Secretary of State John Kerry released on December 28, 2015, a statement reiterating that the United States “remains fully committed and on track to implement its sanctions-related commitments provided for under the JCPOA, once we reach Implementation Day, as well as all of our other commitments under the deal.” Late last week, Secretary Kerry stated that implementation could be “only days away” if all goes well.
The U.S. Government is prepared to implement its JCPOA sanctions relief commitments to remove the secondary, nuclear-related sanctions aimed at non-U.S. persons. The areas of focus under the JCPOA sanctions-relief commitments are the following:
- insurance/reinsurance services;
- the energy and petroleum sectors, including sanctions relating to the sale and purchase of Iranian crude and related financial services and investment in Iran’s oil, gas and petrochemical sector.
- shipping and shipbuilding;
- software and metals; and
- the automotive sector.
In anticipation of Implementation Day, the President last fall issued a memorandum directing the Secretaries of State, the Treasury, Commerce, and Energy to plan for the termination of certain sanctions and the licensing of limited U.S.-person activities with Iran. The Secretary of State also issued time-limited waivers of the nuclear-related sanctions affecting the industries mentioned above.
In addition, the State Department and OFAC are preparing for the implementation of sanctions relief for overseas subsidiaries of U.S. companies. Preliminary indications at this time are that these commitments may be met through licensing (general license). In response to industry concerns about having a level playing field with European companies re-entering Iran, the anticipated regulatory guidance may provide greater clarity or leniency as to what support may be provided by a U.S. parent company for licensed activities by an overseas subsidiary.
Until implementation, existing U.S. sanctions against Iran remain in effect, with the exception of the limited relief provided for in the November 24, 2013 Joint Plan of Action, as extended. Entry by subject persons into so-called “executory contracts,”i.e., those that are contingent on the implementation of sanctions relief, are disallowed.
While it is expected that post-implementation sanctions relief will free the hands of non-U.S. companies and banks to transact purchases of Iranian crude and process related funds transfers, U.S. primary sanctions applicable to U.S. persons and U.S. financial institutions will continue in effect after Implementation Day. Therefore U.S.-dollar supported transactions and other transactions involving U.S. financial institutions, of the type that have resulted in numerous multi-billion dollar criminal sanctions settlements, will continue to present compliance concerns for banks and across a range of industries.
For more information on the JCPOA, including detailed analysis of the effect of the JCPOA's implementation on U.S. sanctions against Iran, please see our earlier updates here, here and here.