Recent weeks have seen significant changes in the global sanctions landscape, predominantly due to notable actions by the US government. The world has watched with a keen eye as the Trump administration introduced sanctions against a Venezuelan government-issued cryptocurrency, updated Russian sanctions and, perhaps most significantly, withdrew the United States from the Joint Comprehensive Plan of Action (JCPOA), reinstating nuclear sanctions against Iran.  There have been plenty of topics for our contributors to cover and our subscribers have shown a thirst for sanctions-related content, with OFAC trending highly in front of our audience of in-house counsel.

The impact of US withdrawal from JCPOA

In the days since Trump’s announcement, Lexology has seen many articles exploring exactly what was announced, providing a timely update to our subscribers. See, for example, US Withdrawal From Iran Nuclear Deal Poses Challenges for Companies, Sanctions Update: US sanctions on Iran or Iran Sanctions: What Next?

The withdrawal comes with wind-down periods, giving companies 90 or 180 days (depending on the sanction) to cease sanctionable Iran-related activities. We have been pleased to see our contributors doing what they do best: going beyond an insightful update to provide a practical examination of the impact on businesses. This actionable insight can be seen particularly strongly in the following articles:

Subscribers seek clarity on Russian sanctions

International relations involving Russia are in a particularly tense – and complex – period, with the United Kingdom still reeling from a nerve agent attack on Russian ex-double agent Sergei Skripal and his daughter, and the United States issuing strengthened sanctions against Russia. As the situation evolves and announcements are made, our subscribers are showing a keen interest: of the top 10 Russian articles read by in-house counsel over the past month, six of them related to sanctions and ‘OFAC’ was the most popular individual tag.

In the most popular sanctions-related article (United States Russian Sanctions and the ‘General Licenses’), Quadrant Chambers explained in detail how OFAC added seven Russian oligarchs, 17 government officials and various companies to the US Specially Designated Nationals (SDN) List and issued two general licences affording affected companies a wind-down period. Since the original announcement OFAC has updated the two general licences, as covered by Dechert LLP in the second most popular article: OFAC Issues Important Updates and Clarifications to Russia Sanctions.

OFAC’s new Russia-related sanctions and New US Sanctions Against Russia Create Unique Issues for Fund Investors were also popular, offering an overview of the latest news as well as an idea of the impact and some practical considerations.

Cryptocurrencies disrupt sanctions

In March, OFAC acknowledged the role of cryptocurrencies and the rapidly changing use of blockchain and digital currency technologies by updating their online FAQs to include, for the first time, a section on virtual currency-related issues.  They also specified that cryptocurrency addresses (public keys) may be included on the SDN List and therefore subject to economic sanctions.  This move has been echoed in Switzerland, with the Swiss Secretariat for Economic Affairs (SECO) confirming that it regards digital currencies as economic assets in the context of sanctions.  Both OFAC and SECO’s positions are clearly explained in this popular article from MME.

March also saw the introduction of Executive Order (EO) 13827, which imposes US economic sanctions on virtual currency the ‘petro’, issued by the Venezuelan government. The EO is explained in detail in Steptoe & Johnson LLP’s article: President Imposes First US Economic Sanctions Against Venezuelan Digital Currency.

Looking at cryptocurrencies and sanctions through a different lens, Freshfield Bruckhaus Deringer’s article Iran and cryptocurrencies: the swift way to pay? explores the possibility of cryptocurrency payment making it significantly easier to conduct lawful business with Iran in the face of significant challenges using international banks to process payments.  This article was written before the US withdrawal from JCPOA, but poses an interesting question of the utility of virtual payments in situations where fiat currencies face potentially insurmountable obstacles.

Violated sanctions? Honesty is the best policy…

An insightful article from Holland & Hart LLP (written before the US withdrawal from JCPOA) assesses 90 OFAC penalties for sanctions violations from the past five years and looks for commonalities:

“The most significant commonality among the penalties is not the alleged egregiousness of the apparent violations, or the compliance practices and failures that gave rise to the violations. The biggest factor in determining OFAC’s enforcement response to sanctions violations may involve a company’s willingness to submit a truthful, timely, and complete disclosure of its violations.”

The article concludes that companies stand to benefit from submitting timely self-disclosures informing OFAC of their violations, rather than waiting for OFAC to come to them.

What next?

International sanctions are complex and are constantly changing. Recent developments include the European Union seeking to expand the EU Blocking Statute to include US sanctions against Iran.  As explained in DLA Piper’s recent article:

"The EU Blocking Statute, originally adopted in reaction to US sanctions against Cuba, is regarded as one of the stronger instruments in the EU's toolbox to protect European companies that do business with Iran from the extra-territorial application of US sanctions.”

As I write this post, news stories are breaking that the United States will be seeking a demanding new nuclear agreement with Iran that could result in all economic sanctions being waived, as well as reports of five Iranians being sanctioned by the United States. We look forward to seeing how these talks progress, and reading articles from our contributors that explain not only what is going on, but how it will impact businesses across the world.

To stay up to date with US sanctions, follow the OFAC hub page.

This article first appeared on the Lexology blog.