Alert
Alert
01.22.14
On January 20, 2014, the U.S. Treasury and State Departments took steps to implement temporary and limited changes to U.S. sanctions policy for Iran as agreed under the interim nuclear deal reached by Iran and the P5 + 1 countries. Most U.S. sanctions on Iran remain in place and will continue to be enforced. Between January 20 and July 20, 2014, non-U.S. individuals and companies (unless U.S. owned or controlled) will not face U.S. sanctions enforcement if they engage in specified transactions relating to the (a) export of Iranian petrochemical products, (b) provision of goods and services for Iran’s auto industry, (c) sale of gold and precious metals to or from Iran and (d) provision of insurance and transport services associated with sales of Iranian oil to six specified countries. The U.S. government also has adopted a favorable licensing policy in specified cases for the provision of goods and services to Iran’s civil aviation industry by U.S. persons, U.S. owned/controlled foreign entities and non-U.S. persons for transfer of U.S. goods or technology. The U.S. also is taking steps to facilitate certain humanitarian and medical trade with Iran, payment of UN dues and support for Iranians studying abroad.
The P5 + 1 (U.S., UK, France, China, Russia and Germany) reached an interim agreement (the “Joint Plan of Action”) with Iran on November 24, 2013 aimed at limiting Iran’s uranium enrichment and potential for nuclear weapons development. On January 20, 2014, the International Atomic Energy Agency verified that Iran had met its initial obligations under the Joint Plan of Action, leading to implementation of U.S. and European Union (“EU”) sanctions commitments. These sanctions changes are temporary and will be maintained only during negotiations and while Iran continues to meet its reciprocal obligations. The interim agreement is scheduled to last for six months until July 20, 2014, with the possibility of renewal, and the parties are expected to negotiate toward a potential final agreement during that time period.
The U.S. government implemented the changes via issuance of a written guidance document from the Treasury and State Departments (the “Guidance”), together with a separate statement of licensing policy for Iran’s civil aviation industry from the Office of Foreign Assets Control (“OFAC”). No executive order or OFAC general licenses were issued, and the changes are being made primarily in the form of forbearance by U.S. government in not imposing sanctions on non-U.S. persons. The Obama administration invoked its waiver authority under several relevant statutes to allow these changes, with no action required from Congress.
Companies should bear in mind three key limitations in assessing the U.S. changes: (A) The Guidance applies only to transactions and activities that are initiated on or after January 20, 2014 and completed by July 20, 2014 (the “JPOA Period”), including receipt of payments. (B) Except as indicated the changes do not apply to transactions with Specially Designated Nationals and blocked parties (“SDNs”) or to sanctions imposed under the U.S. counter-terrorism and counter-proliferation regimes. (C) Except for the aviation sector licensing policy, the Guidance generally will apply only to non-U.S. companies that are not owned or controlled by U.S. persons (“Qualifying Foreign Companies”) and, further, U.S. persons may be required to make SEC disclosures of the activities of their foreign affiliates relating to Iran (whether or not they own/control the affiliates) pursuant to Section 219 of the Iran Threat Reduction & Syria Human Rights Act of 2012 (“TRA”).1
The Guidance addresses six temporary changes to U.S. sanctions policy:
Non-U.S. financial institutions asked to provide or facilitate services under the Joint Plan of Action should proceed cautiously and note the requirements under the Guidance, particularly in relation to authorized SDNs and Iranian depository institutions. For other aspects of the Joint Plan of Action, including the repatriation of $4.2 billion being organized by P5+1 and the humanitarian trade mechanisms, banks will be directly notified by the U.S. Government in writing to arrange and authorize participation.
The EU on January 20, 2014 also temporarily adjusted its sanctions policies for Iran to implement the Joint Plan of Action. The changes generally parallel those made by the United States. The EU increased its threshold for financial transfers to and from Iran requiring authorization ten-fold to €400,000 for most transactions and to €1,000,000 for food, medical equipment, agricultural and humanitarian transactions.
Download: United States Implements Temporary Changes to Iran Sanctions under Interim Agreement