August 7, 2018 – As anticipated, on August 6, 2018, President Trump issued a new Executive Order, entitled “Reimposing Certain Sanctions With Respect to Iran” (“Executive Order”), in furtherance of his May 8, 2018 announcement that the United States would cease participation in the Joint Comprehensive Plan of Action (“JCPOA”). As we previously summarized, August 6 marked the expiration of the 90-day period to wind down certain activities before sanctions that the U.S. waived under the JCPOA “snapback” into effect. The remaining sanctions will snap back after the expiration of the 180-day wind-down period on November 4, 2018. Concurrently with the issuance of the Executive Order, the U.S. Department of the Treasury, Office of Foreign Assets Control (“OFAC”) amended its Frequently Asked Questions (“FAQs”) related to the Iran sanctions program generally and to President Trump’s May 8 announcement that the United States would withdraw from the JCPOA.
Specifically, the Executive Order reimposes U.S. sanctions relating to:
The Government of Iran’s purchase or acquisition of U.S. banknotes;
Iran’s trade in gold or precious metals;
Transactions involving graphite, raw, or semi-finished metals or software for integrating industrial processes;
Significant transactions related to the purchase, sale, or maintenance of funds in Iranian rials;
Transactions involving the purchase, subscription to, or issuance of Iranian sovereign debt; and
Iran’s automotive sector.
With the August 7, 2018, snapback, OFAC’s general licenses permitting wind-down activities in these areas within the 90-day period also expired. OFAC’s FAQs clarify that, while non-U.S., non-Iranian parties may continue to receive payments pursuant to a written contract, U.S. parties or U.S. owned or controlled foreign entities must obtain a specific license from OFAC to continue to receive payments.
In addition, the Executive Order revokes Executive Orders 13716 and 13628 and restates their relevant provisions to cite additional statutory authority. OFAC’s FAQs explain that this is “[t]o provide clarity and consolidate relevant authorities into a single document.” The FAQs further clarify that, because certain sections of Executive Orders 13716 and 13628 have been superseded, their provisions have not been included in the new Executive Order verbatim.
The Executive Order also identifies the additional sanctions that will snap back on November 5, 2018, including sanctions targeting Iran’s energy sector, ports, shipping and shipbuilding. Sanctions targeting transactions with Iranian persons that were removed from the Specially Designated Nationals (“SDN”) list as part of the JCPOA will also snap back on November 5 when such persons are added back to the SDN list.
Finally, as part of the sanctions that will become effective on November 5, 2018, the Executive Order broadens the scope of secondary sanctions targeting persons seeking to engage in transactions or support for Iranian sanctioned parties. Specifically, the Executive Order provides:
Authority for blocking sanctions for persons who, on or after November 5, 2018: (i) provide material support for the Iranian Government’s purchase of U.S. banknotes; (ii) provide material support for the National Iranian Oil Company (“NIOC”), Naftiran Intertrade Company (“NICO”), or the Central Bank of Iran (“CBI”); or (iii) are determined to be part of Iran’s energy, shipping, or shipbuilding sectors or an Iran port operator, or knowingly provide significant support for SDNs or other blocked parties.
Authority to deny access to the U.S. banking system to foreign financial institutions that, on or after November 5, 2018, knowingly facilitate a transaction on behalf of any of the persons described above.
Expansion of the menu of sanctions available against parties who, on or after November 5, 2018, engage in transactions related to Iran’s petroleum sector; and
Expansion of the prohibitions on U.S. owned or controlled foreign entities to prohibit transactions with persons blocked for (i) providing material support for SDNs or other blocked parties, or (ii) being part of Iran’s energy, shipping, or shipbuilding sectors or an Iran port operator, or knowingly providing significant support for SDNs or other blocked parties.