15 August 2018

US (Re-)Imposes Far-Reaching Sanctions With Respect to Iran

Following the administration’s withdrawal of the United States from the Joint Comprehensive Plan of Action (JCPOA) in May 2018 and the expiry of the first of two accompanying wind-down periods on August 6, 2018, President Trump issued Executive Order 13846 Reimposing Certain Sanctions With Respect to Iran (EO 13846), which authorizes and imposes a range of sanctions targeting persons engaged in various transactions involving Iran.  OFAC concurrently released new FAQs regarding the EO 13846 and the newly-imposed sanctions.  EO 13846 not only re-imposes certain of the sanctions with respect to Iran that had previously been suspended pursuant to the JCPOA, but also broadens the scope of the pre-JCPOA sanctions.    

In particular, among other things, EO 13846:

  • Imposes blocking sanctions[1] targeting:
    • Any person that, on or after August 7, 2018, has materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services in support of, the purchase or acquisition of US bank notes or precious metals by the Government of Iran (GOI);
    • Persons that are part of the energy, shipping, or shipbuilding sectors of Iran, persons that operate ports in Iran, and persons that knowingly provide significant financial, material, technological, or other support to, or goods or services in support of any activity or transaction on behalf of any of the foregoing / any Iranian SDNs[2];
    • Any person that, on or after November 5, 2018, 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; and
    • Any person that, on or after November 5, 2018, has materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of: (i) any Iranian person listed as a Specially Designated National (SDN), or (ii) any SDNs that were designated pursuant to EO 13846.
       
  • Authorizes the Secretary of the Treasury to prohibit the opening or the maintenance of correspondence accounts or payable-through accounts in the United States by foreign financial institutions, or the imposition of strict conditions on the maintenance of such accounts, where such institutions have knowingly conducted or facilitated significant financial transactions:[3]
    • On or after August 7, 2018, for the sale, supply, or transfer to Iran of significant goods and services in connection with Iran’s automotive sector;
    • On or after November 5, 2018:
      • on behalf of any Iranian SDN or any SDN listed pursuant to EO 13846;[4]
      • with NIOC or NICO;[5] or
      • for the purchase, sale, transport, or marketing of petroleum or petroleum products[6] or petrochemical products from Iran.
         
  • Authorizes the imposition of menu-based sanctions, including any of a wide range of restrictions on export guarantees, export licenses, dealing in US Government debt or funds, US Government procurement contracts, visa authorizations, transactions in foreign exchange, transfers of credit or payments, loans, and imports into the US, or outright blocking sanctions, for any person[7] that:
     
    • On or after August 7, 2018, knowingly engages in a significant transaction for the sale, supply, or transfer to Iran of significant goods or services used in connection with Iran’s automotive sector;
    • On or after November 5, 2018, knowingly engages in a significant transaction for the purchase, acquisition, sale, transport, or marketing of petroleum, petroleum products,[8] or petrochemical products from Iran;
    • Is a successor entity to any of the foregoing;
    • Owns or controls a person that is one of the foregoing, and had knowledge of such person’s activities; or
    • Is owned or controlled by, or is under common ownership or control with, any of the foregoing and knowingly participated in the requisite sanctionable activities.
       
  • Authorizes the imposition of sanctions on foreign financial institutions that, after August 7, 2018, have knowingly conducted or facilitated any significant transaction related to the purchase or sale of Iranian rials, or derivatives, swaps, futures, forwards, or similar contracts whose value is based on the exchange rate of the Iranian rial, or that have maintained significant funds or accounts, outside of Iran, denominated in Iranian rials.  The applicable sanctions for any such foreign financial institutions may include (i) the prohibition on opening or maintaining any correspondence accounts or payable-through accounts in the United States, or the imposition of strict conditions on the maintenance of such accounts, or (ii) blocking sanctions.
     
  • Authorizes the imposition of blocking sanctions targeting persons[9] who have:
     
    • On or after January 2, 2013, engaged in any activities related to corruption in Iran, including diversion and/or sale or resale of goods (e.g. food and medicine) intended for the people of Iran;
    • On or after August 10, 2012, knowingly transferred or facilitated the transfer of goods or technology to Iran or Iranian persons when such goods, services or technology were likely to be used by the GOI, including its agents and instrumentalities, to commit serious human rights abuses against the people of Iran;
    • Engaged in censorship or the limitation of expression or assembly in Iran, including by way of limiting access to media and jamming or restricting international signals; or
    • Provided any assistance or support to any persons blocked pursuant to the foregoing restrictions or in support of such sanctionable activities.
       
  • Prohibits entities that are located outside of the United States, but which are owned or controlled by US persons, from knowingly engaging in any transactions, directly or indirectly, with the GOI or any person subject to the GOI’s jurisdiction, to the extent that such transaction would be prohibited if entered into by a US person or in the United States.

 
If you have any questions or would like to discuss any of these matters further, please contact any of the authors listed on this page or your usual contact at Allen & Overy.  For more information on our global sanctions practice and team please click here.

 

[1] Whereby all property and interests in property of the sanctioned entity that are in the United States, that thereafter come within the United States, or that are or thereafter come within the possession or control of any US person are blocked, and may not be transferred, paid, exported, withdrawn, or otherwise dealt in.

[2] Other than persons described in section 1244(c)(3) of the Iran Freedom and Counter-Proliferation Act of 2012.

[3] Certain exceptions apply for transactions for provision (including sale) of agricultural commodities, food, medicine, or medical devices.

[4] Other than an Iranian depository institution whose property and interests in property are blocked solely due to Executive Order 13599.

[5] Except for sale or provision to NIOC or NICO of certain products authorized through applicable legislation, provided that the fair market value of such products is lower than the applicable dollar threshold specified in that provision.  There is also an exception for instances in which the transaction in question is for the sale, supply, or transfer to or from Iran of natural gas, the transaction is solely for trade between Iran and the country with jurisdiction over the foreign financial institution in question, and the funds owed to Iran as a result of such trade are credited to an account located in the country with jurisdiction over the foreign financial institution in question.

[6] The petroleum / petroleum products restriction is subject to a finding that there is a sufficient supply of petroleum and petroleum products from elsewhere to allow significant reduction of purchases of same from Iran by or through foreign financial institutions, and also that there is no applicable legislative exemption.

[7] NB that the principal executive officer(s) or similar personnel of any such person may be subject to the same sanctions as the sanctioned person itself.

[8] The petroleum / petroleum products restriction is subject to a finding that there is a sufficient supply of petroleum and petroleum products from elsewhere to allow significant reduction of purchases of same from Iran by or through foreign financial institutions, and also that no legislative exception applies.

[9] NB these restrictions also apply to persons who are owned or controlled by, or who are acting for, persons blocked accordingly.

Ken Rivlin
Partner, New York ken.rivlin@allenovery.com
Maura Rezendes
Senior Senior, Washington D.C. maura.rezendes@allenovery.com
Kuang Chiang
Associate, Washington D.C. kuang.chiang@allenovery.com
Nick Ognibene
Associate, New York nick.ognibene@allenovery.com
Tracy French
Associate, Washington D.C. tracy.french@allenovery.com
Pierce Young
Law Clerk, New York pierce.young@allenovery.com

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