On May 8, 2018, U.S. President Donald Trump announced his decision to withdraw the United States from the Iran nuclear deal — the Joint Comprehensive Plan of Action (JCPOA). The United States will also begin reinstating the sanctions it had waived as part of the deal. The U.S. government will establish 90-day and 180-day wind-down periods, as applicable, for activities involving Iran that were previously consistent with the JCPOA. At the end of these periods, the applicable sanctions will come back into full effect.

Revoked Authorizations

As part of this process, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) plans to revoke all JCPOA-related licenses and authorizations as soon as is administratively feasible. OFAC will then issue new authorizations allowing for the wind-down of activities previously authorized under those licenses or authorizations. 

Significantly, OFAC intends to revoke General License H, which it had issued in January 2016 as part of the JCPOA and authorized U.S.-owned or -controlled foreign entities to engage in certain activities involving Iran. OFAC expects to issue a revised authorization allowing for the wind-down of activities previously authorized under General License H. The wind-down of those activities must be completed by Nov. 4.

Following a 90-day wind-down period that ends Aug. 6, OFAC will also revoke JCPOA-related authorizations that allowed (i) the importation of Iranian-origin carpets and foodstuffs, (ii) activities undertaken pursuant to specific licenses issued in connection with the Statement of Licensing Policy for Activities Related to the Export or Re-export to Iran of Commercial Passenger Aircraft and Related Parts and Services (JCPOA SLP) and (iii) activities undertaken pursuant to General License I, which authorized certain transactions relating to activities eligible under the JCPOA SLP. Despite the revocation of the JCPOA SLP, OFAC will still consider specific license applications for activity necessary to ensure the safety of civil aviation and safe operation of U.S.-origin commercial passenger aircraft. There is no indication that OFAC intends to revoke the general license authorizing the export or re-export of medicines, medical devices and agricultural commodities to Iran, pursuant to section 560.530 of the Iranian Transactions and Sanctions Regulations, which predates the JCPOA. Thus, activities and transactions falling under this general license are currently permitted.

Reimposed Sanctions

The U.S. government also plans to reinstate several sanctions that were lifted pursuant to the JCPOA. In particular, after a 90-day wind-down period that ends Aug. 6, the U.S. government will reimpose sanctions on

the purchase or acquisition of U.S. dollar banknotes by the government of Iran Iran’s trade in gold or precious metals the sale, supply or transfer to or from Iran of graphite, raw or semifinished metals such as aluminum, steel and coal transactions related to the purchase or sale of Iranian currency, including the maintenance of accounts outside Iran denominated in Iranian currency the purchase or facilitation of the issuance of Iranian sovereign debt Iran’s automotive sector

Following a 180-day wind-down period ending on Nov. 4, the U.S. government will also reinstate sanctions on

Iran’s port operators and shipping and shipbuilding sectors petroleum-related transactions with, among others, the National Iranian Oil Company, including the purchase of petroleum products from Iran transactions by foreign financial institutions with the Central Bank of Iran and certain designated Iranian financial institutions the provision of underwriting services, insurance or reinsurance Iran’s energy sector

Furthermore, no later than Nov. 5, the U.S. government will reimpose the sanctions that applied to persons removed from the List of Specially Designated Nationals and Blocked Persons (SDN List) and/or other lists maintained by the U.S. government on Jan. 16, 2016. In particular, OFAC expects to move persons identified as “the Government of Iran” or an “Iranian financial institution” from the List of Persons Blocked Solely Pursuant to E.O. 13599 (E.O. 13599 List) to the SDN List. Beginning on Nov. 5, activities with most persons moved from the E.O. 13599 List to the SDN List will be subject to secondary sanctions.

OFAC will likely provide additional guidance on the types of permitted wind-down activities when it issues its revised authorizations. In the meantime, persons conducting activities in Iran or with Iranian persons during the wind-down periods should exercise care to ensure that they do not knowingly engage in transactions with persons on the SDN List and do not take steps to increase their business or engage in transactions that would be difficult to exit when necessary.