On 15 October 2012, the Council of the European Union announced that it had decided to strengthen significantly the EU's restrictive measures in respect of Iran - increasing the action being taken by the international community against Iran. The amendments to the current EU sanctions regime in respect of Iran are wide-ranging in scope and intended to target both Iran's nuclear and ballistic programmes as well as anything that might serve to provide revenue for those purposes to the Iranian government. The Council Decision (2012/635/CFSP) which will need to be implemented in due course and Council Implementing Regulation (945/2012) implementing amendments to the asset freezing regime, which is directly applicable in all EU Member States, were published in the Official Journal on 16 October 2012. This update analyses some of the key changes to this regime arising out of these developments.

Key changes to the Iran sanctions regime

The most significant changes to the EU's sanctions regime in respect of Iran are as follows:

Once the Decision is implemented -

  • all transactions between the EU financial sector and Iranian banks will be  prohibited, unless prior authorisation is obtained by licence;
  • the export of certain materials that might be of relevance to Iran's nuclear and ballistic programmes or to industries controlled by the Iranian Revolutionary Guard Corps will be prohibited;
  • the importation of natural gas from Iran to the EU will be prohibited;
  • vessels belonging to EU citizens or companies must not be used for transporting or storing Iranian oil or petrochemical products;
  • EU industries will be prohibited from supplying oil tankers, key naval equipment and technology for ship building and maintenance to Iran;
  • short term export credits, guarantees or insurance supporting trade with Iran will be prohibited; and 

with immediate effect  -

  • 34 additional Iranian entities have had asset freeze and travel ban restrictions imposed on them because they were deemed to be providing substantial financial support to the Iranian government.

Below we expand on the changes to the sanctions insofar as they relate to financial institutions and the oil, gas and petrochemical industries.  

Financial sanctions

As covered by our previous update, the UK passed the Financial Restrictions (Iran) Order 2011 in November 2011. This Order prohibited all UK financial and credit institutions from current or future dealings with any Iranian banks except under licence. It could be said that the new EU Council Decision aligns the rest of the EU with the position that had already been adopted by the UK. The Order continues to apply in relation to UK banks.

HM Treasury has published a Financial Sanctions Notice providing further details in respect of the Council Decision.

The most recent EU Council Decision, when implemented, will prohibit EU banks from entering into, or continuing to participate in any transactions with Iranian banks unless they have first been authorised by the Member State in question. Various exceptions and means by which Member States will be permitted to authorise/licence such transactions will be set out in the implementing Regulation and include:

  • the transactions relate to foodstuffs, healthcare, medical equipment or agricultural or humanitarian purposes;
  • the transactions are personal remittances;
  • the transactions concern a diplomatic or consular mission or an international organisation enjoying immunity in accordance with international law, insofar as those transactions are intended to be used for official purposes of that mission or organisation; and
  • the transactions regard payment to satisfy claims against Iran, Iranian persons or Iranian entities - subject to a ten-day notification period and to be assessed on a case-by-case basis.

No authorisation or notification is required for transactions under the first three points above which are under €10,000 in value. For transactions above that value different thresholds will apply to determine if notification or seeking of authorisation/a licence will be required.

Short term export credits, guarantees or insurance supporting trade with Iran will also be prohibited. Medium and long term commitments were already previously prohibited.

Oil, gas and petrochemical industry sanctions

As covered in our March 2012 update, the Council had already announced a number of embargos affecting the oil and petrochemicals industry in Iran. Whilst these sanctions initially only related to the trading of Iranian crude oil and petroleum products, the latest Council Decision will significantly widen the scope of the sanctions, when implemented, to include:

  • a blanket prohibition on the import, purchase or transport of natural gas from Iran;
  • a prohibition on the provision, directly or indirectly, of financing or financial assistance - including derivatives, insurance, reinsurance and brokering services - relating to the import, purchase or transport of Iranian natural gas;
  • a prohibition on the construction of new oil tankers for Iran or for Iranian persons or entities; and
  • a prohibition on the provision of technical or financial assistance or financing towards the construction of new oil tankers for Iranian persons or entities.


In its press release, the Council reiterated its concerns over Iran's nuclear programme and stated its aims as being to persuade Iran to engage in constructive negotiations designed to address the concerns of the international community. The amendments, to the sanctions will, when implemented, seek to hold the Iranian regime to account by widening the scope of sanctions, which are already considered far-reaching.

The new sanctions, when implemented, will, in common with those already in force, apply to EU nationals and entities, whether inside or outside of the EU. Companies should also continue to be mindful of the US sanctions regime, particularly as these have extra-territorial scope and are heavily enforced by the regulators.

Given that those in the UK already encountered robust measures in force relating to financial institutions, the impact of these updates to the sanctions is most likely to be felt  (in the UK) by those operating in the oil, gas and petrochemical industries. Whilst the notion of sanctions is certainly not new to these industries, these sanctions represent a further narrowing of the extent to which they may lawfully conduct business in and with Iran.