Updated: President Trump Signs Executive Order Reimposing US Sanctions on Iran | Practical Law

Updated: President Trump Signs Executive Order Reimposing US Sanctions on Iran | Practical Law

In accordance with a newly released Executive Order, the US reimposed sanctions on Iran after the expiration of a 90-day wind-down period following the US withdrawal from the multilateral Joint Comprehensive Plan of Action (JCPOA).

Updated: President Trump Signs Executive Order Reimposing US Sanctions on Iran

Practical Law Legal Update 9-554-9565 (Approx. 9 pages)

Updated: President Trump Signs Executive Order Reimposing US Sanctions on Iran

by Practical Law Commercial Transactions
Published on 08 Aug 2018 • USA (National/Federal)
In accordance with a newly released Executive Order, the US reimposed sanctions on Iran after the expiration of a 90-day wind-down period following the US withdrawal from the multilateral Joint Comprehensive Plan of Action (JCPOA).
This resource was updated on August 7, 2018 to reflect President Trump's new Executive Order, which details the reimposition of US sanctions on Iran after the expiration of a 90-day wind-down period following the US withdrawal from the Joint Comprehensive Plan of Action (JCPOA) (see Update IX).
On January 20, 2014, the White House announced in a press release that it is implementing a Joint Plan of Action regarding Iran's nuclear program and temporarily suspending certain sanctions against Iran. The Joint Plan of Action is an agreement between the US, it's partners in the P5+1 (the United Kingdom, France, Germany, Russia, and China), and Iran to halt Iran's progress on its nuclear program and to roll it back in key areas. The International Atomic Energy Agency reported on January 20th that Iran has taken the initial specific steps it committed to as part of the Joint Plan of Action. Therefore, the White House is moving forward with its initial agreement to provide Iran with limited, targeted, and reversible sanctions relief for a six-month period.
The US Department of State has issued an explanatory fact sheet summarizing this sanctions relief. Under the Joint Plan of Action:
  • The US is suspending sanctions on transactions:
    • for the purchase of petrochemical products from Iran by non-US persons;
    • by non-US persons for the sale, supply, or transfer to or from Iran of gold and other precious metals; and
    • by non-US persons for the sale, supply, or transfer to Iran of significant goods or services used in connection with the Iranian automotive sector.
  • The US is adopting a licensing policy to permit the supply and installation of spare parts necessary for safety-of-flight inspections and repairs for Iranian civil aviation.
  • Iran and the P5+1 have agreed to facilitate Iran's import of certain humanitarian goods, such as food, agricultural commodities, medicine, and medical devices.
  • Iran will gain access to $4.2 billion of restricted Iranian revenues held abroad.
The US Department of State specifically notes that:
  • All US sanctions not explicitly waived or suspended on January 20, 2014 remain fully in force.
  • US persons and US owned or controlled foreign entities are still generally prohibited from conducting transactions with Iran.
The Joint Plan of Action and associated sanctions suspensions are in force for six months, from January 20 to July 20, 2014. This temporary suspension of sanctions applies only to activities that begin and end within this six-month period.
Companies with foreign affiliates should be careful in structuring any transactions with Iran because:

Update

On July 22, 2014, the US Department of State issued a press release announcing that the agency is extending this Joint Plan of Action. During this extension, the Department of State will:
  • Continue to suspend the sanctions mentioned above.
  • Allow Iran access to $2.8 billion dollars of its restricted assets held abroad.
The Joint Plan of Action was originally set to expire on July 20, 2014. The Department of State is now extending the Joint Plan of Action until November 24, 2014.
On August 4, 2014, OFAC published updated guidance in the Federal Register to assist parties in complying with the Joint Plan of Action.

Update II

On December 30, 2014, the US Department of State released a public notice to outline the actions the US government has taken to implement the sanctions relief under this Joint Plan of Action. This notice describes the:
  • Sections of the Iran Freedom and Counter-Proliferation Act of 2012 (22 U.S.C.A. §§ 8801 - 8811) the US has temporarily waived.
  • Business transactions and partners that are covered by this waiver.
The Joint Plan of Action was renewed on July 19, 2014 and again on November 24, 2014, extending its temporary sanctions relief to cover the period from November 24, 2014 until June 30, 2015.

Update III

On July 14, 2015, the White House announced that the US and its partners in the P5+1 have agreed to a long-term nuclear deal with Iran to prevent Iran from acquiring a nuclear weapon and to ensure that Iran's nuclear program is exclusively peaceful.
This agreement could ultimately relieve broad nuclear-related sanctions against Iran in a phased manner as international inspectors confirm that Iran has upheld its commitments. Except for the limited sanctions relief that has been in place since negotiations began, all current sanctions against Iran remain in place until Iran's compliance with this agreement has been verified. The US and its P5+1 partners are not relieving any new US or international sanctions until further notice.

Update IV

On January 16, 2016, the US, its partners in the P5+1, and Iran reached Implementation Day under the Joint Plan of Action after the International Atomic Energy Agency verified that Iran has implemented its key nuclear-related measures described in the agreement. As a result, the US is lifting certain nuclear-related sanctions against Iran, including secondary sanctions related to:
  • Iran's:
    • trade in gold and other precious metals;
    • energy sector;
    • shipping and shipbuilding sectors and port operators; and
    • automotive sector.
  • Certain banking and financial transactions with Iran.
  • Certain underwriting services and insurance transactions with Iran.
  • Trade with Iran in graphite, raw, or semi-finished metals and software for integrating industrial processes.
OFAC has published several new guidance documents related to Implementation Day and US sanctions against Iran:
These documents are effective January 16, 2016.
For more information on the Joint Plan of Action, see White House: The Iran Deal, State Department: Joint Comprehensive Plan of Action (JCPOA), and the President's Executive Order.

