Implementation of Sanctions Relief for Iran

On January 16, 2016, following a favorable report from the International Atomic Energy Agency, the P5+1 powers (the United States, United Kingdom, China, France, Russia, and Germany) and Iran declared that “Implementation Day” had occurred under the Joint Comprehensive Plan of Action (JCPOA), bringing into force agreed relief from sanctions against Iran. The scope of relief was largely as expected, but the timing of the declaration was significantly earlier than unofficial estimates provided last year by U.S. officials.

To summarize the impact of JCPOA implementation:

• The majority of U.S. secondary sanctions against Iran have been lifted, as have most EU and UN sanctions.
• U.S. direct sanctions remain in place, meaning that all transactions involving Iran within U.S. jurisdiction (whether by U.S. persons or non-U.S. persons) are still prohibited, including dollar transactions clearing through the U.S. financial system.
• While European and other non-U.S. businesses now have considerably more freedom to do business with Iran, aggressive U.S. enforcement of direct U.S. sanctions against foreign persons acting within U.S. jurisdiction is likely to continue. Moreover, important U.S. secondary sanctions remain in place, particularly with respect to dealings with the remaining entities on the U.S. sanctions list. The need to monitor and address continuing secondary sanctions, as well as to avoid any contact with U.S. jurisdiction, will continue to raise potentially complex compliance issues for non-U.S. companies doing business with Iran.
• “Snap-back,” or reimposition of sanctions, remains a risk over the medium to long term.