United States: Implementation Day And The Lifting Of Sanctions Against Iran

On January 16, 2016, the International Atomic Energy Agency confirmed that Iran had fulfilled its initial nuclear-related obligations under the Joint Comprehensive Plan of Action (JCPOA) that had been reached in July between the United States, the other P5+1 countries, the European Union, and Iran. ( See July 31, 2015, Alert). As a result, on that day (Implementation Day) the UN, the United States, and the European Union lifted their nuclear-related sanctions against Iran. For European companies, this essentially means that, provided they comply with the EU's export licensing requirements for shipments to Iran, they should be able to engage in most types of transactions with that country.

The same is not the case for U.S. companies and other U.S. persons – for the most part, they remain prohibited from engaging in transactions with Iran, although, as explained below, under certain circumstances, their separately-incorporated foreign subsidiaries may engage in certain transactions with Iran that previously were prohibited to them.

Following is a review of those Iran sanctions lifted by the United States.

1. Removal of nuclear-related secondary sanctions – Prior to January 16, foreign firms that engaged in certain transactions/trading with Iran related to that country's

  • financial and banking,
  • energy and petroleum,
  • shipping, shipbuilding, and port operations,
  • gold and other precious metals,
  • graphite, raw or semi-finished metals such as aluminum and steel,
  • coal,
  • software for integrating industrial process, and
  • automotive

sectors were subject to the potential imposition by the United States of a broad spectrum of sanctions, up to and including, being blocked from engaging in transactions with the United States. Secondary sanctions were also imposable by the United States against (re)insurers of sanctionable transactions. On January 16, the threat of those secondary sanctions being imposed was removed.

However, U.S. secondary sanctions may still be imposed against foreign persons for transactions with the more than 200 Iranian or Iran-related Specially Designated Nationals (SDNs) remaining on the SDN List, the Iranian Revolutionary Guard Corps (IRGC) and its designated agents or affiliates, and activities in support of SDNs designated for Weapons of Mass Destruction (WMD) reasons or Iran's support for international terrorism. In addition, clearance of U.S. dollar transactions involving Iranian persons by foreign banks through U.S. financial institutions remains prohibited.

Since, as part of the JCPOA, the United States also removed, on Implementation Day, approximately 400 Iranian entities, such as the Central Bank of Iran, a number of other Iranian financial institutions, the Islamic Republic of Iran Shipping Lines (IRISL), the National Iranian Oil Co., the Naftiran Trading Company, and the National Iranian Tanker Company from the SDN List, foreign person transactions with those entities will not result in the imposition of U.S. secondary sanctions. Moreover, Iranian banks that have been removed from the SDN List will be allowed to reenter the SWIFT messaging service network. Finally, Iran is being allowed to repatriate what is believed to be between $50-$100 billion in oil revenues held in third countries.

2. Removal of certain aspects of the U.S. direct embargo of Iran – The United States has imposed a comprehensive embargo on trade and financial transaction with, and investments in, Iran since at least 1995. This embargo is applicable to U.S. persons and items subject to U.S. export control jurisdiction. In 2012, this embargo was extended to cover the activities of foreign entities owned or controlled by U.S. persons.

In light of Implementation Day, the United States took steps in three specific and limited areas to lift its primary embargo against Iran. First, and perhaps of the greatest practical impact, the Office of Foreign Assets Control (OFAC) has issued a new general license (General License H), which authorizes foreign entities owned or controlled by U.S. persons to engage in transactions with Iran. However, such transactions are subject to a number of restrictions.

