- Effective May 8, 2018, the US Government withdrew from the Joint Comprehensive Plan of Action (“JCPOA”).
- The US Government will re-instate the sanctions that were lifted or waived following the implementation of the JCPOA.
- This action has a greater impact on non-US persons because most of the lifted or waived sanctions were secondary sanctions targeting activities of non-US companies occurring outside of US jurisdiction.
- The sanctions will be re-instated on August 7, 2018, and November 5, 2018, following the end of 90-day and 180-day “wind-down” periods.
- Importantly, US Persons and non-US entities owned or controlled by US Persons engaged in activities authorized under General License H will need to wind down such activities by November 4, 2018.
- Non-US persons can also take advantage of the wind-down periods to cease engaging in the sanctionable activities described below; otherwise they face the risk of US secondary sanctions for engaging in such sanctionable activities past the wind-down periods.
- Thus, all persons, but especially non-US persons should carefully consider, without limitation: ◦the scope of their activities implicating Iran;
- whether such activities, if continued following the wind-down periods, could present a risk of US secondary sanctions;
- the extent to which such activities should be wound down, based on the foregoing risk assessment;
- what activities are permissible as a part of wind down; and
- practical impact on financial transactions involving Iran or Iranian banks, even assuming no secondary sanctions risk.
US Withdrawal from the JCPOA
On May 8, 2018, President Trump announced that the United States will be withdrawing from the JCPOA, culminating months of uncertainty around the fate of the Iran nuclear deal. The announcement came ahead of a May 12 deadline for the renewal of a key sanctions waiver. As described here, the last sanctions waiver occurred on January 12, 2018 amidst statements by President Trump that the waiver would be the last unless what President Trump considered “flaws” in the deal were fixed. In his May 8 speech, President Trump announced that the United States would re-impose nuclear sanctions against Iran.
Many of these sanctions, including so-called “secondary sanctions” that primarily target non-US companies engaging in business in or with Iran entirely outside US jurisdiction, were waived as part the US Government’s commitments under the JCPOA. By way of reminder, the sanctions relief under the JCPOA was mostly with respect to these secondary sanctions, whereas primary sanctions (applicable to US Persons) were left intact, with the exception of a few general licenses and favorable licensing policies (which themselves will be revoked as a result of today’s announcement).
Following the President’s announcement, the US Treasury Department’s Office of Foreign Assets Control (“OFAC”) released guidance, including new FAQs, regarding the implementation of the President’s decision. As described in this new guidance, the President’s announcement, as implemented by the US Treasury and State Departments, revokes any sanctions waivers issued to implement JCPOA sanctions relief and has replaced them with temporary waivers to provide for the wind down of previously-authorized activities in Iran in keeping with newly-established, 90-day (ending on August 6, 2018) and 180-day (ending on November 4, 2018) wind-down periods for activities involving Iran.