The renewal of the sanctions follows US president Donald Trump’s announcement in May that the US was withdrawing from the Joint Comprehensive Plan of Action (JCPOA), the deal signed between Iran, China, Russia, France, Germany, the UK and US, and the EU in 2015. The deal saw Iran agree to limits on its nuclear programme in exchange for the lifting of sanctions.
The US secondary sanctions have been re-imposed at the end of a 180-day wind down period which followed the announcement that the US was pulling out of the Iran deal.
In particular the sanctions target Iran’s vital energy sector and its shipping and shipbuilding sector and banking sector.
Sanctions are imposed on supplies to the energy sector, on petroleum related transactions with, amongst others, the National Iranian Oil Company, Naftiran Intertrade Company and the National Iranian Tanker Company. There are also sanctions on port operators, shipping and shipbuilding sectors, including dealings with particular shipping lines, on transactions by financial institutions with designated Iranian financial institutions and on the provision of specialised financial messaging services to certain Iranian financial institutions. .
US treasury secretary Steven Mnuchin said over 700 names had been added to the list of blocked entities.
“This includes hundreds of targets previously granted sanctions relief under the JCPOA, as well as more than 300 new designations. This is substantially more than we ever have previously done,” Mnuchin said.
Sanctions expert Stacy Keen of Pinsent Masons, the law firm behind Out-Law.com, said the EU was looking to assist companies doing business in or with Iran despite the US secondary sanctions, and has updated its Blocking Regulation to protect EU persons from the US Iranian secondary sanctions.
Keen said the EU was also looking to implement a payment mechanism via a Special Purpose Vehicle to handle transactions with Iran and avoid payments directly into or out of Iran.
However she said it was “yet to be seen” if these measures would be effective when balanced against the risk of being cut off from the US market.
“Further practical issues will be considerations when deciding whether or not to do business in Iran,” Keen said.
“Is insurance cover available? Can payments be transferred back to the UK? Can money laundering risk be suitable addressed? Does the cost of doing business in Iran – shipping equipment into, or paying people to work in. Iran, make it prohibitive?” Keen said.