Sanctions Round-Up: Fourth Quarter 2013

As 2013 drew to a close, a potentially groundbreaking agreement was reached with Iran regarding its nuclear program, leading to much speculation about how certain sanctions might be suspended, and under what conditions. While the majority of this year's actions focused on Iran, OFAC continued to announce a number of designations made under the other US sanctions programs, including those targeting terrorism, transnational criminal organizations, and narcotics traffickers. OFAC also announced a handful of settlements stemming from apparent sanctions-related violations, including the largest-ever settlement with a non-financial institution. Finally, the EU took steps to re-blacklist a number of persons whose designations had previously been annulled by EU courts while those courts continued to review additional contested designations.

Interim Agreement Reached with Iran

On November 23, Iran and the five permanent members of the UN Security Council (China, France, Russia, the United Kingdom, and the United States), and Germany (collectively known as the P5+1), reached a tentative interim agreement regarding Iran's nuclear program. The Joint Plan of Action (JPA) proposes that Iran be granted contingent economic relief from certain US and EU sanctions in exchange for taking verifiable steps to limit its nuclear activities. The JPA does not itself modify any existing sanctions laws and regulations nor authorize any specific transactions or trade with Iran. Further, the sanctions relief measures will be temporary and reversible, and no sanctions will be suspended until Iran complies with its obligations under the JPA.

The proposed sanctions relief includes:

the suspension of the imposition of any new nuclear-related sanctions for six months; the suspension of certain sanctions on gold and precious metals, Iran's auto sector, and Iran's petrochemical exports; allowance for limited safety-related repairs and inspections for certain Iranian airlines; maintenance of sales of Iranian oil at their currently significantly reduced levels (meaning those countries that currently buy oil from Iran may continue to do so at current volume and pricing); allowance for $400 million in governmental tuition assistance to be transferred from restricted Iranian funds to recognized educational institutions in third countries to defray the tuition costs of Iranian students; and facilitation of humanitarian transactions already allowed by US law, including those related to Iran's purchase of food, agricultural commodities, and medicine and medical devices. None of these proposed measures contemplate authorizing any business dealings with Specially Designated Nationals or otherwise blocked persons.

It does not appear that the sanctions relief proposed under the JPA will apply to US persons, and US companies and their US and non-US subsidiaries will continue to be prohibited from transacting with Iran. Additionally, while the sanctions relief contemplated by the JPA may provide certain non-US companies with limited ability to conduct certain transactions with Iran, these companies will remain subject to the sanctions laws of their respective jurisdictions, to the extent that parallel relief is not provided. The relevant US government agencies and the European Union will be providing additional guidance in the near future. Although no date has been set for the interim agreement to take effect, EU Member States have pledged to suspend some sanctions targeting Iran as soon as the International Atomic Energy Agency verifies that Iran has halted its nuclear work.

For further details, you may wish to refer to our client publication, "Opportunities and Pitfalls of Proposed Easing of Iran Sanctions", published December 5, 2013.

New Iran-Related Designations

On December 12, OFAC and the State Department coordinated actions to blacklist more than a dozen companies and individuals in Iran, Singapore, and Ukraine for allegedly helping Iran procure equipment for its nuclear and missile programs and otherwise evade sanctions. This included a number of OFAC designations made under E.O. 13645, which, amongst other provisions, targets non-US persons who provide material assistance to certain Iranian persons already subject to US sanctions. Four companies - Mid Oil Asia, Singa Tankers, Siqiriya Maritime, and Ferlund Company Ltd. - were blacklisted pursuant to E.O. 13645 for providing support to the National Iranian Tanker Company (NITC); Ferlund Company...

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