OFAC publishes new guidance on JCPOA

OFAC has published new FAQs on the lifting of Iran sanctions under the JCPOA.  The guidance is intended to address uncertainty among financial institutions and other businesses as to what is and is not prohibited under the sanctions relief.  The new FAQs (C.15 & C.16, K.14-22) say that:

  1. US financial institutions can transact with and maintain correspondent accounts for non-US, non-Iranian, financial institutions that do business with Iranian financial institutions, provided those institutions are not on the SDN List.
  2. Non-US financial institutions are still prohibited from routing unauthorised Iran-related transactions through US financial institutions, and accordingly they should have appropriate compliance checks in place.
  3. Non-US, non-Iranian entities may engage in transactions with Iranian persons not on the SDN List, even though one or more US persons serve on that entity’s board of directors, provided the US-persons are “walled off” from those transactions. A blanket recusal policy should be considered, as case-by-case abstentions could be deemed a prohibited facilitation / export of services under the Iranian Transactions and Sanctions Regulations.

General Licence H

General Licence H, published alongside the implementation of the JCPOA in January this year, authorises non-US entities that are owned or controlled by US persons to engage in a range of previously prohibited transactions involving Iran (see previous blog).

  1. The US parent of a foreign subsidiary is authorised to alter its or the subsidiary’s policies and procedures to allow the subsidiary to establish a physical presence in Iran. The subsidiary would still be prohibited from exporting or supplying goods to Iran or the government of Iran.
  2. US-owned or controlled foreign entities are not considered US persons under the ITSR.
  3. A non-US entity is considered owned or controlled by a US person if one or more US persons, in the aggregate, hold a 50% or greater share in the entity.
  4. A foreign entity that is publically traded, or where ownership is otherwise widely dispersed, will not be regarded as being owned or controlled by a US person if US persons, in the aggregate, hold more than 50% of the shares but no one US person holds a controlling share.
  5. US-owned or controlled foreign entities are authorised to engage in transactions with people and entities on the 13599 List, which lists foreign entities that are no longer SDN designated but have been identified as meeting the definition of Government of Iran or Iranian financial institution.
  6. US persons who, in the aggregate, own or control a foreign entity, may amend the policies and procedures of US entities that own a portion of that foreign entity, or of the foreign entity itself, in order to allow the foreign entity to engage in transactions that are authorised under General Licence H.
  7. US persons may continue to be involved in the day-to-day operations of an owned or controlled foreign entity that does authorised business with Iran, where those operations involve only non-sanctioned jurisdictions.
  8. US persons may receive reports from owned or controlled foreign entities on transactions authorised under General Licence H, but are prohibited from engaging in Iran-related activities and cannot to attempt to influence Iran-related business decisions.
This entry was posted in Iran, USA by Michael O'Kane. Bookmark the permalink.

About Michael O'Kane

Michael O’Kane is a partner and Head of the Business Crime team at leading UK firm Peters & Peters. Described as ‘first-rate’ (Legal 500 2012), he “draws glowing praise from commentators” (Chambers 2013) for handling the international aspects of business crime, including sanctions, extradition and mutual legal assistance. Called to the Bar in 1992 and prior to joining Peters & Peters he was a senior specialist prosecutor at the Crown Prosecution Service Headquarters(CPS). At CPS HQ he was a key member of a small specialist unit responsible for the prosecution of serious and high profile fraud, terrorist and special interest criminal matters including the Stansted Airport Afghan hijacking and the prosecution of Paul Burrell (Princess Diana’s butler). Michael joined Peters & Peters in 2002. He became a partner in May 2004, and Head of the Business Crime team in May 2009. Since joining Peters & Peters, Michael has dealt with a wide range of business crime matters. He has particular expertise in international sanctions, criminal cartels, extradition, corruption, mutual legal assistance, and FSA investigations. Described as“ an influential practitioner in fraud and regulatory work, so much so that he is top of the referral lists of many City firms for independent advice for directors” (The Lawyer’s Hot 100 2009), he was recognised as one of the UK’s most innovative lawyers in the 2011 FT Innovative Lawyer Awards and included in the list of the UK's leading lawyers in 'The International Who's Who of Asset Recovery 2012. In 2012 he was the winner of the Global Competition Review Article of the Year. Michael regularly appears on television and radio to discuss his specialist areas and he is the author of the leading textbook on the UK Criminal Cartel Offence “The Law of Criminal Cartels-Practice and Procedure” (Oxford University Press 2009). Recent/Current Sanctions Work • Representing 109 individuals and 12 companies subject to designation by the European Council under targeted measures imposed against Zimbabwe. This is the largest and most complex collective challenge to a sanctions listing ever brought before the European Court. • Acting for a former Egyptian Minister and his UK resident wife, challenging their designation by the European Council of Ministers under targeted measures brought against former members of the Egyptian Government. • Advising a company accused in a UN investigation report to have breached UN sanctions imposed in relation to Somalia. • Advising a UK company in relation to ongoing commercial relationships with an Iranian company listed under both EU and UN sanctions. • Advising an individual in relation to a UK investigation for alleging breaching nuclear export controls.

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