The United States will continue to take enforcement action against those who seek to evade or circumvent sanctions.
As part of the implementation of the initial understanding with Iran, pursuant to the Joint Plan of Action among the United States and certain of its trading partners ("the Agreement") regarding the rollback of Iran's nuclear program, the Office of Foreign Assets Control (OFAC) has published guidance affecting sanction relief for the period beginning on January 20, 2014, and ending on July 20, 2014 ("the Period").
With limited exceptions, the relief from sanctions does not apply to U.S. persons. Moreover, the United States retains the right and authority to continue imposing sanctions for activities that occurred prior to January 20, 2014, and to impose sanctions regarding activities that occur during the Period "to the extent such activities are materially inconsistent with sanctions relief described in [the Agreement]." The United States will continue to take enforcement action against those who seek to evade or circumvent sanctions.
As noted above, with the exception of civil aviation and humanitarian activities described in the guidance, none of the sanctions relief outlined in the guidance involves "a U.S. person, or, as applicable, a foreign entity owned or controlled by a U.S. person, if otherwise prohibited under any sanctions program" as defined by OFAC and/or Department of State sanctions provisions. The guidance refers to programs administered by the U.S. government.
The Agreement provides for the temporary suspension of sanctions related to Iran's export of petrochemical products, correspondent or payable-through account sanctions, blocking sanctions and so-called menu-based sanctions for activities that begin and end within the Period. Menu-based sanctions refer "to menus of sanctions that the [United States] may impose in response to conduct specified [in certain Executive Orders (E.O. 13622 and 13654)]."
The Agreement also lifts certain sanctions related to Iran's auto industry and associated services—particularly, correspondent or payable-through account sanctions with respect to foreign financial institutions—that during the Period, knowingly "conduct or facilitate financial transactions for the sale, supply, or transfer to Iran of significant goods or services used in connection with the automotive sector of Iran." The activity must be wholly within the Period. Also, the menu-based sanctions will not be imposed, provided that the transactions do not involve persons on the OFAC List of Specially Designated Nationals and Blocked Persons (SDN) other than any Iranian depository institution listed solely pursuant to E.O. 13599.
The Agreement also lifts certain sanctions relating to "gold and precious metals, as well as sanctions on associated services." For details, please refer to the guidance and the underlying sanctions provisions as modified by the Agreement.
The Agreement provides for temporary licensing of "the supply and installation in Iran of spare parts for safety of flight for Iranian civil aviation and associated services. License safety related inspections and repairs in Iran as well as associated services" are also covered by temporary licensing.
Sanctions waivers are also available under specifically identified transactions as noted in the guidance.
For Further Information
If you would like further information about this Alert, please contact Brian S. Goldstein, any member of the International Practice Group or the attorney in the firm with whom you are regularly in contact.
Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.