On May 8, 2018, President Trump announced that the United States will withdraw from the Joint Comprehensive Plan of Action (JCPOA), resulting in the re-institution of sanctions against Iran. The JCPOA, adopted in October 2015, is an agreement between Iran, the European Union, and the P5+1 (the five permanent members of the United Nations Security Council, plus Germany), whereby Iran agreed to reduce its stockpile of uranium and take steps to limit the development of its nuclear program in exchange for sanctions relief from the U.N., E.U., and the P5+1. The sanctions that are to be reinstated have been lifted or waived under the JCPOA since 2016, and before that, suspended under the interim Joint Plan of Action (JPOA), since 2013.

Re-imposition of Sanctions

On May 8, 2018, the President issued a National Security Presidential Memorandum (NSPM) directing the Secretary of State and Secretary of the Treasury to prepare for immediate re-instatement of all sanctions lifted or waived pursuant to the JCPOA, with all to be re-implemented no later than November 4, 2018. Accordingly, the Departments of State and Treasury will institute a 90-day and a 180-day wind-down period for activities involving Iran that were permitted under the JCPOA.

According to the U.S. Department of the Treasury, the following sanctions will be re-imposed after the 180-day wind-down period ends on November 4, 2018:

• Sanctions on Iran’s port operators, and shipping and shipbuilding sectors, including on the Islamic Republic of Iran Shipping Lines (IRISL), South Shipping Line Iran, or their affiliates;
• Sanctions on petroleum-related transactions with, among others, the National Iranian Oil Company (NIOC), Naftiran Intertrade Company (NICO), and National Iranian Tanker Company (NITC), including the purchase of petroleum, petroleum products, or petrochemical products from Iran;
• Sanctions on transactions by foreign financial institutions with the Central Bank of Iran and designated Iranian financial institutions under Section 1245 of the National Defense Authorization Act for Fiscal Year 2012 (NDAA);
• Sanctions on the provision of specialized financial messaging services to the Central Bank of Iran and Iranian financial institutions described in Section 104(c)(2)(E)(ii) of the Comprehensive Iran Sanctions and Divestment Act of 2010 (CISADA);
• Sanctions on the provision of underwriting services, insurance, or reinsurance; and
• Sanctions on Iran’s energy sector.

According to the U.S. Department of the Treasury, the following sanctions will be re-imposed after the 90-day wind-down period ends on August 6, 2018:

• Sanctions on the purchase or acquisition of U.S. dollar banknotes by the Government of Iran;
• Sanctions on Iran’s trade in gold or precious metals;
• Sanctions on the direct or indirect sale, supply, or transfer to or from Iran of graphite, raw, or semi-finished metals such as aluminum and steel, coal, and software for integrating industrial processes;
• Sanctions on significant transactions related to the purchase or sale of Iranian rials, or the maintenance of significant funds or accounts outside the territory of Iran denominated in the Iranian rial;
• Sanctions on the purchase, subscription to, or facilitation of the issuance of Iranian sovereign debt; and
• Sanctions on Iran’s automotive sector.

Following the 90-day wind-down period ending August 6, 2018, the U.S. government will also revoke the following JCPOA-related authorizations:

• The importation into the United States of Iranian-origin carpets and foodstuffs and certain related financial transactions pursuant to general licenses under the Iranian Transactions and Sanctions Regulations, 31 C.F.R. part 560 (ITSR);
• 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
• Activities undertaken pursuant to General License I relating to contingent contracts for activities eligible for authorization under the JCPOA SLP.

The U.S. government will also re-impose the sanctions that applied to persons removed from the List of Specially Designated Nationals and Blocked Persons (SDN List) in accordance with the JCPOA. Such re-designations are to occur no later than November 5, 2018, but can occur sooner.

Those engaging in any of the above-described transactions or activities with Iranian persons or entities, or with individuals or entities that were removed from the SDN List, must take the steps necessary to wind-down those activities by August 6, 2018 and November 4, 2018, respectively, or risk exposure to sanctions or an enforcement action under U.S. law.

General and Specific Licenses

In connection with the JCPOA, OFAC granted general and specific licenses authorizing certain activities that would otherwise be prohibited. According to today’s announcement, all such licenses will be revoked. Activities under General License H, which authorized U.S.-owned or controlled foreign entities to engage in certain activities involving Iran, must cease no later than November 4, 2018. Activities under General License I, which authorized U.S. persons to enter into, and to engage in transactions that are ordinarily incident to the negotiation of and entry into, contingent contracts for activities eligible for authorization under the JCPOA SLP must be completed by August 6, 2018. Finally, to the extent OFAC granted specific licenses pursuant to the JCPOA that have not yet expired, they will end on August 6, 2018.

Conclusion

President Trump’s announcement of the United States’ withdrawal from the JCPOA occurred this afternoon. We expect this decision to have widespread effects on a number of industries. We will continue to follow events in this space, and will report on any further developments.

If you have any questions or concerns about U.S. sanctions against Iran, please contact one of the attorneys listed below.