October 24, 2016
On October 7, 2016, the Office of Foreign Assets Control ("OFAC") of the U.S. Department of the Treasury issued additional guidance for non-U.S. persons engaging in transactions with Iranian counterparties pursuant to sanctions relief granted on "Implementation Day," January 16, 2016, under the Joint Comprehensive Plan of Action ("JCPOA"), the Iran nuclear deal finalized in July 2015. Through publication of several new Frequently Asked Questions ("FAQs"), OFAC clarified the compliance and due diligence steps non-U.S. persons should take for possible dealings with Iran or Iranian counterparties.
The principal forms of relief granted to date by the United States under the JCPOA have been directed toward easing various "secondary sanctions" measures directed at non-U.S. entities that could be sanctioned by U.S. authorities for engaging in certain activities involving Iran, and relief offered to U.S.-owned or –controlled foreign entities pursuant to General License H, authorizing such entities to engage in certain transactions with Iran.
Prior to Implementation Day, non-U.S. persons faced U.S. sanctions exposure if they engaged with certain Iranian persons or in transactions with specified Iranian sectors. On Implementation Day, the U.S. has lifted secondary sanctions with respect to non-U.S. persons and removed over 400 individuals and entities from OFAC’s Specially Designated Nationals List ("SDN List"), including most of Iran’s major financial institutions and oil and energy firms. Secondary sanctions continue to attach to non-U.S. persons, however, in transactions or activities with (1) Iranian persons who remain or are placed on the SDN List, (2) the Islamic Revolutionary Guard Corps ("IRGC") and its designated agents or affiliates, or (3) any other person on the SDN List designated in connection with Iran’s proliferation of weapons of mass destruction or their means of delivery or Iran’s support for international terrorism.
Despite the lifting of secondary sanctions, many non-U.S. persons, including non-U.S. financial institutions, have been unsure how to take advantage of the new relief and still maintain compliance with the remaining U.S. sanctions restrictions on Iran. The October 7, 2016 OFAC guidance seeks to address these concerns.
The new FAQs provide the following guidance concerning the scope of secondary sanctions relief for non-U.S. persons:
The newly published FAQs provide additional guidance to non-U.S. persons, including non-U.S. financial institutions, contemplating activities or business in Iran. However, the latest round of FAQs do not provide further flexibility of action to non-U.S. businesses in potential Iran-related undertakings, and non-U.S. persons should continue to engage in necessary due diligence as they evaluate potential Iranian counterparties.
 For a detailed summary of this development, please see Gibson Dunn Client Alert: "Implementation Day" Arrives: Substantial Easing of Iran Sanctions alongside Continued Limitations and Risks (Jan. 18, 2016), available at http://www.gibsondunn.com/publications/Pages/Implementation-Day-Arrives-Substantial-Easing-of-Iran-Sanctions–Continued-Limitations-and-Risk.aspx and Client Alert: 2015 Year-End Sanctions Update (Feb. 2, 2016), available at http://www.gibsondunn.com/publications/Pages/2015-Year-End-Sanctions-Update.aspx.
 Office of Foreign Assets Control, Frequently Asked Questions Relating to the Lifting of Certain U.S. Sanctions Under the Joint Comprehensive Plan of Action (JCPOA) on Implementation Day (Jan. 16, 2016), available at https://www.treasury.gov/resource-center/sanctions/Programs/Documents/jcpoa_faqs.pdf (last updated October 7, 2016) [hereinafter "OFAC JCPOA FAQs"].
 The term "non-U.S. person" means any individual or entity excluding any U. S. citizen, permanent resident alien, entity organized under the laws of the United States or any jurisdiction within the United States (including foreign branches), or any person in the United States. See 31 C.F.R. § 560.314.
 General License H: Authorizing Certain Transactions Relating to Foreign Entities Owned or Controlled by a United States Person (Jan. 16, 2016), available at https://www.treasury.gov/resource-center/sanctions/Programs/Documents/iran_glh.pdf. For a detailed summary of OFAC Guidance with respect to General License H, please see Gibson Dunn Client Alert: OFAC Issues Additional Guidance on the Scope of Iran Sanctions Easement under JCPOA – Emphasizing the Limited Nature of the Present Relief (June 16, 2016), available at http://www.gibsondunn.com/publications/Pages/OFAC-Issues-Additional-Guidance-on-Scope-of-Iran-Sanctions-Easement-under-JCPOA.aspx.
 OFAC JCPOA FAQs, Question A. 6.
 Office of Foreign Assets Control, Revised Guidance on Entities Owned by Persons Whose Property and Interests in Property Are Blocked (August 13, 2014), available at https://www.treasury.gov/resource-center/sanctions/Documents/licensing_guidance.pdf. Office of Foreign Assets Control, Frequently Asked Questions, Question 116, available at https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_compliance.aspx#116.
The following Gibson Dunn lawyers assisted in the preparation of this client alert: Judith Alison Lee, Adam M. Smith, David A. Wolber and Kamola Kobildjanova.
Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding the above developments. Please contact the Gibson Dunn lawyer with whom you usually work, the authors, or any of the following leaders and members of the firm’s International Trade Group:
Judith A. Lee – Co-Chair, Washington, D.C. (+1 202-887-3591, email@example.com)
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Mehrnoosh Aryanpour – Washington, D.C. (+1 202-955-8619, email@example.com)
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