On November 5, 2018 the Department of Treasury’s Office of Foreign Asset Control (“OFAC”) completed the process to re-impose the Iran sanctions program.  The 180-day wind-down period for termination of the United States’ participation in the Joint Comprehensive Plan of Action (“JCPOA”) ended.  As part of the re-imposition of U.S. sanctions, OFAC added more than 700 individuals, entities, aircraft, and vessels to the SDN List, including individuals and entities that had been removed from the SDN List in connection with the JCPOA as well as over 300 new targets.

The final phase of Iran sanctions targets Iran’s port operators and shipping and ship-building sectors; petroleum-related transactions; financial transactions and specialized messaging services with the Central Bank of Iran; underwriting and insurance services; and Iran’s energy sector.  In addition, all activities under General License H will no longer be authorized.

OFAC also announced significant reduction exceptions (“SREs”) to eight countries (China, India, Italy, Greece, Japan, South Korea, Taiwan, and Turkey) to allow those countries to temporarily continue to purchase Iranian oil.  The SREs, which must be renewed every six months, with the primary effect that these countries may continue to temporarily import Iranian-origin oil so long as certain conditions regarding the purchases are met.

The new executive order also broadens the scope of sanctions in effect prior to the JCPOA dated January 16, 2016.  The new Iran sanctions regulations provide new authority to designate SDNs to include any person that on or after November 5, 2018 provides material support or goods or services in support of persons designated for: (1) providing support, or goods or services in support of the purchase or acquisition of U.S. bank notes or precious metals by the Iran government; (2) providing support, or goods or services in support of the National Iranian Oil Company (NIOC), the Nafitran Intertrade Oil Company (NIOC), or the Central Bank of Iran; or (3) being part of the Iranian energy sector, shipping, or shipbuilding sectors, being a port operator in Iran, or providing significant support of persons designated as SDNs.

The new Iran sanctions regulations provide OFAC authority to prohibit or restrict correspondent and payable-through accounts of foreign financial institutions that knowingly conduct or facilitate significant transactions with persons designated under the new authorities outlined above.

OFAC also expanded the menu of sanctions available to be imposed on persons who knowingly engage in significant transactions related to Iranian petroleum products and petrochemicals, including: (1) Visa restrictions on controlling officers and shareholders; (2) secondary sanctions on principal executive officers of a SDN; and (3) prohibitions on investing in or purchasing debt and equity instruments from a sanctioned person.

The re-imposed Iran sanctions program expands restrictions on foreign subsidiaries of U.S. owned or controlled companies by prohibiting transactions with persons blocked for any of the following activities: (1) providing material support for, or goods and services in support of, persons designated pursuant to Iran sanctions; and (2) being part of the Iranian energy sector, shipping or shipbuilding sectors, being a port operators in Iran or providing significant support of SDNs.

US Persons (i.e., entities organized under US law and their non-US branches; parties physically located in the United States; US citizens and permanent resident aliens wherever located or employed) are prohibited from engaging in transactions involving any person designated as an SDN. Non-US Persons may be subject to US secondary sanctions for engaging in significant transactions involving an Iranian person on the SDN List (other than a non-designated Iranian financial institution) or a person designated in connection with Iran’s support for international terrorism or proliferation of weapons of mass destruction.

The new Iran sanctions regulations continue exceptions that allow for the sale of agricultural commodities, food, medicine, and medical devices to Iran from the United States or by U.S. persons or U.S.-owned or -controlled foreign entities.   Transactions for the sale of agricultural commodities, food, medicine, or medical devices to Iran are not sanctionable unless they involve persons on the SDN List that have been designated in connection with Iran’s support for international terrorism or proliferation of weapons of mass destruction, including designated Iranian financial institutions or the Islamic Revolutionary Guard Corps (IRGC), or activity that is subject to other sanctions.