On October 18, 2015, the United States and the European Union recognized “Adoption Day” under the landmark Iran nuclear agreement, the Joint Comprehensive Plan of Action (“JCPOA”). The significance of Adoption Day is that the U.S. and EU formally announced their plans to relax certain Iran sanctions at a future date. Concluded on July 14, 2015, the JCPOA obligates Iran to scale back its nuclear program and submit to monitoring by the International Atomic Energy Agency (“IAEA”) in exchange for nuclear-related sanctions relief granted by the U.S., EU, and U.N. Adoption Day marks the end of the prescribed 90-day period following the passage of U.N. Security Council Resolution 2231 endorsing the JCPOA, and represents the day when the “P5+1” partners begin to take preparatory steps to comply with the JCPOA.

Notably, no sanctions relief has yet to take effect under the JCPOA. That will only occur on “Implementation Day,” when the IAEA verifies that Iran has fully met its initial nuclear compliance commitments under the JCPOA. To that end, President Obama released a memorandum instructing the Secretaries of State, Treasury, Commerce, and Energy to prepare for Implementation Day, and the Secretary of State issued contingent waivers of specified statutory sanctions. On the other side of the Atlantic, the EU adopted legislative measures that will become effective on Implementation Day, setting out changes to its existing nuclear-related sanctions on Iran, as well as providing a list of individuals and entities who will be de-listed. It should be noted that the EU’s human rights-related sanctions on Iran are to remain in place.

We have summarized below key points of consideration for the sanctions landscape looking forward.

The first substantive U.S. sanctions relief under the JCPOA will not occur until Implementation Day, when the sanctions waivers issued by the Secretary of State on Adoption Day will take effect. On Implementation Day, the U.S. will suspend nuclear-related secondary sanctions—those covering non-

U.S. persons—that address financial and banking measures; insurance measures; Iran’s energy, petrochemical, shipping, shipbuilding, port, and automotive sectors; gold and other precious metals; and software and metals. Sanctions relief for U.S. persons will be far narrower. U.S. persons will be able to obtain licenses for the export or sale of commercial passenger aircraft, parts and components, and associated services, and licenses for the import of Iranian carpets and food items.

The EU will ease its nuclear sanctions framework in substantially similar areas on Implementation Day. Regulation 2015/1861 will amend the main legal framework set out in Regulation 267/2012, suspending sanctions addressing, inter alia, the following measures: key equipment for crude oil and natural gas exploration; shipbuilding equipment; the import of crude oil, natural gas and petrochemical products; the trade in gold, precious metals and diamonds; the provision of Iranian denominated bank notes and coinage; all restrictions on the transfer of funds and on financial services, except for restrictions concerning financial messaging services; and all measures against the Iranian shipping, shipbuilding and transport sectors, except for those relating to the transport of military items. At the same time, previously prohibited activities, such as the provision of certain software and related services, and the export of graphite and raw or semi-finished metals, will be subject to a prior notification requirement.

In addition, Council Decision (CFSP) 2015/1863 means that, on Implementation Day, 331 individuals and entities subject to an EU asset freeze and a prohibition to make available funds and economic resources will be de-listed. These persons will include governmental entities, such as the National Iranian Oil Company, as well as several Iranian banks, such as Bank Melli, Bank Mellat and Bank Tejarat.

Until Implementation Day, the U.S. and EU will limit the scope of Iran sanctions relief to that which was previously agreed to under the initial Joint Plan of Action (“JPOA”) of November 24, 2013. Implementation Day is generally expected to occur in early- to mid-2016, although the exact timing is still uncertain. Therefore, companies evaluating whether to pursue business opportunities in Iran that may become available once sanctions relief occurs should be aware that OFAC and European regulators continue to enforce the Iran sanctions that exist. OFAC continues to take enforcement actions, while HM Treasury has pointed out: “It is important to note that while sanctions remain in place, they will continue to be enforced.”  Any Iran-related contracts entered into before Implementation Day may be sanctionable if they involve activities or persons currently subject to OFAC restrictions.

As part of its Adoption Day actions, OFAC has released Frequently Asked Questions relating to Adoption Day, thereby building on its previous initial guidance on the extension of JPOA sanctions relief and related Frequently Asked Questions, and a Statement of Licensing Policy for activities relating to Iranian civil aviation. OFAC has indicated that it will release additional guidance before Implementation Day. Additionally, on Implementation Day, the U.S. will remove approximately two-thirds of Iran-related individuals and entities currently designated on certain restricted party lists. Non-U.S. entities that are owned or controlled by U.S. persons will be authorized to engage in activities that are consistent with the JCPOA. OFAC has indicated that it will issue a general license to implement this policy.

It is important to note that numerous restrictions on transactions with Iran will remain in place after Implementation Day. The U.S. will continue to impose the comprehensive trade embargo on Iran, with only limited exceptions. Iran will remain on the Department of State’s list of state sponsors of terrorism. Moreover, any sanctions suspended on Implementation Day may be reimposed under the JCPOA’s “snap back” mechanism if Iran fails to meet its commitments. The Obama Administration has emphasized that the JCPOA does not bar the U.S. from imposing new sanctions on Iran for reasons other than Iran’s nuclear program. Additionally, non-nuclear sanctions, such as those imposed for human rights violations, will remain in place. In short, U.S. sanctions will remain complex and highly restrictive for U.S. persons for the foreseeable future.

In particular, U.S. companies should be aware that the scope of sanctions relief in the EU and other non-U.S. countries will be broader than in the United States. While this may create greater commercial opportunities for non-U.S. companies, it also presents compliance challenges for all companies. Because U.S. sanctions will largely remain in place while other countries will relax their Iran sanctions programs after Implementation Day, it is important for U.S. and international companies to maintain robust compliance policies and procedures to ensure continued compliance with all applicable sanctions laws.