On January 7, U.S. Secretary of State John Kerry told reporters that Implementation Day — the point at which the lifting of sanctions under the nuclear agreement between the world’s major powers and Iran is set to occur — was “days away.” In an op-ed published in the New York Times on January 11, Iran’s Foreign Minister Javad Zarif made a similar pledge. These assurances come as Iran has reportedly removed the core of its plutonium-producing nuclear reactor at Arak, a key milestone of the July 2015 agreement.

Under the Joint Comprehensive Plan of Action (JCPOA), Implementation Day occurs when the International Atomic Energy Agency verifies that Iran has fulfilled key nuclear-related commitments specified in the JCPOA, after which the United States will lift so-called nuclear-related sanctions against Iran, which primarily relate to secondary U.S. sanctions targeting non-U.S. persons.

The JCPOA was formally adopted on October 18, 2015, the date on which participants started taking the steps necessary to implement their JCPOA commitments. Iran began implementing nuclear-related measures, such as reducing its enriched uranium stockpile, while the United States and European Union began the necessary additional work for the eventual lifting of certain nuclear-related sanctions. No sanctions were lifted on Adoption Day in October 2015.

When Implementation Day is triggered, the United States will suspend nuclear-related secondary sanctions. These are the sanctions that primarily target third-country parties conducting business with Iran — including in the oil, banking, and shipping sectors. Iran will also be able to freely access about a third of its estimated total overseas foreign reserves that are being held in restricted accounts in certain third countries that were able to buy Iranian oil pursuant to temporary exemptions — a little over $50 billion, according to the U.S. Treasury Department.

The U.S. government has also committed under the JCPOA to license certain activities involving U.S. persons or U.S. origin goods that are consistent with the JCPOA and U.S. law. These include the sale of U.S. origin aircraft, parts and services exclusively for commercial passenger aviation end uses to Iran; the import of Iranian-origin carpets and foodstuffs; and certain activities conducted by foreign subsidiaries of U.S. companies. Further, as has previously been the case, there are exceptions for certain exports of food, medicine, and medical devices.

Even after Implementation Day, however, the U.S. embargo will generally remain in place. With primary U.S. sanctions still in effect, U.S. persons, including companies, will remain broadly prohibited from engaging in transactions with Iran, as well as with Iranian individuals and entities, such as financial institutions. For example, Treasury Secretary Jack Lew has testified to Congress that Iranian banks will not be able to clear U.S. dollar payments through New York (even when a sender and a recipient are outside the United States), hold correspondent account relationships with U.S. financial institutions, or enter into financing arrangements with U.S. banks.

The general prohibitions on U.S. persons will continue to include: investment in Iran; importing Iranian-origin goods or services; and exporting goods or services to Iran, including clearing U.S. dollars. Additionally, U.S. export controls will continue to apply to controlled U.S.-origin goods and technology located anywhere in the world.

The U.S. will also continue to impose so-called secondary sanctions, which target conduct by non-U.S. persons related to sanctioned persons or activities, even when the underlying activity has no U.S. nexus. The United States will retain secondary sanctions authorities targeting third parties for dealings with Iranian persons/entities that will remain designated on the Office of Foreign Assets Control List of Specially Designated Nationals and Blocked Persons (SDN). The SDN List encompasses persons designated under terrorism, counter-proliferation, missile, and human rights authorities. Although a large number of existing Iranian SDNs will be removed from the SDN List on Implementation Day, a significant number will remain, and non-U.S. persons dealing in the future with such Iranian SDNs will continue to face possible exposure under secondary U.S. sanctions.

In practice, persons transacting with or supporting individuals or entities sanctioned in connection with Iran’s support for terrorism or development of WMD and missiles — as well as any Iranian individual or entity who remains on the SDN List — risk being cut off from the U.S. financial system or facing even more dire restrictions that the U.S. government could impose (including asset freezes). This includes foreign financial institutions, which would risk losing their correspondent accounts with U.S. banks. Sanctions will also continue to apply to persons who provide Iran with specified weapons, dual use goods and related technologies.