On December 15, 2016, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) revised their Frequently Asked Questions Relating to the Lifting of Certain U.S. Sanctions Under the Joint Comprehensive Plan of Action (JCPOA), clarifying procedures related to the potential “snapback” of the JCPOA and the subsequent re-imposition of sanctions.

In comments throughout the presidential campaign, President-Elect Donald Trump repeatedly referred to the JCPOA as “the worst deal ever negotiated” and a “disaster.” In a March 2016 speech to the American Israel Public Affairs Committee, the President-Elect announced that his “number-one priority is to dismantle the disastrous deal with Iran.” In addition to the President-Elect’s campaign statements, the U.S. Congress recently passed the Iran Sanctions Extension Act (H.R. 6297), providing a long-term extension of the Act and a pathway for the potential snapback of sanctions against Iran. President Obama allowed the Act to become law without his signature, using a rare constitutional maneuver that hasn’t been used in recent years.

The OFAC update addresses whether sanctions will apply retroactively to business activity taking place after Implementation Day, but before a snapback. Businesses will not be subject to sanctions if their business was lawfully undertaken after Implementation Day. However, if a snapback occurs, business activities for which sanctions have been re-imposed could be sanctionable to the extent they implicate activity for which sanctions have been re-imposed. The JCPOA does not grandfather contracts signed prior to snapback.

In the event that sanctions are reinstituted and/or general or specific licenses issued by OFAC are revoked, the U.S. will authorize a 180-day “wind-down period,” during which time any U.S. person or any U.S.-owned or U.S.-controlled foreign entity must begin winding-down operations involving Iran. The 180-day wind-down period would also apply to non-U.S., non-Iranian persons to disengage from business involving Iran that was consistent with the U.S. sanctions lifting under the JCPOA and undertaken pursuant to a written contract or written agreement entered into prior to snapback.

The delivery of goods and services and/or the extension of additional credits to an Iranian counterparty after snapback may result in the imposition of U.S. sanctions, unless such activity is deemed necessary to wind-down operations. The U.S. government would evaluate such matters on a case-by-case basis. OFAC will publish additional guidance if U.S. sanctions are reinstituted on Iran.