The Trump administration announced on May 8, 2018, that the United States would cease participation in the JCPOA and begin to re-impose nuclear-related sanctions that had been previously lifted, subject to two distinct wind-down periods.
Secondary sanctions that will be re-imposed after a 90-day wind-down period ending on August 6, 2018, create risk for non-U.S. companies transacting in Iran’s automotive sector; Iran’s trade in gold or precious metals; the direct or indirect sale, supply, or transfer to or from Iran of graphite, raw, or semi-finished metals such as aluminum and steel, coal, and software for integrating industrial processes; the purchase or sale of Iranian rials, or the maintenance of significant funds or accounts outside the territory of Iran denominated in the Iranian rial; the purchase or acquisition of U.S. dollar banknotes by the government of Iran; and the purchase, subscription to, or facilitation of the issuance of Iranian sovereign debt. After August 6, 2018, the U.S. government will also revoke authorizations covering the importation into the United States of Iranian-origin carpets and foodstuffs and certain activities undertaken in connection with commercial aircraft and related parts and services.
Further sanctions will be re-imposed after a 180-day wind-down period ending on November 4, 2018, including sanctions on entities previously designated as Specially Designated Nationals (SDNs) but which had been removed from the SDN List as part of the JCPOA relief; and sanctions relating to Iran’s port operations and shipping sectors; petroleum-related transactions; foreign financial transactions involving the Central Bank of Iran and other designated Iranian financial institutions; the provision of underwriting services, insurance, or reinsurance; and Iran’s energy sector. Again, these restored secondary sanctions target the activities of non-U.S. persons, as U.S. persons have remained largely prohibited from Iran transactions even after the JCPOA came into force.
Of interest to many U.S. companies with foreign subsidiaries, effective November 5, 2018, OFAC will revoke General License H, which had authorized U.S.-owned or -controlled foreign entities to engage in certain transactions with Iran. Companies operating under General License H should now take steps to wind down those activities.
We expect that more details on the snap-back of these sanctions will be published in the coming weeks, including how they will be implemented and how Iran and the EU countries will respond. If you would like additional information about the issues addressed in this client alert, please contact Rich Matheny or Jacob Osborn, or the Goodwin attorney with whom you typically consult.