UK: Sanctions Against Iran – EU Regulation 961/2010

Last Updated: 1 November 2010
Article by Tim Taylor, Lyall Hickson, Jennifer Salmon and Chris Zavos

A new European Union Regulation, in force throughout the EU from 27 October, imposes enhanced restrictions on the dealings of EU citizens and companies with Iran/Iranian companies and entities. The Regulation replaces EU Regulation 423/2007 and stands alongside the existing US, UN and various national sanctions against Iran and the existing anti-terror and anti-money laundering legislation.

We set out below some of the measures introduced by Regulation 961/2010.

Oil and gas

The following activities are generally prohibited:

  • The sale, supply, transport or export of certain key equipment or technology for key sectors of the oil and gas industry in Iran, directly or indirectly, to any Iranian person, entity or body or for use in Iran (Article 8).
  • The provision, directly or indirectly, of technical or brokering services or financing or financial assistance related to certain key equipment or technology for the oil and gas industry in Iran to any Iranian person, entity or body or for use in Iran (Article 9).
  • The provision of financial loan or credit to any Iranian person, body or entity engaged in the exploration or production of crude oil and natural gas, the refining of fuels or the liquefaction of natural gas (the formation of a JV with or acquisition or extension of a participation in any such person, body or entity are also prohibited) (Article 11).
  • The establishment of co-operation with an Iranian person, entity or body engaged in the transmission of natural gas (Article 11(4)).

Transactions with Iran/Iranian persons and entities

  • There have been some additions to the list of persons and entities whose funds and assets are to be frozen.
  • Transfer of sums of over EUR10,000 must be notified to the designated competent authorities of the Member States and transfers of over EUR40,000 require an application for prior authorisation (Article 21). The competent authority for the UK is HM Treasury.
  • New monitoring and record-keeping obligations are imposed on EU credit and financial institutions in their dealings with certain credit and financial institutions with links to Iran (Article 23).

Insurance/reinsurance

  • Under Article 26, it is prohibited to provide insurance or reinsurance to:

(i) Iran or its Government, and its public bodies, corporations and agencies;

(ii) an Iranian person, entity or body other than a natural person; or

(iii) a natural person or a legal person, entity or body when acting on behalf or at the direction of a legal person, entity or body referred to in (i) and (ii).

  • However, Article 26 allows for the provision of compulsory or third party insurance and health and travel insurance in certain circumstances.
  • Article 26 also prohibits the extension/renewal of insurance/reinsurance agreements concluded before the Regulation had come into force.
  • Article 26 does not generally prohibit compliance with agreements concluded before 27 October, but the UK Treasury has stated that compliance with the other provisions of the Regulation (including the payment mechanism at Article 21 above) will nevertheless be required.

Transportation

  • Important restrictions have been imposed on the transportation of certain goods and technology between the EU and Iran.

Each Member State is responsible for the implementation of "effective, proportionate and dissuasive" penalties applicable to infringements of the Regulation. The UK has prescribed penalties of up to two years in prison and/or a fine for the breach of the Regulation.

Watch this space for a more detailed briefing on the impact of the new Regulation.

Council Regulation (EU) 961/2010 is available at http://www.hm-treasury.gov.uk/d/council_regulation_eu_961_251010.pdf

The UK Treasury Notice on Council Regulation (EU) 961/2010 is available at http://www.hm-treasury.gov.uk/d/public_notice_reg961_271010.pdf

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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