions Regulations (ITSR), and the export control obligations under the Export Control Law of the People’s Republic of China. GRZAN’s judgment is that the humanitarian category — pharmaceuticals and medical devices — usually enjoys a channel within the sanctions framework, but an available channel is not the same as case-specific compliance. Three checks must be made case by case: whether the product falls on the list of items requiring specific authorisation, whether the counterparty is a designated party, and whether the settlement and logistics routes are compliant. Failing any one of the three can void the benefit of the general licence, and the failure mode is rarely dramatic — it is typically a spare part, a software update, or a bank that declines the transaction. Because the two legal systems are independent, satisfying one never satisfies the other: a US general licence does not remove the duty to assess the transaction under Chinese law, and a Chinese export control clearance does not remove the duty to check the OFAC lists. Companies should therefore run both assessments in parallel for every transaction, and keep evidence of both.

• Two independent systems apply together: the US ITSR with its general licences and specific authorisation lists, and the Chinese Export Control Law.
• The humanitarian category — pharmaceuticals and medical devices — usually has a channel, but channel availability does not equal case-specific compliance.
• Three case-by-case checks: the product against the specific authorisation list, the counterparty against designations, and the settlement and logistics routes.
• The OFAC list of medical devices requiring specific authorisation is updated periodically; the current version governs.
• Chinese law obligations are independent: items and end users must be assessed under the Chinese Export Control Law regardless of the US general licence.

2. Legal basis

The dual constraint described here rests on the US regulatory framework, on the Chinese export control statute, and on the Iranian authorisation requirement for medical products. The items below state each basis and its verification status.

1. United States Iranian Transactions and Sanctions Regulations (ITSR), 31 C.F.R. Part 560, in which § 560.530 sets the licence policy for agricultural products, medicines and medical devices; the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) maintains the List of Medical Devices Requiring Specific Authorization, which is updated periodically.
2. Export Control Law of the People’s Republic of China, adopted on 17 October 2020 at the 22nd session of the Standing Committee of the 13th National People’s Congress and effective on 1 December 2020, Article 2 (scope of controlled items) and Article 12 (control lists and temporary controls).
3. Law on Regulation of Medical, Pharmaceutical and Food and Beverage Affairs, FAOLEX LEX-FAOC227692, dated 20 June 1955, Article 3.

3. Expert insights

Insight 1: the scope of the general licence has clear boundaries. The ITSR provides a general licence channel for EAR99-class medical devices, but the categories on the specific authorisation list — such as certain oxygen-generation and imaging equipment — and transactions directed to military or law-enforcement end users require specific authorisation. The list is updated, and the current version governs. The boundary between the general channel and the specific authorisation requirement runs through the product classification and the end user, not through the buyer’s assurances. Verifying both, against the version of the list current at the time of each transaction, is the only way the general licence protection can be relied on with confidence.

Insight 2: parts and software have their own rules. Replacement parts are supplied under a one-to-one principle, and software and services can be authorised provided no restricted parties are involved. These details are frequently overlooked by companies, which leads to violations in the aftermarket stage — long after the original export was cleared. The original sale and the aftermarket are separate compliance events: a device that entered Iran lawfully does not carry its authorisation forward automatically to its spare parts, its software updates or its service engineers. Aftermarket flows therefore need their own screening, not a reference back to the original transaction file.

Insight 3: the obligations under Chinese law are independent. Article 2 and Article 12 of the Export Control Law of the People’s Republic of China establish the regime of controlled items and control lists. Chinese companies exporting to Iran must equally complete the compliance assessment under Chinese law; the fact that the United States grants a general licence does not remove the need for the review under Chinese law. The two assessments ask different questions of the same transaction — what the items are and who the end users are — and both answers must be documented before shipment.

4. Practical recommendations

• Build a case-by-case check sheet: whether the product is on the specific authorisation list, whether the counterparty is designated, and whether the settlement and logistics routes are compliant.
• Use the current version of the lists: check the latest version of the OFAC list before every transaction.
• Review the aftermarket separately: verify the one-to-one principle for parts and the authorisation rules for software and services as their own checks.
• Judge independently under Chinese law: complete the review of exported items and end users under the Export Control Law of the People’s Republic of China, and apply for a licence or seek professional advice where necessary.

5. Verification checklist

• □ The products to be exported have been checked against the current version of the OFAC List of Medical Devices Requiring Specific Authorization
• □ Counterparties (importer, end user, banks) have completed sanctions list screening
• □ The settlement and logistics routes have completed a compliance assessment
• □ The authorisation rules for parts supply and software services have been checked separately
• □ An independent compliance judgment under Chinese law has been completed under the Export Control Law of the People’s Republic of China

Regulatory information verified as of 29 October 2026.

How GRZAN can help. GRZAN provides medical device and IVD registration, quality system, authorised representative and local testing support for the Iranian market. Our team coordinates local import arrangements, and supports post-market vigilance obligations. Business enquiries: info@grzanglobal.com