Update V

On March 25, 2016, OFAC issued a new general license under the Iranian Transactions and Sanctions Regulations (General License I).
Under General License I, US parties are now authorized to enter into, and to engage in all transactions ordinarily incident to the negotiation of and entry into, contracts for activities eligible for authorization under the January 16, 2016 Statement of Aircraft Licensing Policy. However, the performance of the contract must be made expressly contingent on the issuance of a specific OFAC license authorizing the activities to be performed.
OFAC also updated its FAQ to clarify:
  • Why it issued General License I.
  • That General License I does not authorize the export or re-export of commercial passenger aircraft or related parts or services to Iran.
  • That General License I authorizes the negotiation of and entry into a Nondisclosure Agreement in connection with the negotiation of a contingent contract for activities eligible for authorization under the Statement of Aircraft Licensing Policy.
  • What information should be included in specific license applications submitted under the Statement of Aircraft Licensing Policy.
(See FAQ J.9 – J.12.)
General License I became effective on March 24, 2016.

Update VI: Iran Sanctions Extension Act

The White House announced on December 15, 2016, that the Iran Sanctions Extension Act (Iran Sanctions Extension Act, H.R. 6297 (2016)) is becoming law, despite President Obama's not signing the bill (White House: Statement by the Press Secretary on H.R. 6297 - Iran Sanctions Extension Act). The White House noted that although it considers the extension unnecessary, it also believes the extension is entirely consistent with the US' commitments in the Joint Plan of Action. The Iran Sanctions Act is now extended until December 31, 2026.
OFAC has also updated its FAQ to amend two questions (M.4 and M.5) regarding the re-imposition of sanctions in the event of a sanctions snapback under the Joint Plan of Action.

Update VII

On December 22, 2016, OFAC announced the following amendments to the Iranian Transactions and Sanctions Regulations:
  • Authorized sales of agricultural commodities and medical devices to Iran. After a review of existing general licenses and in response to inquiries from the regulated public, OFAC is:
    • expanding the scope of medical devices and agricultural commodities that may be exported or reexported to Iran without specific authorization;
    • authorizing the provision of training necessary for the safe and effective use of these medical devices and agricultural commodities;
    • modifying the rules governing export of replacement parts for medical devices, removing the requirement of a one-to-one basis of exchange; and
    • authorizing importation to the US of broken, defective, non-operational, or recalled agricultural commodities and medical devices previously exported or reexported to Iran.
  • Definitions. OFAC is amending the definitions of the terms "goods of Iranian origin" and "Iranian-origin goods" to clarify that these terms do not apply to certain categories of goods.
The amendments took effect on December 23, 2016. OFAC has also updated the FAQ on Iran Sanctions to reflect the amendments.

Update VIII

On May 8, 2018, President Trump announced that the US will withdraw from participation in the Joint Comprehensive Plan of Action (JCPOA). In conjunction with the withdrawal, the US will begin re-imposing nuclear-related sanctions against Iran that were lifted as part of the JCPOA sanctions relief, after a wind-down period. President Trump also issued a National Security Presidential Memorandum (NSPM) directing US government agencies, including the US Department of the Treasury, to begin implementing the necessary actions to enforce his decision.

Applicable Wind-Down Periods

The US State Department has issued statutory sanctions waivers that provide for 90-day and 180-day wind-down periods, until August 6, 2018 and November 4, 2018, for activities involving Iran that were consistent with the US sanctions relief specified in the JCPOA. OFAC is expected to revoke or amend, as appropriate, the general and specific licenses that were issued in connection with the JCPOA. OFAC will then issue new authorizations to allow the wind-down of transactions and activities that were authorized under the revoked or amended general and specific licenses. At the end of the 90-day and 180-day wind-down periods, the applicable sanctions will come back into full effect.
OFAC has updated the FAQ on Iran sanctions to provide guidance on the sanctions to be re-imposed and the applicable wind-down periods.

Update IX

On August 6, 2018, President Trump issued an Executive Order Reimposing Certain Sanctions with Respect to Iran. The Executive Order states that following the expiration of the 90-day wind-down period instituted in the President's May 8 withdrawal from the JCPOA, the US was reimposing sanctions on Iran on August 7, 2018. A second round of sanctions will be reimposed at the end of the 180-day wind-down period ending November 4, 2018.
The first set reimposes sanctions on:
  • The purchase of or acquisition of US dollar banknotes by the Government of Iran.
  • Iran's trade in gold and precious metals.
  • 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.
  • Significant transactions related to the purchase or sale of Iranian rials.
  • Maintenance of significant funds or accounts outside of the territory of Iran denominated in the Iranian rial.
  • The purchase, subscription to, or facilitation of the issuance of Iranian sovereign debt.
  • Iran's automotive sector.
In addition, the following JCPOA-related authorizations under US primary sanctions regarding Iran have been revoked following the expiration of the 90-day wind-down period on August 6:
  • The importation into the US 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).
  • Activities undertaken pursuant to General License I relating to contingent contracts for activities eligible for authorization under the JCPOA SLP.
(See Frequently Asked Questions Regarding the Re-Imposition of Sanctions Pursuant to the May 8, 2018 National Security Presidential Memorandum Relating to the Joint Comprehensive Plan of Action (JCPOA) - FAQ 1.2.)
Additionally, OFAC: