Reed Smith Client Alerts

As expected, on November 5 the United States reimposed the final tranche of sanctions on Iran, which had been lifted pursuant to the Joint Comprehensive Plan of Action (“JCPOA”) in 2016. The vast majority of these sanctions are “secondary sanctions”, being those which target non-U.S. persons and companies even where there is no U.S. nexus (e.g. the use of USD; U.S.-persons; or U.S. goods). The secondary sanctions, as we highlight below and as further explained in our previous blogs, cover a variety of goods and services, as well as prohibitions on dealings with certain individual persons and entities. While exceptions for humanitarian goods, agricultural products, medicine and medical devices remain in place, entities may find doing even this kind of business in Iran more challenging due to restrictions on the Iranian banking industry. When taking decisions about whether to enter into or continue Iran-related trade, EU companies must also weigh the risk of circumventing the EU’s so-called “blocking” statute.

Authors: Leigh T. Hansson Chloé Rogers Jeffrey Orenstein Alexander Brandt Eli Rymland-Kelly

Below we provide a brief summary of the reimposed sanctions and the implications thereof.

The recently reimposed U.S. secondary sanctions

Transactions Covered by Secondary Sanctions

With both wind-down periods now complete, the secondary sanctions that were previously waived are now effective. These include sanctions on the purchase or acquisition of US dollars by the Government of Iran; Iran’s trade in gold or precious metals; the sale, supply, or transfer to or from Iran of graphite, raw or semi-finished metals and software for integrating industrial processes; significant transactions related to the purchase/sale of rials; and the purchase, subscription to, or facilitation of the issues of Iranian sovereign debt.

The sanctions also target the automotive sector; shipping and shipbuilding sectors; the energy sector; petroleum-related transactions; transactions by foreign financial institutions with the Central Bank of Iran and designated Iranian financial institutions; the provision of specialised financial messaging services to the Central Bank of Iran and Iranian financial institutions; and certain underwriting services, insurance and re-insurance.