Practical Implications Of The New Iran Sanctions Targeting The Metals Sector

Author:Mr Cari N. Stinebower, Alexandra M. Solórzano and Mariana Pendás Fernández
Profession:Winston & Strawn LLP

On January 10, 2020, the President issued a new Executive Order and identified as Specially Designated Nationals eight senior Iranian officials; 17 Iranian metals producers and mining companies; a network of three China- and Seychelles-based entities; and a vessel involved in the purchase, sale, and transfer of Iranian metals products, as well as in the provision of critical metals production components to Iranian metal producers.

Simultaneously with the release of the Executive Order and the designations, the Secretaries of State and Treasury conducted a press briefing that shed additional light on the sanctions conveying the United State Government's intent to (i) pursue secondary sanctions, ((ii) work with the Swiss Government to develop a secure channel for humanitarian payments into and out of Iran, and (iii) provide authorizations for certain activity related to the investigation of the Ukrainian aircraft that was shot down on January 7, 2020 in Tehran.

Secondary Sanctions

According to the Secretary of State, the intent of the additional sanctions is to further deny the Government of Iran revenue streams. The Secretary of the Treasury confirmed that, together with Secretary Pompeo, secondary sanctions for persons continuing to engage in business with Iran would be reviewed for the imposition of secondary sanctions. Secretary Mnuchin confirmed that such secondary sanctions could include participants in the Instrument in Support of Trade Exchanges (INSTEX) - a barter mechanism developed by the Governments of France, the United Kingdom, and Germany to assist in the flow of trade with Iran. In November of 2019, six additional members joined INSTEX: Belgium, Denmark, Finland, the Netherlands, Norway, and Sweden. According to Secretary Mnuchin, no transactions have yet been processed through that system.

Humanitarian Trade; Support for the Ukrainian Air Investigation

Secretary Mnuchin also confirmed that the United States remains committed to humanitarian transactions involving Iran. The authorizations under the Trade Sanctions and Export Enhancement Act of 2000 (TSRA) remain in place although, as a practical matter, exports under that program report difficulties in arranging for financial transactions for qualifying shipments into Iran. To that end, Secretary Mnuchin referenced the USG's continued conversations with the Government of Switzerland to secure a channel for humanitarian related payments. Optimistic estimates from the Government...

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