On May 8, 2018, President Trump announced that the United States would no longer be participating in the Joint Comprehensive Plan of Action (JCPOA), under which Iran agreed to curb its nuclear program in exchange for sanctions relief. Therefore, sanctions on non-U.S. companies doing business with Iran will “snap-back” and be re-imposed. In essence, and as explained below, the U.S. sanctions will return to the pre-January 2016 status quo.

The president directed that all sanctions be re-imposed as soon as possible, but no later than 180 days from the date of the May 8 announcement. In accordance with this directive, the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC), which administers and enforces U.S. sanctions against Iran, has published a detailed statement and Frequently Asked Questions (FAQs). OFAC has provided a 90-day and a 180-day “wind-down period” before certain sanctions will become effective.

Specifically, after the 90-day wind-down period ends on August 6, 2018, the U.S. will re-impose sanctions related to the following activities:

• The purchase or acquisition of U.S. dollar banknotes by the Government of Iran.
• Iran’s trade in gold or precious metals.
• The direct or indirect sale, supply, or transfer to or from Iran of graphite, raw or semi-finished metals such as aluminum and steel, coal, and software for integrating industrial processes.
• Significant transactions related to the purchase or sale of Iranian rials or the maintenance of significant funds or accounts outside the territory of Iran denominated in the Iranian rial.
• The purchase, subscription to, or facilitation of the issuance of Iranian sovereign debt.
• Sanctions on Iran’s automotive sector.
• Activities undertaken pursuant to specific licensing issued in connection with the Statement of Licensing Policy for Activities Related to the Export or Re-export to Iran of Commercial Passenger Aircraft and Related Parts and Services, including those undertaken pursuant to OFAC’s General License I.

An additional group of secondary sanctions will snap back after a 180-day wind-down period ends on November 4, 2018. Specifically, effective November 5, 2018, the U.S. will re-impose sanctions related to the following activities and related services:

• Sanctions on Iran’s port operators and shipping and shipbuilding sectors.
• Sanctions on petroleum-related transactions with, among others, the National Iranian Oil Company, including the purchase of petroleum, petroleum products, or petrochemical products from Iran.
• Sanctions on foreign financial institutions doing business with the Central Bank of Iran and designated Iranian financial institutions under Section 1245 of the National Defense Authorization Act for Fiscal Year 2012.
• Sanctions on the provision of specialized financial messaging services to the Central Bank of Iran and Iranian financial institutions described in Section 103(c)(2)(E)(ii) of the Comprehensive Iran Sanctions and Divestment Act of 2010.
• Sanctions on the provision of underwriting services, insurance, or re-insurance.
• Sanctions on Iran’s energy sector.

Significantly, for any U.S. companies whose foreign subsidiaries were engaging in transactions with Iran pursuant to OFAC’s General License H, that general license will be revoked effective November 5, 2018. Also on November 5, 2018, the United States will re-impose sanctions on certain Iranian financial institutions and other persons who had been removed from OFAC’s Specially Designated Nationals and Blocked Persons List (SDN List) pursuant to the JCPOA and Executive Order 13599.

After the applicable wind-down period has completed, OFAC will allow payment for goods or services provided during the wind-down period so long as there was a written contract or agreement covering the activities that was entered into prior to May 8, 2018. This includes loans or credits if memorialized in writing prior to May 8, 2018. To qualify, the activities must have been consistent with U.S. sanctions at the time of delivery or provision of goods or services. Additionally, the payment must be consistent with U.S. sanctions (i.e., no involvement by U.S. persons or U.S. financial institutions, unless the transactions were exempt from regulation or authorized by OFAC).

Companies, financial institutions, and others who engage in prohibited transactions after the wind-down periods expire, or who perform activities outside the scope of permissible wind-down activities, can face sanctions and penalties. When considering enforcement actions, OFAC will evaluate the efforts and steps taken to comply with the wind-down requirements.

In the coming days, OFAC will publish additional information on its website and in the Federal Register concerning the re-imposition of sanctions. For now, all persons doing business with Iran, or considering entering into new business with Iran (even if previously authorized by the JCPOA), should carefully consider their positions.