On May 8, 2018, United States (“US“) President Trump announced his decision to withdraw the US’ participation in the Joint Comprehensive Plan of Action (“JCPOA“), and to begin re-instating the US nuclear-related sanctions, following a wind-down period. According to the Presidents statement:
- President Trump is terminating the US participation in the JCPOA, as it failed to protect America?s national security interests. Ceasing the US participation in the JCPOA will pressure the Iranian regime to alter its course of malign activities.
- The US will re-impose sanctions on Iran and the President has directed his administration to begin this process instantly. The re-imposed sanctions will target critical sectors of Iran?s economy, such as its energy, petrochemical, and financial sectors.
- Those doing business in Iran will be provided a period of time to allow them to wind down operations in or business involving Iran.
- Those who fail to do so by the end of the period will risk severe consequences. President Trump did not state what these consequences will exactly be.
The full White House fact sheet can be found here.
Wind-down periods
The US will begin the process of implementing 90-day and 180-day wind-down periods for activities involving Iran (i.e. steel, aluminium and coal 90 days, financial transactions 90 days and petrochemical transactions 180 days). At the end of the 90-day and 180-day wind-down periods, the applicable sanctions will come back into full effect.
The Office of Foreign Assets Control posted additional frequently asked questions (FAQs) on its website in order to provide additional guidance on the sanctions that are to be re-imposed and the relevant wind-down periods.
Challenges when considering doing business in Iran
Should you consider doing business in Iran, please consider the following:
- Sanctions violations are illegal and can be (criminally) prosecuted.
- Ensure your company’s compliance with the sanctions regimes in place against Iran (notably US sanctions), but also with applicable export control regimes.
- Know your client(s) and consider your exposure to non-compliance when dealing with Iranian businesses. Please take into consideration, that a large number of Iranian listed entities are involved in many different business sectors.
- Perform necessary screening to ensure that you are not involved in terrorist financing or financial crime, such as money-laundering, bribery or corruption.
Despite the less than ideal restrictions and considerations described above, doing business with Iran is possible from an EU perspective for the moment still. However, should the US Iran sanctions regime be fully re-imposed this may obstruct you from pursuing Iran related transactions, despite being allowed to enter into the contemplated transactions under the EU Iran sanctions regime. Therefore, carefully determine your risk and whether you have ensured the appropriate and adequate levels of compliance.