On May 17, 2017, the day on which the US State Department made its semi-annual report to Congress under the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (CISADA), the State Department announced that the current administration continues to waive sanctions as contemplated by the Joint Comprehensive Plan of Action (JCPOA). Nevertheless, the State Department report condemns Iran as having "compiled one of the world's most egregious records on human rights," and on the same day, the Treasury Department announced new sanctions related to Iran's ballistic missile program, outside of the JCPOA framework. Thus, the actions taken sent a mixed message about the new administration's intentions with respect to the US's Iranian sanctions program.
As set out in our earlier bulletin, the US authorities lifted sanctions on Implementation Day of the JCPOA through, among other things, the issuing of waivers of certain statutory sanctions provisions. The new administration, nevertheless, has the authority to determine to terminate these waivers, thus diverging from the JCPOA commitments. Nevertheless, the announcement that the waivers will be extended signals that the new administration will likely adhere to the JCPOA, at least in the short term, despite the President's criticism of it during his campaign.
Instead, recent sanctions imposed and the new report both indicate that the administration might prefer to impose sanctions outside of the JCPOA framework to achieve its foreign policy goals. Importantly, the JCPOA only provides relief for the majority of nuclear-related secondary sanctions, and a wide range of activities are still sanctionable, including activity which involves Specially Designated Nationals (SDN) or the Iranian Revolutionary Guard Corp (IRGC), support for terrorism, human rights abuses, or proliferation of ballistic missiles and WMD or threats to the peace, security, or stability of Yemen. Indeed, one of the targets of the most recent sanctions is a Chinese national who supplied a designated Iranian defense entity in relation to its alleged proliferation activities. The report also states that the US government will "use all means at [its] disposal" to promote human rights in Iran.
Thus, it remains important for firms entering into Iran or currently conducting business with Iran to monitor sanctions development and to consider the sanctions implications of its activities. Firms should periodically screen existing counterparties in Iran to ensure that they are not later added to the SDN list, and should obtain proper representations and warranties that the products and services they provide will not be used in any sanctionable activity.