On May 8, 2018, President Trump announced his decision to withdraw the United States from the Joint Comprehensive Plan of Action (JCPOA) and to reimpose on Iran a multitude of sanctions that were lifted in January 2016 under the JCPOA.

This so-called “snap back” of sanctions will be implemented by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) and the U.S. Department of State in a manner that permits affected parties to wind-down their affairs. The impact, however, will be immediate. All non-U.S. companies, but especially those owned by U.S. persons, must act swiftly to terminate their affairs in Iran by the specific deadline, or otherwise face substantial penalties—in some cases, blocking and other secondary sanctions.

The easing of sanctions under the JCPOA

When the United States implemented sanctions relief under the JCPOA in January 2016, the most consequential change was the easing of secondary sanctions—sanctions that apply to non-U.S. persons even when there is no U.S. nexus. Specifically, the U.S. ceased its “nuclear-related” secondary sanctions programs pertaining to Iran and lifted sanctions against non-U.S. persons for engaging in activities relating to energy and petrochemicals, shipping and shipbuilding, automotive, metals, financial and banking and insurance.

Sanctions related to Iran’s support for terrorism, proliferation missile activities, and human rights abuses remained in place. Additionally, with the JCPOA came the removal of more than 400 Iranian individuals and entities from its sanction lists.

How will the withdrawal be implemented?

With President Trump’s withdrawal announcement came a National Security Presidential Memorandum directing OFAC and other agencies to take the steps necessary to reimpose sanctions eased under the JCPOA. This includes the revocation or amendment by OFAC of the general and specific licenses issued in connection with the JCPOA, as well as the issuance of new authorizations to allow for the wind-down of transactions and activities that were previously authorized.

In guidance provided in newly issued FAQs, OFAC has explained the process by which sanctions will be reimposed.

A. General License H to be revoked

General License H was issued in 2016 to authorize U.S.-owned or controlled foreign entities to engage in most commercial activities involving Iran. This authorization will be revoked and OFAC intends to issue a revised authorization to permit the wind-down of activities previously authorized under the General License. This authorization will require all wind-down activities to be completed by November 4, 2018. Accordingly, any U.S.-owned or controlled foreign entities previously taking advantage of General License H will need to re-evaluate all Iran-related business to ensure all unauthorized activities and transactions cease by the November 4 deadline. Transactions after this date will be in violation of the ITSR and could be subject to enforcement actions by OFAC.

B. Relisting of sanctioned parties

Upon signing the JCPOA (Implementation Day), the U.S. removed over 400 individuals and entities from OFAC’s Specially Designated National List, Foreign Sanctions Evaders List, and Non-SDN Iran Sanctions Act List. These individuals and entities were included in Attachment 3 to Annex II of the JCPOA, but will now be re-listed due to the snap-back.

OFAC will not immediately reimpose sanctions on individuals and entities that were removed from the SDN List or other lists on Implementation Day. OFAC has stated, however, that sanctions will be re-imposed on these parties no later than November 5, 2018 and that secondary sanctions will reattach in some circumstances. The SDN List will indicate which individuals and entities are subject to secondary sanctions with the notation: “Additional Sanctions Information – Subject to Secondary Sanctions” in their entry.

Transactions with persons who will be relisted could be sanctionable if they are outside of the wind-down waivers issued by the State Department, involve currently listed SDNs, support human rights abuses in Iran, Syria, or Yemen, or constitute significant transactions with the Islamic Revolutionary Guard Corps.

C. Wind-down periods

OFAC has announced that it will provide wind-down periods so that companies can minimize the impact of sanctions on activities legitimately undertaken before the re-imposition of sanctions. OFAC will be issuing a 90-day (August 6, 2018) and 180-day (November 4, 2018) wind-down period, as applicable, for activities previously authorized before sanctions “snapped back” in to effect.

OFAC will evaluate the steps taken to wind-down activities and whether any new business was entered into during the wind-down period. New transactions could serve as an aggravating factor in an enforcement response.

1. The 90-day wind-down period

OFAC will establish wind-down periods during which business operations and activities with Iran must be brought to a conclusion. After a 90-day wind-down period, which ends on August 6, 2018, sanctions will be reimposed on:

  • The purchase or acquisition of U.S. dollar banknotes by the Government of Iran
  • Iran’s trade in gold or precious metals
  • Significant transactions related to the purchase or sale of Iranian currency, or the maintenance of significant funds or accounts outside the territory of Iran that occurs in Iranian currency
  • The purchase, subscription to, or facilitation of the issuance of Iran sovereign debt
  • Iran’s automotive sector

2. The 180-day wind-down period

 After a 180-day wind-down period, ending on November 4, 2018, sanctions will be reimposed on:

  • Iran’s port operators and shipping and shipbuilding sectors, including on the Islamic Republic of Iran Shipping Lines, South Shipping Line, or their affiliates
  • Certain petroleum related transactions, with, among others, the National Iranian Oil Company, Naftiran Intertrade Company, and National Iranian Tanker Company
  • Transactions by foreign financial institutions with the Central Bank of Iran and other foreign financial institutions that have been designated under NDAA Section 1245
  • The provision of specialised financial messaging services to the Central Bank of Iran and other Iranian financial institutions
  • The provision of underwriting services, insurance, or reinsurance
  • Iran’s energy sector

These transactions will now again be subject to secondary sanctions imposed pursuant to the Iran Sanctions Act, Iran Threat Reduction and Syria Human Rights Act of 2012, and Iran Freedom and Counter-Proliferation Act of 2012.

3. Outstanding payments

Non-U.S., non-Iranian persons who are owed payments after the relevant wind-down period will be able to receive payment in accordance with a written contract entered into before May 8, 2018, provided the payment is for activities which were authorized under U.S. sanctions at the time (i.e., business pursued by foreign entities pursuant to General License H). OFAC will also allow non-U.S., non-Iranian persons to receive repayments on loans or credits extended before wind-down, if such loan or extension of credit was consistent with U.S. sanctions at the time it was extended.

Companies will need to ensure that any payments made after wind-down do not use the U.S. financial system or involve U.S. persons unless otherwise exempt or authorized.

D. Other licenses revoked

OFAC will no longer evaluate license applications under the JCPOA and will revoke, as soon as is administratively feasible, General License I, which previously authorized U.S. persons to engage in transactions for the negotiation and entry into contracts for the export or re-export of commercial passenger aircraft. OFAC will continue to evaluate license applications under the “safety of flight” licensing policy in 31 C.F.R. 560.528.

In addition, OFAC will replace (1) the General License for Import of Iranian-Origin Carpet and Foodstuffs (560.534) and (2) the General License for Certain Related Letters of Credit and Brokering Services (560.535) with more narrowly tailored authorizations to allow for the wind-down of activities that were authorized under those licenses.


President Trump's announcement of the United States' withdrawal from the JCPOA and the resulting “snap-back” of U.S. sanctions against Iran will impact both U.S. and non-U.S. entities. Although OFAC has provided 90 and 180-day wind down periods, the effects will be felt immediately. Reed Smith’s sanctions team will closely monitor and report further developments.