President Trump announced today, May 8, 2018, that the United States will withdraw from the Iran Nuclear Deal and will begin reimposing previously waived sanctions on Iran. The deal, formally known as the Joint Comprehensive Plan of Action, or JCPOA, was signed by the U.S. in July 2015 along with China, France, Germany, Russia, the United Kingdom, the European Union and Iran. The White House issued a statement which explained that “President Trump is terminating United States participation in the JCPOA, as it failed to protect America’s national security interests.”
President Trump has long been a critic of the JCPOA and previously refused to certify the agreement in October of 2017. Then, in January of 2018, President Trump agreed to temporarily extend statutory waivers necessary to preserve the JCPOA but stated that he would be doing so for the last time unless Iran and the other JCPOA-counterparties could amend the JCPOA to his satisfaction. With today’s announcement, the U.S. Departments of State and Treasury will officially revoke those waivers. The U.S. Department of Treasury‘s Office of Foreign Assets Control (OFAC) has issued guidance which indicates that the revoked waivers will be replaced with waivers and OFAC authorizations that will permit limited wind-down activities for transactions that were previously permitted under the JCPOA. The authorized wind-down activities are expected to include:
For a period of ninety (90) days (e., until August 6, 2018), the wind-down waivers are expected to permit U.S. and non-U.S. persons to wind down certain previously permitted transactions with Iran’s financial sector, Iran’s automotive sector and Iran’s trade in gold, precious metals, other commodities and industrial software.
For a period of one hundred eighty (180) days (e., until November 4, 2018), the wind-down waivers are expected to permit U.S. and non-U.S. persons to wind down certain previously permitted transactions with Iran’s port operators, shipping and shipbuilding sectors, petroleum-related transactions involving Iran (including transactions with the National Iranian Oil Company (NIOC), Naftiran Intertrade Company (NICO), and National Iranian Tanker Company (NITC)), transactions between non-U.S. financial institutions and the Central Bank of Iran and other sanctioned Iranian banks, transactions involving the provision of underwriting services, insurance or reinsurance and transactions involving Iran’s energy sector.
OFAC has also indicated that:
OFAC will revoke General License H, which was issued under the JCPOA and which previously permitted U.S.-owned or –controlled foreign entities to transact with Iran under certain conditions. OFAC will replace General License H with an authorization of some sort which will permit U.S. owned or-controlled foreign entities to wind down Iranian transactions that were previously authorized under General License H for a period of one hundred eighty (180) days (e., until November 4, 2018).
To the extent that OFAC may have issued any other specific licenses in connection with the JCPOA, OFAC intends to revoke those licenses and replace them with limited ninety (90) day wind-down authorizations which will expire on August 6, 2018.
Persons and entities removed from OFAC’s Specially Designated Nationals List (the “SDN List”) in connection with the JCPOA will be relisted on the SDN List no later than November 5, 2018. As a result of those relistings, secondary sanctions will reattach to certain of those relisted individuals and entities and non-U.S. persons will be liable for violating various OFAC sanctions if they transact with such individuals or entities. Names will get relisted to other U.S. lists in addition to the SDN List.
At the time of this posting, the Departments of State and Treasury have not yet issued the forthcoming wind-down waivers and OFAC also has not yet issued its additional wind-down authorizations. As a result, it is currently unclear exactly what winding-down activities will be allowed during the wind-down periods discussed above.