President Trump issued an Executive Order today re-imposing and, in some cases, expanding sanctions on Iran that had been lifted under the 2016 nuclear deal (the “JCPOA”), as today marked the end of the first “wind-down” period of 90 days following the President’s May 8 announcement that the US would no longer honor its sanctions commitments under the JCPOA. Some of the re-imposed sanctions will be effective tomorrow, August 7; others will come back into effect following the second (180-day) wind-down period ending November 4. In addition, OFAC issued additional answers to frequently asked questions on Iran sanctions, including guidance on the circumstances in which payments from Iranian parties can be received after the end of the wind-down periods. These actions are largely consistent with the President’s May 8 announcement and the earlier guidance that had been issued by OFAC on the re-imposition of Iran sanctions.
Effective August 7, the following sanctions that were lifted pursuant to the JCPOA, have been reimposed, including sanctions on certain support for and services related to the activities below:
- sanctions related to the purchase or acquisition of US dollar banknotes by the Government of Iran (see, e.g., subsection 1(a)(i) of the Executive Order);
- sanctions on Iran’s trade in gold or precious metals (see, e.g., subsection 1(a)(i) of the Executive Order and subsection 1245(a)(1)(A) of the Iran Freedom and Counter-Proliferation Act of 2012 (“IFCA”));
- sanctions on 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 (see, e.g., section 5 of the Executive Order and subsections 1245(a)(1)(B)-(a)(1)(C) and (c) of IFCA);
- sanctions on significant transactions related to 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 (see, e.g., section 6 of the Executive Order);
- sanctions on the purchase, subscription to, or facilitation of the issuance of Iranian sovereign debt (see, e.g., section 5 of the Executive Order and subsection 213(a) of the Iran Threat Reduction and Syria Human Rights Act of 2012); and
- sanctions on Iran’s automotive sector (see, e.g., subsections 2(a)(i) and 3(a)(i) of the Executive Order).
In addition, pursuant to actions already undertaken by OFAC, the following JCPOA-related “wind-down” authorizations will expire as of August 7:
- activities related to the importation of Iranian-origin carpets and foodstuffs;
- activities undertaken pursuant to specific licenses issued in connection with 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 (“JCPOA SLP”); and
- activities relating to contingent contracts for activities eligible for authorization under the JCPOA SLP.
Other sanctions that were lifted pursuant to the JCPOA will be reimposed effective November 5, 2018, including sanctions on certain support for and services related to the activities below:
- Sanctions on Iran’s port operators, and shipping and shipbuilding sectors, including on the Islamic Republic of Iran Shipping Lines (IRISL), South Shipping Line Iran, or their affiliates;
- Sanctions on petroleum-related transactions with, among others, the National Iranian Oil Company (NIOC), Naftiran Intertrade Company (NICO), and the National Iranian Tanker Company (NITC), including the purchase of petroleum, petroleum products, or petrochemical products from Iran;
- Sanctions on transactions by foreign financial institutions with the Central Bank of Iran (CBI) and designated Iranian financial institutions under section 1245 of the National Defense Authorization Act for FY 2012
- Sanctions on the provision of specialized financial messaging services to the CBI and certain Iranian financial institutions;
- Sanctions on the provision of underwriting services, insurance, or reinsurance; and
- Sanctions on Iran’s energy sector.
The Executive Order expands US sanctions on Iran by:
- providing new authority for blocking sanctions on persons that, on or after November 5, 2018, provide material support to or goods and services in support of certain persons, including those involved in the energy, shipping or shipbuilding sectors of Iran;
- providing new authority for correspondent and payable-through account sanctions on foreign financial institutions that are determined to have conducted or facilitated any significant financial transaction with certain persons on or after November 5, 2018;
- expanding the menu of sanctions that can be imposed on persons that knowingly engage in certain significant transactions, including those relating to petroleum, petroleum products, or petrochemicals from Iran; and
- expanding the scope of transactions by U.S.-owned or controlled companies that are prohibited to include transactions with persons blocked for being part of the energy, shipping or shipbuilding sectors or Iran or a port operator in Iran, among other transactions.
OFAC also has updated existing FAQs relating to the US withdrawal from the JCPOA (see updated FAQ 1.4 and new FAQs 2.3-2.7). For example, OFAC clarifies that it “looks to the industry standard” to determine whether particular goods or services are considered “fully provided or delivered” prior to the expiration of the relevant wind-down periods, but that “as a general matter” the party providing or delivering goods or services must perform all the actions and satisfy all the obligations necessary to be eligible for payment.