On May 8, 2018, President Trump announced the United States will withdraw from the Joint Comprehensive Plan of Action ("JCPOA"), commonly referred to as the "Iran Nuclear Deal," which was adopted on October 18, 2015 and implemented on January 16, 2016 ("Implementation Day"). During the announcement, the President criticized the JCPOA, saying the heart of the deal was a "giant fiction," and the U.S. cannot prevent Iran from creating a nuclear bomb under the "decaying and rotten" structure of the JCPOA.
As background, on Implementation Day the United States issued waivers on certain U.S. sanctions on Iran in exchange for concessions made by Iran with regards to its nuclear program. These sanctions include "secondary sanctions" that apply to non-U.S. persons and are related to Iran's financial and energy sectors and many other segments of Iran's economy. Under the JCPOA, the waivers are limited in duration and require extension at statute-specific intervals by signature of the President.
In a statement on January 12, 2018, President Trump announced he would not extend the waivers of sanctions on Iran pursuant to the JCPOA if a new deal could not be reached by May 12, 2018. The May 12 deadline was the next due date for an extension of the sanctions waiver. No new deal was reached, or even attempted, so the President followed through with his earlier statements and refused to extend the sanctions waiver and announced the U.S. withdrawal from the JCPOA. The most direct effect of the withdrawal will be the re-imposition of sanctions lifted on Implementation Day.
The Department of Treasury Office of Foreign Assets Control ("OFAC") issued new Frequently Asked Questions (FAQs) Regarding the Re-Imposition of Sanctions within minutes of the President's announcement. The FAQs clarify that the Departments of State and Treasury will implement wind-down periods of 90 days and 180 days for persons affected by the re-imposition of the sanctions. The applicable wind-down period depends on the type of future sanctioned activity conducted. For example, activities related to Iran's trade in gold or precious metals are subject to the 90-day wind-down period, while activities related to Iran's energy sector are subject to the 180-day wind-down period. OFAC stated that all nuclear-related sanctions lifted under the JCPOA are expected to be re-imposed following November 4, 2018.
Importantly, during the applicable wind-down period, OFAC will permit U.S. persons and U.S. owned or controlled foreign entities to receive payment according to the terms of written contracts entered into prior to May 8, 2018 for goods or services fully provided or delivered pursuant to an OFAC authorization. Additionally, OFAC will soon replace General License H, Authorizing Certain Transactions Relating to Foreign Entities Owned or Controlled by a United States Person, and other general licenses, with more narrow authorizations allowing transactions ordinarily incident to the wind-down of activities previously authorized by the general licenses, including the receipt of payments pursuant to the terms of written contracts entered into before May 8, 2018.
On Implementation Day, many persons were removed from OFAC's Specially Designated National ("SDN") List of blocked persons. Pursuant to the U.S. withdrawal from the JCPOA, by November 5, 2018, OFAC will re-impose the sanctions that apply to SDN-listed persons, as appropriate. OFAC will also begin revoking specific licenses awarded during the period of lifted sanctions and will return without action any pending specific license requests.
It is as unclear whether the President will also implement further sanctions in addition to those being re-imposed. Torres Law will continue to monitor developments related to the U.S. withdrawal from the JCPOA and any additional action taken with regards to Iran. Please contact our attorneys with any questions you may have about the implications of the JCPOA withdrawal.
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.