US Reimposes Second Set of Sanctions on Iran, Targeting Oil, Shipping, and Banking Sectors | Practical Law

US Reimposes Second Set of Sanctions on Iran, Targeting Oil, Shipping, and Banking Sectors | Practical Law

The Office of Foreign Assets Control (OFAC) reimposed sanctions on Iran on November 5, 2018, after the expiration of a 180-day wind-down period following US withdrawal from the multilateral Joint Comprehensive Plan of Action (JCPOA).

US Reimposes Second Set of Sanctions on Iran, Targeting Oil, Shipping, and Banking Sectors

by Practical Law Commercial Transactions
Published on 08 Nov 2018USA (National/Federal)
The Office of Foreign Assets Control (OFAC) reimposed sanctions on Iran on November 5, 2018, after the expiration of a 180-day wind-down period following US withdrawal from the multilateral Joint Comprehensive Plan of Action (JCPOA).
The US Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned more than 700 individuals, entities, aircraft, and vessels on November 5, 2018, in the largest ever single-day action targeting Iran. This action is part of the reimposition of the remaining US nuclear-related sanctions that were lifted or waived in connection with the 2015 nuclear accord between the US, United Kingdom, France, Germany, Russia, and China, collectively referred to as P5 + 1 (see Department of the Treasury: U.S. Government Fully Re-Imposes Sanctions on the Iranian Regime).

Background

Under the 2015 accord, also known as the Joint Comprehensive Plan of Action (JCPOA), Iran agreed to limit its nuclear activities and allow in international inspectors in return for the lifting of certain economic sanctions. The US withdrew from the JCPOA on May 8, 2018, citing the deal's limited effectiveness in curbing Iran's ability to make nuclear weapons, its development of missiles, and its support for armed conflict in the region. All signatory countries except the US remain a part of the JCPOA.
The US withdrawal from the JCPOA triggered the reimposition of certain sanctions. To allow time for compliance, the US State Department issued statutory sanctions waivers that provided for 90-day and 180-day wind-down periods, until August 6, 2018 and November 4, 2018, respectively. These waivers covered activities involving Iran that were consistent with the US sanctions relief specified in the JCPOA. The US reimposed certain sanctions on August 7, 2018 following the expiration of the 90-day wind down period. The November 5 sanctions follow the expiration of the 180-day wind down period. For more information on the 2015 JCPOA, US withdrawal from the JCPOA, and the August 7, 2018 reimposition of certain sanctions, see Legal Update, Updated: President Trump Signs Executive Order Reimposing US Sanctions on Iran.

November 5 Sanctions

The November 5 sanctions largely target Iran's oil exports by seeking to block dealings with Iran's banks, as well as its shipping and aviation industries. Specifically, the sanctions' targets include:
  • Fifty Iranian banks and subsidiaries.
  • More than 200 persons and vessels in Iran's shipping sector.
  • Tehran's national airline, Iran Air.
  • More than 65 Iranian aircraft.
Under the new sanctions:
  • The US can seize assets under its jurisdiction that are owned by blocked people and entities.
  • Commercial relations with sanctioned people and entities are forbidden.
  • Companies in non-US countries will be subject to penalties, or "secondary sanctions," for dealing commercially with Iran and must otherwise comply with US sanctions policies.
  • There are exceptions for humanitarian purchases.
OFAC has published 15 new Frequently Asked Questions (FAQs 630-645) about the reimposed sanctions.
The US carved out exemptions for China, Japan, South Korea, India, and Taiwan in Asia, as well as Greece, Italy, and Turkey in Europe. These countries may continue to buy oil from Iran for 180 days without being penalized, as long as they show reductions in their imports. This measure was imposed to prevent a spike in oil prices.
The Trump administration says it will lift the sanctions only after Iran accepts its list of 12 demands.
For more information on OFAC sanctions generally, see Practice Note, Export Regulation: OFAC Economic and Trade Sanctions.