Whereas foreign subsidiaries of U.S. companies will be able to export to Iran U.S.-origin EAR99 items they bought for general inventory purposes, they will not generally be able to ship to Iran any other items subject to U.S. export control jurisdiction. Such items include not only those of U.S. origin, but also foreign-origin items containing more than 10 percent controlled U.S. content, and some foreign-origin items that are the direct product of U.S. technology. Second, no U.S. person, including the foreign subsidiary's U.S. parent and U.S. citizens and permanent resident aliens working at the foreign subsidiary, can finance, guarantee, approve, or otherwise "facilitate" any Iranian transactions. Third, Iranian transactions cannot involve any transfer of funds to, from, or through a U.S. depository institution, nor can they involve any SDN, person/entity identified as a foreign sanctions evader, or certain other denied/sanctioned persons, or any military, paramilitary, intelligence, or law enforcement entity of the Government of Iran or any official, agent, or affiliate thereof.

If foreign entities owned or controlled by a U.S. company engage in conduct with Iran not authorized by General License H, the parent company will be liable for any resulting civil penalties.

The OFAC prohibition on U.S. person facilitation of transactions by foreign affiliates with Iran is broad and includes most types of assistance for such activities, including such things as operational assistance and the provision of a wide variety of supporting services, such as logistics, accounting, and engineering.

However, General License H does authorize two types of previously prohibited facilitation activities. First, it authorizes U.S. persons to establish or alter operating policies and procedures to the extent necessary to allow a U.S. person-owned or -controlled foreign entity to engage in authorized transactions with Iran. This authorization is explained by OFAC to cover the involvement of U.S. person board members, senior management, and employees, as well as outside U.S. legal counsel or consultants to draft, alter, advise, or consult on such operating policies and procedures. U.S. persons can also provide training, advice, and counseling on new or revised operating policies and procedures.

Second, it authorizes making available to U.S.-owned or -controlled foreign entities any automated and globally integrated computer, accounting, email, telecommunications, or other business support system, platform, database, application, or server necessary to store, collect, transmit, generate, or otherwise process documents or information related to authorized Iran transactions. However, computer and related business support systems cannot be used for any transfer of funds to, from, or through a U.S. depository institution or a U.S.-registered broker or dealer in securities.

In this regard, the term "automated" refers to a computer, accounting, email, telecommunications, or other business support system, platform, database, application, or server that operates passively and without human intervention (except for routine or emergency maintenance) to facilitate the flow of data between and among the U.S. person and its owned or controlled foreign entities. U.S. persons would not be authorized to perform data entry or internal processing for the creation of a customer record. The term "globally integrated" refers to a computer, accounting, email, telecommunications, or other business support system, such as an ERP system, platform, database, application, or server, that is available to, and in general use by, the U.S. person's global organization, including the U.S. person and its owned or controlled foreign entities.

The second action taken by OFAC to ease the U.S. direct embargo of Iran was the establishment of a favorable licensing policy for activities related to the export, reexport, sale, lease, or transfer to Iran of commercial passenger aircraft for exclusively commercial aviation use, and of related spare parts, components, and associated services. While licenses will still be required for shipments of such items, OFAC has committed to a favorable licensing policy provided that the items are used exclusively for commercial passenger aviation and the items are not for resale or retransfer to persons on the SDN List.

The third step taken by OFAC was the issuance, on January 21, of a general license to authorize the importation of Iranian-origin carpets and foodstuffs intended for human consumption, including caviar and pistachios. U.S. person dealings in such items are also authorized, provided that the transaction or dealing does not involve or relate to goods, technology, or services for exportation, reexportation, sale, or supply, directly or indirectly, to Iran, the Government of Iran, an Iranian financial institution, or any other Iranian-blocked person/entity.

The above actions taken by the United States provide a limited, but possibly important Iranian market opportunity, at least for some U.S. industries and foreign subsidiaries. However, the remaining restrictions on the new opportunities, particularly the retention of the facilitation prohibition, will mean that careful planning will be needed to take proper advantage of them. More broadly, the limited nature of the U.S. primary sanctions against Iran that are being lifted means that most transactions by U.S. persons involving Iran will remain prohibited and subject to licensing. Further easing of the embargo against Iran will have to await further improvements in diplomatic relations between the two countries.

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.


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.