The United States will Withdraw from the Iran Nuclear Deal and Fully Re-impose Nuclear Sanctions on Iran Within 180 Days

Kelley Drye Client Advisory

Today President Trump announced that the United States will exit the multilateral Iran nuclear deal and fully re-impose sanctions on Iran.  After the announcement, the Office of Foreign Assets Control (OFAC), the agency responsible for administering most U.S. sanctions, issued a statement and guidance on the re-imposition of U.S. sanctions.  This announcement reflects a major change in U.S. policy towards Iran and will have far-reaching implications for companies that re-entered the Iranian market following the 2016 nuclear deal.

U.S. and non-U.S. companies should formulate carefully considered wind down and exit strategies to ensure compliance with applicable U.S. rules and to avoid secondary sanctions risks. 


In January 2016, the Joint Comprehensive Plan of Action (JCPOA) between the United States, Iran, and five other countries was formally implemented, lifting many sanctions on Iran in exchange for restrictions on Iran’s nuclear program.  Under the JCPOA, the United States waived most secondary sanctions on Iran, including those targeting non-U.S. companies for doing business that involved Iran’s energy, finance, and other sectors.  OFAC also removed a large number of Iranian parties associated with the Government of Iran from the List of Specially Designated Nationals (SDN List), allowing non-U.S. companies to conduct transactions with those parties without being subject to secondary sanctions.  Foreign subsidiaries of U.S. companies were also authorized under OFAC’s General License H to conduct most commercial business involving Iran.  These changes allowed non-U.S. companies and foreign subsidiaries of U.S. companies to re-enter the Iranian market in compliance with U.S. law and without the threat of U.S. secondary sanctions penalties.


The re-imposition of sanctions will occur in three phases.  In the near term, OFAC will revoke general and specific licenses related to Iran and replace them with licenses authorizing limited wind down activities.  Then, depending on the activity, in 90 and 180 days, the United States will fully re-impose primary and secondary sanctions on Iran.

  • As soon as possible: In its statement, OFAC indicated that it intends to revoke General License H and other general licenses as soon as possible and replace them with general licenses authorizing certain wind down activities for 180 days.  OFAC also intends to revoke specific licenses related to Iran and issue specific licenses for wind down activities.
  • 90 days: On August 6, 2018, the United States will re-impose certain secondary sanctions with respect to Iran’s purchase of U.S. dollar banknotes; the provision of graphite and raw or semi-finished metals, including steel and aluminum; certain transactions in the Iranian rial; Iranian sovereign debt; and certain automotive sector activity.  Within 90 days the U.S. will also re-impose primary sanctions on the importation of Iranian-origin carpets and foodstuffs and activities authorized under commercial aviation specific licenses.
  • 180 days: On November 4, 2018, OFAC’s wind down general licenses will expire and the agency will re-designate, as appropriate,” Iranian parties that were removed from the SDN List as part of the Iran deal.  Secondary sanctions regarding shipping; Iranian petroleum, petroleum products, and petrochemical products; crude oil exports; the Central Bank of Iran and other Iranian financial institutions; financial messaging services; insurance services; and the energy sector will also be re-imposed.  Activities under General License H, which allowed foreign subsidiaries of U.S. companies to conduct certain transactions with Iran, must also be completed by November 4.  Certain payments by Iranian companies may be permitted after November 4 in order to avoid windfalls for Iranian companies. 

Key Considerations

U.S. and non-U.S. companies should develop carefully considered strategies to wind down deals related to Iran that may be subject to U.S. law or face secondary sanctions penalties.  Companies relying on General License H should evaluate their wind down and exit strategies with particular care.  This should include a review of all pending and prior agreements and orders with Iran, with attention to how the new rules will apply to those agreements and, where necessary, how those agreements and orders could be wound down/exited in compliance with applicable law.  Some companies may find it necessary to seek specific licenses from OFAC to fully wind down Iran-related business in compliance with U.S. law.

This will likely be a complex affair for many global companies.  Winding down business will need to occur expeditiously and with caution to ensure compliance with relevant rules.  U.S. persons must not be put in positions where they are asked to approve specific transactions or orders that would be contrary to company wind-down policies.  European and other countries may also adopt blocking statutes in an attempt to bar local companies from complying with renewed U.S. sanctions on Iran, as many of those countries disagree with the United States’ withdrawal from the JCPOA.  This could set up difficult conflict of law scenarios for global companies, which will remain fearful of non-compliance with U.S. law and the substantial penalties that accompany U.S. violations.  Firms with potential Iran exposure will need to monitor developments in this area closely to ensure compliance with U.S. law, avoid U.S. secondary sanctions risk, and comply with local legal requirements.

Please contact Eric McClafferty (emcclafferty@​kelleydrye.​com; 202-342-8841) with questions or for guidance about how to deal with this change in the Iran sanctions.