Reed Smith Client Alerts

On Wednesday, May 8, 2019, exactly one year after pulling out of the Joint Comprehensive Plan of Action ("JCPOA"), U.S. President Donald Trump imposed additional secondary sanctions on Iran’s iron, steel, aluminum, and copper sectors. This move by the Trump Administration follows Tehran’s announcement that it was withdrawing from aspects of the JCPOA while threatening further action if the EU did not shield it from the effects of U.S. sanctions. This imposition of sanctions is part of the Trump Administration’s “maximum pressure” campaign which aims to “deny Iran all paths to both a nuclear weapon and intercontinental ballistic missiles ... [while] counter[ing] the totality of Iran’s malign influence in the Middle East.”

Autores: Eli Rymland-Kelly Alexander Brandt

The new sanctions

The new Executive Order became effective from May 8, and provides OFAC with the authority to impose blocking sanctions on any person determined:

(i) to operate in the iron, steel, aluminum, or copper sector of Iran, or to be a person that owns, controls, or operates an entity that is part of the iron, steel, aluminum, or copper sector of Iran;

(ii) to have knowingly engaged in a significant transaction for the sale, supply, or transfer to Iran of significant goods or services used in connection with the iron, steel, aluminum, or copper sectors of Iran;

(iii) to have knowingly engaged in a significant transaction for the purchase, acquisition, sale, transport, or marketing of iron, iron products, aluminum, aluminum products, steel, steel products, copper, or copper products from Iran;

(iv) to have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services in support of any person whose property and interests in property are blocked pursuant to the Executive Order; or

(v) to be owned or controlled by, or to have acted or purported to act for or on behalf of, directly or indirectly, any person whose property and interests in property are blocked pursuant to the Executive Order.

Section 2 of the Executive Order provides OFAC with the authority to impose correspondent and payable-through account sanctions on foreign financial institutions that process any of the above-described transactions.

Wind-down period

Non-U.S. persons engaged in activities now sanctionable under the Executive Order have 90 days (i.e., until August 6, 2019) to wind down those transactions. “New business” entered into between May 8, 2019, and August 6, 2019, “will not be considered wind-down activity and could be sanctioned even during the wind-down period.” “New business” can reasonably be interpreted to mean any written contract or written agreement entered into after May 8, 2019.

 

Client Alert 2019-123