This month, the Department of State and the Office of Foreign Assets Control (OFAC) at the Department of the Treasury announced the formal relaxation of certain sanctions on Iran as part of the multilateral interim nuclear agreement. The temporary relief, which runs from January 20 through July 20, 2014, primarily eases sanctions for non-U.S. companies. As expected, the changes do little to alter the regulatory landscape for U.S. companies and their overseas subsidiaries, which are still generally barred from pursuing any transaction or dealing involving Iran without specific authorization from OFAC.

During the temporary relief period, non-U.S. companies may engage in certain activities related to petrochemical exports, crude oil exports, the auto industry, and gold and precious metals. Companies should carefully examine OFAC and State’s published guidelines to determine whether any proposed activity meets the temporary exemptions from the banking, blocking, and menu sanctions that would otherwise apply. Dealings with blacklisted Specially Designated Nationals (SDNs) generally remain prohibited, with limited exceptions noted in the guidelines. Any activity occurring outside the relief period may be subject to sanctions by OFAC and the State Department. Non-U.S. companies should also be careful to prevent any involvement, even inadvertent, of U.S. companies, persons, or goods, in any activities authorized under the temporary relief.

OFAC also issued a new licensing policy regarding activities by U.S. companies intended to ensure the safe operation of Iranian commercial passenger aircraft, including those involving Iran Air. The policy establishes a favorable licensing regime for U.S. companies (and non-U.S. companies exporting U.S. goods) that intend to provide inspection services, conduct repair and servicing activities, or export goods and technology, including spare parts, for commercial aircraft. Any licenses issued pursuant to the policy would expire at the end of the relief period.

Companies taking action pursuant to the relief package need to carefully watch diplomatic, legislative, and regulatory developments. Sanctions relief could be scaled back at any time based on Iran’s compliance with the interim agreement and the outcome of ongoing negotiations. While the administration has managed to hold the U.S. Congress at bay so far, any new sanctions legislation could also affect the substance and duration of the relief. The OFAC and State Department guidance also reminds companies that both agencies intend to vigorously enforce applicable U.S. sanctions laws through the period.

Questions related to Iranian and other economic sanctions programs can be directed to our export control team at:

Eric McClafferty
(202) 342-8841
emcclafferty@kelleydrye.com

Temporary Relaxation of U.S. Sanctions on Iran Formalized by State and OFAC