On May 27, 2020, the U.S. Department of State announced that the U.S. would be ending certain sanctions waivers covering Iran’s civilian nuclear activities. Specifically, the State Department announced the end of the sanctions waivers covering all remaining Joint Comprehensive Plan of Action (JCPOA) originating nuclear projects in Iran, including the Arak reactor conversion, the provision of enriched uranium for the Tehran Research Reactor, and the export of Iran’s spent and scrap research reactor fuel. The sanctions waivers covering these activities will end following a 60-day wind down period, during which foreign companies and entities involved must cease their operations.
The U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) also provided guidance via a Frequently Asked Question (FAQ), further clarifying the applicability of the 60-day wind down period. Notably, the FAQ clarifies that the wind down period ends on July 27, 2020 and that foreign persons engaged in the aforementioned activities after that date may be exposed to sanctions under the Iran Freedom and Counter-Proliferation Act (IFCA). The IFCA provides for sanctions on persons determined to knowingly provide significant financial, material, technological, or other support to, or goods or services in support of, any activity or transaction on behalf of or for the benefit of, an Iranian person on OFAC’s Specially Designated Nationals (SDN) List. The IFCA also provides for sanctions on persons determined to knowingly sell, supply, or transfer, directly or indirectly, to or from Iran certain materials, including raw and semi-finished metals, if the materials are provided to or from an Iranian person on OFAC’s SDN List.
In addition, that same day, the U.S. Department of State also announced its determination under the Hong Kong Policy Act that Hong Kong no longer had a high degree of autonomy from mainland China, which was related, in part, to the new proposed national security legislation. There currently is not a comprehensive U.S. economic sanctions program related to Hong Kong or China, and the U.S. has used other sanctions authorities in the past (e.g., the Iran program) to target companies and individuals operating out of China.
In short, the U.S. is continuing its maximum pressure campaign against Iran and tensions are escalating regarding China and Hong Kong. We will continue to closely monitor developments in this space. If you have any questions or concerns about U.S. sanctions, please contact Bruce G. Paulsen (212-574-1533), Andrew S. Jacobson (212-574-1477), or Noah S. Czarny (212-574-1642) at Seward & Kissel’s Sanctions Practice Group.
