by Robert Ward | Nov 7, 2018 | Iran
November 4, 2018 was the last day of the 180-day wind-down period following President Trump’s May 8, 2018 announcement to withdraw the US’ participation from the Joint Comprehensive Plan of Action (the Nuclear Deal). On November 5, 2018, the US fully reimposed the sanctions on Iran that had been lifted under the Nuclear Deal. These tough sanctions on Iran target critical sectors of Iran’s economy, including the energy, shipping and shipbuilding, as well as financial sectors.
As part of the re-imposition of U.S. sanctions against the Iranian regime, OFAC sanctioned more than 700 individuals, entities, aircraft, and vessels on November 5, 2018.
Additionally, on November 5, 2018, OFAC moved persons identified as meeting the definition of the terms “Government of Iran” or an “Iranian financial institution” from the List of Persons Blocked Solely Pursuant to E.O. 13599 (the “E.O. 13599 List”) to the SDN List and removed the E.O. 13599 List from its website. This, in effect, moved these persons back into “blacklisted” status.
Notably, the Wall Street Journal reported November 7, 2018 at https://www.wsj.com/articles/new-sanctions-new-hurdles-for-western-firms-still-doing-business-in-iran-1541620289?
“For some Western companies whose dealings with Iran are primarily limited to export, the trade had already subsided so much as a result of Iran’s economic woes that the new U.S. restrictions are unlikely to have a major impact.
The Iranian rial’s sharp loss in value caused California-based Del Monte to stop exporting packaged food to Iran several months ago because its products were suddenly much more expensive.
‘They are very cautious to not buy food from outside,’ Muhammad Adil Imtiaz, a Dubai-based sales manager for Del Monte, said of Iranian buyers. ‘For consumers buying any product, not just food but garments and electronics, the prices have changed completely on the shelves.'”
The impact of the re-imposed sanctions were already having the intended impact prior to November 5, 2018. For example as reported in the same above article, the Europeans are resorting to creating an alternative financing vehicle to operate outside the U.S. financial system in effort to permit EU countries to continue to adhere to the Iran Nuclear Deal, an effort that has met with many snags.
by Robert Ward | Aug 10, 2018 | Uncategorized, Iran
The Trump Administration issued Executive Order 13846 on August 6, 2018 right at the start of the first wind-down period for U.S. persons to begin ceasing business with Iran. The key parts of the Order impose blocking sanctions relating to support for the Government of Iran’s purchase or acquisition of U.S. bank notes or precious metals; certain Iranian persons; and Iran’s energy, shipping, and shipbuilding sectors and port operators.
These new sanctions come in two wind-down phases; one starting August 7, 2018; the other starting November 5, 2018. The Order provides specifically for the Secretary of the Treasury to require U.S. persons to block (including to refuse to transfer, pay, export, withdraw, or otherwise deal in) all property and interests in property that are in, come within or that come within the possession or control of any U.S. person of such designated person. Please note these are designations referred to as secondary sanctions. The U.S. Government can impose these latter sanctions even against parties located outside Iran in instances where the following occurs.
“(i) on or after August 7, 2018, the person has
materially assisted, sponsored, or provided financial,
material, or technological support for, or goods or
services in support of, the purchase or acquisition of
U.S. bank notes or precious metals by the Government
of Iran;
(ii) on or after November 5, 2018, the person has
materially assisted, sponsored, or provided financial,
material, or technological support for, or goods or
services in support of, the National Iranian Oil
Company (NIOC), Naftiran Intertrade Company (NICO),
or the Central Bank of Iran;
(iii) on or after November 5, 2018, the person has
materially assisted, sponsored, or provided financial,
material, or technological support for, or goods or
services to or in support of:
(A) any Iranian person included on the list of
Specially Designated Nationals and Blocked
Persons maintained by the Office of Foreign
Assets Control (SDN List) . . . ; or
(B) any other person included on the SDN List
whose property and interests in property are
blocked pursuant to subsection (a) of this
section or Executive Order 13599 . . . ; or
(iv) pursuant to authority delegated by the
President and in accordance with the terms of such
delegation, sanctions shall be imposed on such person
pursuant to section 1244(c)(1)(A) of IFCA* because the
person:
(A) is part of the energy, shipping, or
shipbuilding sectors of Iran;
(B) operates a port in Iran; or
(C) knowingly provides significant financial,
material, technological, or other support to, or
goods or services in support of any activity or
transaction on behalf of a person determined
under section 1244(c)(2)(A) of IFCA to be a
part of the energy, shipping, or shipbuilding
sectors of Iran; a person determined under
section 1244(c)(2)(B) of IFCA to operate a port
in Iran; or an Iranian person included on the
SDN List (other than a person described in
section 1244(c)(3) of IFCA).”
*ICFA=Iran Freedom and Counter-Proliferation Act of 2012
by Robert Ward | Jul 5, 2018 | Iran
The Department of the Treasury’s Office of Foreign Assets Control (OFAC) has revoked on June 27, 2018 Iran-related General Licenses H and I, which were issued in connection with the Joint Comprehensive Plan of Action (JCPOA) respecting Iran. Due to the Trump administration’s withdrawal from the JCPOA on May 8, 2018, OFAC amended the Iranian Transactions and Sanctions Regulations (ITSR) at 31 C.F.R. Part 560 to set forth a timeline for winding down activities under both these General Licenses.
The timeline is as follows:
General License I – authorized wind-down through August 6, 2018 [Former License covered Certain Transactions Related to the Negotiation of, and Entry into, Contingent Contracts for Activities Eligible for Authorization Under the Statement of Licensing Policy for Activities Related to the Export or Re-export to Iran of Commercial Passenger Aircraft and Related Parts and Services]
General License H – authorized wind-down through November 4, 2018 [Former License covered Certain Transactions relating to Foreign Entities Owned or Controlled by a United States Person]
In addition, the ITSR amendments provide for the winding down through August 6, 2018 of transactions related to the importation into the United States of, and dealings in, certain foodstuffs [i.e., intended for human consumption that are classified under chapters 2–23 of the Harmonized Tariff Schedule of the United States]; and in carpets [i.e., carpets and other textile floor coverings and carpets used as wall hangings that are classified under chapter 57 or heading 9706.00.0060 of the Harmonized Tariff Schedule of the United States].
Finally, the ITSR amendments provide for the winding down through August 6, 2018 of ancillary transactions related to letters of credit and brokering services covering those same certain foodstuffs and carpets.
by Robert Ward | May 8, 2018 | Iran
On Tuesday May 8, 2018, President Trump announced his decision to withdraw the United States from the Joint Comprehensive Plan of Action respecting the multi-lateral agreement on Iran’s nuclear program. Citing evidence that Iran has violated the agreement, the President moved forward in unilaterally pulling the United States out of the deal, contrary to the wishes of European allies who had hoped to negotiate add-ons to the current arrangement. The decision means that sanctions previously in place in 2015 will be fully reinstated.
Compliance practitioners should be mindful of the 90 day and 180 day grace periods for unwinding business transactions involving Iran that will now once again become illegal through the reinstatement of sanctions.
