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As reported in our previous GT Alerts, on May 8, 2018, President Trump announced his decision to withdraw the United States from the Iran Joint Comprehensive Plan of Action (JCPOA), and on June 27, 2018, OFAC issued amended regulations and general licenses implementing the withdrawal.

The Office of Foreign Assets Control’s (OFAC) re-imposition of Iran sanctions pursuant to the U.S. withdrawal from the JCPOA was set up in two phases, with the first set of Iran sanctions “snapping back” Aug. 7, 2018, and the final set of sanctions snapping back Nov. 5, 2018. The main changes to the Iran sanctions that became effective Nov. 5 include:

  • Foreign Subsidiaries of U.S. Entities Again Subject to Iran Embargo: While the United States was a party to the JCPOA, activities in Iran by non-U.S. subsidiaries of U.S. companies were generally permissible under OFAC’s General License H. After the U.S. withdrawal from the JCPOA, OFAC revoked General License H and required U.S. companies’ foreign subsidiaries to wind down most of their previously authorized Iran-related activities by Nov. 4. With the end of the wind-down period, U.S. companies’ foreign subsidiaries once again must comply with the restrictions and prohibitions of the U.S. embargo against Iran.
  • Re-Imposition of Secondary Sanctions in Certain Sectors of the Iranian Economy: Effective Nov. 5, non-U.S. individuals and entities that do business with certain sectors of Iran’s economy will again be exposed to U.S. sanctions, including dealings with:
    • Iranian port operators, shipping, and shipbuilding sectors
    • Petroleum-related transactions (including the purchase of petroleum, petroleum products, or petrochemical products from Iran)
    • Certain Iranian financial institutions (including the Central Bank of Iran)
    • Iran’s energy sector

In a press statement, the State Department indicated that it will grant temporary exemptions from the petroleum-related sanctions restrictions to eight countries – China, India, Italy, Greece, Japan, South Korea, Taiwan, and Turkey – to allow them to continue to purchase oil from Iran.

  • Additions to the SDN List: Since May 8, 2018, OFAC has indicated it plans to relist persons and entities that were removed from the Specially Designated Nationals (SDN) List in January 2016 pursuant to the JCPOA. On Nov. 5, OFAC added over 700 persons to the SDN list, including parties that had been removed in connection with the JCPOA.

Even when the United States was a party to the JCPOA, U.S. persons remained prohibited from engaging in almost all dealings with Iran. However, the re-imposition of these sanctions represents a significant change in the permissibility of dealings in Iran undertaken by non-U.S. parties. In light of the changing legal landscape, it is important for businesses with international operations to assess compliance with these updated sanctions and ensure that non-U.S. parties understand the ways in which U.S. sanctions law may apply to them.

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Photo of Cyril T. Brennan Cyril T. Brennan

Cyril (Cy) Brennan focuses his practice on international trade regulation and compliance, with an emphasis on U.S. export controls and economic sanctions. Cy handles matters regarding the International Traffic in Arms Regulations (ITAR), the Export Administration Regulations (EAR), U.S. sanctions programs administered by…

Cyril (Cy) Brennan focuses his practice on international trade regulation and compliance, with an emphasis on U.S. export controls and economic sanctions. Cy handles matters regarding the International Traffic in Arms Regulations (ITAR), the Export Administration Regulations (EAR), U.S. sanctions programs administered by the Treasury Department’s Office of Foreign Assets Control (OFAC) and the Department of Commerce’s anti-boycott regulations. In addition, he represents clients before the Committee on Foreign Investment in the United States (CFIUS), and advises clients on the Foreign Corrupt Practices Act (FCPA), the foreign direct investment reporting requirements of the Bureau of Economic Analysis (BEA), and other trade and investment-related regulations in the context of mergers and acquisitions.

Photo of Kara M. Bombach Kara M. Bombach

Kara Bombach assists companies and organizations to lawfully export goods, technology and services around the globe. She places emphasis on helping clients achieve practical, workable solutions to complex regulatory situations arising under anti-corruption and anti-bribery measures (U.S. Foreign Corrupt Practices Act (FCPA) and

Kara Bombach assists companies and organizations to lawfully export goods, technology and services around the globe. She places emphasis on helping clients achieve practical, workable solutions to complex regulatory situations arising under anti-corruption and anti-bribery measures (U.S. Foreign Corrupt Practices Act (FCPA) and OECD Convention), export control laws (EAR and ITAR), anti-boycott laws, and special sanctions (embargoes) maintained by the U.S. government (OFAC and other agencies) against various countries (including Iran, Cuba and Russia), entities and individuals. In cases of foreign investment in the United States, Kara advises on the Exon-Florio provisions relating to U.S. national security concerns. She represents companies before the Committee on Foreign Investment in the United States (CFIUS), and also assists clients in mitigating foreign ownership, control or influence (FOCI) as may be required by CFIUS or U.S. national industrial security regulations.

Kara regularly represents clients in matters before U.S. government agencies, including the U.S. Departments of Commerce, State, Treasury and Defense. Kara has significant experience representing individuals and entities before OFAC in delisting matters and challenges to OFAC sanctions designations.

She advises national and multi-national companies (including Fortune® 5) on best practices in the development and delivery of compliance policies and procedures, training, and risk assessments, as well as executing cross-border export, sanctions and anti-corruption due diligence in mergers and acquisitions, targeted internal risk assessments, and compliance investigations.

Kara also counsels international not-for-profit and relief/aid organizations on best practices in economic sanctions, trade, and anti-corruption compliance issues that arise in their global operations, frequently in challenging and austere environments. She has provided legal services to organizations such as Save the Children (US), ONE Campaign, Mercy Corps, the International Committee of the Red Cross, Not on Our Watch/The Sentry, and The Enough Project.