It has been over two months since the UN, EU and U.S. partially lifted their nuclear-related economic and financial sanctions against Iran on January 16, 2016. Some practical insights on this matter are addressed below.
EU and U.S. Sanctions Relief
There are notable differences between the sanctions relief of the EU and that of the U.S. The EU lifted many of their nuclear-related sanctions. The U.S. however only lifted the nuclear-related secondary sanctions which are directed toward non-U.S. persons for specified conduct involving Iran that occurs entirely outside of U.S. jurisdiction. This means the U.S. primary sanctions remain in force and preclude – apart from a few exceptions – U.S. companies (including U.S. banks) from engaging in direct dealings with Iran.
For more detailed information on the current status of the U.S. Iran sanctions we refer to the Iran nuclear sanctions update from KPMG U.S. (https://advisory.kpmg.us/content/dam/kpmg-advisory/risk-consulting/pdfs/2016/iran-sanction-update-jan-2016.pdf).
Bearing in mind the extra-territorial application of U.S. Iranian sanctions legislation, it remains essential that EU companies determine whether there are U.S. prohibitions on conducting business with Iran.
Know Your Customer
We emphasize that – even though a substantial number of Iranian persons and entities have been delisted – proper screening of your counter party remains of the utmost importance as some Iranian entities and persons are still subject to EU and U.S. sanctions. A major challenge in a Know Your Customer due diligence process is to ascertain ownership and control of the Iranian party involved.
In our previous alert we addressed the reconnection of Iranian banks to the SWIFT system (https://www.meijburg.com/news/update-on-us-sanctions-against-cuba-and-iran-sanctions-relief). Despite this reconnection and the fact that many transactions are no longer prohibited by the EU, EU banks seem to be reluctant to facilitate doing business with Iran (source: http://www.reuters.com/article/us-iran-sanctions-usa-idUSKCN0WP1LD). This can be explained by the fact that some EU banks have been heavily fined by U.S. sanctions authorities for violation of U.S. sanctions. EU businesses should consult their banks at an early stage to discuss whether a transaction is possible.
We have specialists dedicated to export controls and sanctions around the world, ensuring that we are well-placed to help understand local and global operating commitments and requirements.
Meijburg & Co Contact Information
For additional information on our Trade and Customs Practice and its Export Control & Sanctions Services, please contact your local KPMG Meijburg & Co advisor or go to our website: http://www.meijburg.com/page/trade-customs