United States: Iran Sanctions Deal Does Not Alleviate Current U.S. Economic Sanctions: "Iran Is Not Open For Business"

Last Updated: February 7 2014
Article by Lindsay B. Meyer, Carrie A. Kroll and Amanda C. Blunt

U.S. sanctions involving Iran have been a forefront topic recently, with some continuing confusion as to the current state of the sanctions' provisions for most U.S. businesses. On January 20, 2014, the P5 + 1 Agreement (or "Interim Deal") took effect reflecting the six-month interim sanctions deal with Iran that was negotiated in November by a U.S.-led coalition of states. For now, however, the U.S. Government has emphasized that the P5 + 1 Agreement has little impact on trade restrictions currently limiting U.S. trade and investment with Iran.

Published Joint Guidance Confirms U.S. Sanctions Currently Remain

To clarify this position, the U.S. Departments of State and Treasury released joint guidance on January 20, noting that, but for extremely limited exceptions, no sanctions relief would impact U.S. businesses or foreign companies controlled by U.S. persons. That is, U.S. economic sanctions remain in place, as well as subsidiary liability, Securities and Exchange Commission (SEC) reporting requirements, and all "blocks" on persons and entities on the Specially Designated Nationals (SDN) list. Importantly, the Obama Administration fully intends to continue to enforce Iranian sanctions during the interim period. Indeed, the relief has been described as "limited, targeted and reversible."

Moreover, limited changes temporarily easing restrictions on non-U.S. persons with respect to certain defined sectors will not go into effect until such time as they are implemented by the U.S., UK, France, China, Russia, and Germany. In the United States, this will occur via Executive Order of the President and action by the U.S. Department of the Treasury's Office of Foreign Asset Control (OFAC). And, as it is "interim," the deal will be revisited in six months, either to renew it, or to reach a revised final agreement. As such, the changes may be nullified shortly after U.S. implementation gives them effect.

Understanding the Interim Deal

The Interim Deal represents the first time in a decade that Iran has agreed to halt, and in some cases "roll back," aspects of its nuclear program as outlined in a Joint Plan of Action (JPOA) between Iran and the P5 + 1. For instance, Iran agreed to restrict uranium enrichment and address existing stockpiles and inspections, while the P5 + 1 agreed to limited changes to U.S. and EU sanctions programs and to unfreeze certain assets. The P5 + 1 also agreed to maintain current levels of permissible oil transactions and certain insurance and shipping services to facilitate those oil exports. It is contemplated that limited funds from these exports will assist the Iranian government in fulfilling its obligations to reduce its nuclear program, while the rest of the funds will continue to be held in blocked accounts.

Other changes to be implemented by the negotiating states include authorizing transactions by actors impacted by so-called "secondary sanctions," including transactions:

  • To provide and service spare parts for civil aviation in order to improve flight safety of Iranian airlines including Iran Air;

  • For precious metals including gold;

  • Concerning the auto industry; and

  • To establish financial channels for certain foreign banks and Iranian banks not specially designated.

With the exception of temporary licensing permitted for civil aviation activities and a "financial channel" to facilitate humanitarian trade, none of the sanctions relief outlined may involve a U.S. person or a foreign entity owned or controlled by a U.S. person, if otherwise prohibited under any sanctions program administered by the U.S. Government.

Current exceptions for humanitarian trade of food, agriculture, and medicine will remain, and permit related funds to accrue to Iran to pay United Nations' debts and university tuition for Iranian students abroad.

Recent U.S. Government Testimony Reaffirms that "Iran Is not Open for Business"

If the joint guidance left any uncertainty as to the U.S. position, it was clarified in the testimony of Under Secretary of State for Political Affairs, Wendy R. Sherman, and Under Secretary of Treasury for Terrorism and Financial Intelligence, David S. Cohen, before the Senate Foreign Relations Committee on February 4.

As lead U.S. negotiator for the Interim Deal, Under Secretary Sherman made abundantly clear that, if ongoing negotiations failed to result in a "long-term" deal addressing international concerns over the Iran nuclear program, then the Administration would ask Congress for additional sanctions against Iran. At this point, however, she noted that these would not be passed over the next few months while talks with Iran continue, as such requests would undermine ongoing diplomatic efforts, consistent with President Obama's vow to veto any legislation proposing new sanctions on Iran in his State of the Union address.

Under Secretary Cohen also testified that over the past several weeks, Administration officials have met with foreign banks, businesses, and trade promotion authorities to "explain the limits" in scope and duration of the sanctions relief. He noted that the message to be delivered was that "Iran is not open for business." In reference to his personal meetings with businesses in Turkey, Germany, Italy, and the United Arab Emirates, he emphasized that "anyone doing business with Iran continues to incur significant reputational risk."

Several U.S. Senators raised questions about reports of European business delegations engaging in meetings in Tehran, to which Obama Administration officials have responded that they understood these visits were meant to position the companies for work in the future. Reportedly, U.S. Secretary of State John Kerry took note of such actions, admonishing French Foreign Minister Laurent Fabius that the "business delegation" of more than 100 French executives who traveled to Iran on Monday was "not helpful" and gave the wrong impression that the West could now engage in business as usual in Iran.

Given the limited and temporary nature of the P5 + 1 Agreement, it is critical for U.S. exporters to be mindful that U.S. sanctions, subsidiary liability, Securities and Exchange Commission (SEC) reporting requirements, and the Specially Designated Nationals (SDN) list remain in place. The Administration has publicly stated that it will continue to vigorously enforce Iranian sanctions during the Interim Deal period. Given the fluid nature of the negotiations, careful monitoring of international and domestic developments is a crucial component of compliance for U.S. companies and U.S.-controlled foreign entities.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.