On June 8, 2016, the US Department of
Treasury's Office of Foreign Asset Control (OFAC) updated its
Frequently Asked Questions (FAQs) "to provide further clarity
on the scope of the sanctions lifting that occurred on
Implementation Day of the [Joint Comprehensive Plan of Action
The updated FAQs address a number of concerns regarding
practical application of the sanctions relief provided in the
JCPOA. As discussed below, they relate to sanctions relief for (1)
financial and banking operations and (2) US entities, citizens or
permanent resident aliens (US Persons), which have
been authorized to engage in Iran-related transactions pursuant to
General License H (GL H).
Financial and Banking Measures
FAQ C. 15 clarifies that US financial institutions are
permitted to open or maintain correspondent accounts and otherwise
engage in transactions with non-Iranian financial institutions that
have banking relationships with Iranian financial institutions,
provided that the Iranian financial institution is not on
OFAC's list of Specially Designated Nationals (SDN
FAQ C. 16 explains that US Persons may act as board
directors of non-US, non-Iranian entities (including financial
institutions) that engage in Iran-related business, provided that
such US Persons are "walled off" or
"ring-fenced" from the Iran-related business. OFAC
recommends that non-US, non-Iranian entities establish a
"blanket recusal policy" (as opposed to case-by-case
abstentions) to ensure that US Persons directors, managers or
employees are not involved in Iran-related business.
Foreign Entities owned or controlled by US Persons
FAQ K. 14 explains that US parents may alter their
policies and procedures, and those of foreign subsidiaries, to
allow such foreign subsidiaries to establish a physical presence in
FAQ K. 15 notes that foreign entities that are owned or
controlled by US Persons are not themselves US Persons, but are
nevertheless subject to US-Iran sanctions prohibitions except as
authorized by GL H.
FAQ K. 16 clarifies that foreign entities that are owned
or controlled by US Persons may engage in transactions with
individuals and entities on the "E.O. 13599 List", which
contains the names of individuals and entities previously on the
SDN List (and with which US Persons continue to be prohibited from
engaging in transactions).
FAQ K. 17 OFAC has announced its position that interests
of multiple US Persons are considered in assessing whether a
foreign entity is US-owned or –controlled. According to FAQ
As a general matter, an entity established or maintained
outside the United States is considered owned or controlled by a
U.S. person if, in the aggregate, one or more U.S. persons hold(s)
a 50 percent or greater equity interest by vote or value in the
entity or if one or more U.S. persons hold(s) a majority of seats
on the board of directors of the entity. A determination as to
whether one or more U.S. persons otherwise control(s) the actions,
policies, or personnel decisions of a foreign entity is a
fact-specific, case-by-case determination, but in making such a
determination, OFAC would look to the aggregated ownership
interests held, and indicia of control exercised, by all relevant
FAQ K. 17 also states that in circumstances in which a foreign
entity is publicly traded or interests in it are otherwise widely
disbursed, OFAC would not regard passive shareholdings by US
Persons in excess of 50% to constitute US ownership or control.
FAQ K. 18 clarifies that a US Person that owns or
controls a foreign entity may amend its and the foreign
entity's policies and procedures to allow the foreign entity to
engage in Iran-related transactions authorized under GL H.
FAQ K. 19 provides that such policies and procedures may
be amended more than once, provided that the amendments are not
made with the purpose of facilitating a particular Iran-related
FAQ K. 20 notes that US Persons involved with US-owned
or –controlled foreign entities must be recused or walled off
from such entities' Iran-related business activities.
FAQ K. 21 notes that a US parent company may not be
involved in day-to-day operations of a foreign subsidiary that
engages in Iran-related business, but the US parent company may
nevertheless be involved in such foreign subsidiaries'
day-to-day operations as they relate to jurisdictions that are not
subject to US sanctions.
FAQ K. 22 explains that US Persons may receive reports
from their owned or controlled foreign entities that contain
information about such foreign entities Iran-related transactions,
but they may not use such information to influence Iran-related
business decisions of the foreign entities.
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