Jonathan M. Epstein and Ronald A Oleynik are partners in Holland & Knight's Washington D.C. office
HIGHLIGHTS:
- The U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) revoked certain Iran-related "general licenses" that allowed U.S. and U.S.-owned foreign entities to engage in certain transactions and activities involving Iran.
- OFAC replaced these general licenses with new regulatory general licenses allowing for the winding-down of previously authorized activities.
- These actions follow President Donald Trump's May 8, 2018, decision to withdraw from the Joint Comprehensive Plan of Action (JCPOA).
The U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) on June 27, 2018, took further concrete action to reimpose restrictions on Iran that were authorized by OFAC general license during the period that the Joint Comprehensive Plan of Action (JCPOA) was in effect. (See Holland & Knight's alert, "The U.S. Will Reimpose Sanctions on Iran: What Companies Need to Know," May 9, 2018.) This action was expected, although the fairly narrow scope of "wind-down" activities authorized may make disengagement more difficult for some companies.
- Under OFAC General License H, foreign entities owned or controlled by U.S. persons were authorized to engage in many types of transactions with Iran and Iranian entities, consistent with the JCPOA. OFAC's revocation means that U.S.-owned or controlled foreign entities are now subject to the same prohibitions on transactions with Iran as their U.S. parent companies. OFAC's new general license, however, allows such entities to engage in wind-down of previously authorized activities involving Iran through Nov. 4, 2018 (180 days from President Donald Trump's initial announcement on May 8, 2018). In addition, U.S. parent companies can take action to alter policies and procedures affecting their foreign subsidiaries to effect this wind-down.
- Under OFAC General License I, U.S. persons were authorized to enter into contingent contracts eligible for authorization under the "Statement of Licensing Policy for Activities Related to the Export or Re-export to Iran of Commercial Passenger Aircraft and Related Parts and Services" (SLP). On June 27, 2018, OFAC officially revoked GL I and issued a wind-down license authorizing U.S. persons to engage only in wind-down activities previously permitted under the SLP through Aug. 6, 2018.
- OFAC also revoked general licenses related to imports of certain foodstuffs and carpets and related activities, including provision of brokering services or letters of credit, and issued wind-down authorization until Aug. 6, 2018.
As a practical matter, winding-down can be very difficult, not only because of commercial issues, but because different entities construe what is "ordinary and incident" to winding-down differently. Hence, financial institutions, shippers or other third parties may hesitate to support such wind-down transactions for fear of breaching sanctions themselves.
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.
