EU Ends Economic and Financial Nuclear-Related Sanctions against Iran, but Some Limitations Remain
With the arrival of “Implementation Day” on January 16, 2016, the EU has lifted all economic and financial sanctions related to the Iranian nuclear program. Some European non-nuclear sanctions on Iran, however, still remain in place. Furthermore, some EU companies could still be subject to U.S. primary and secondary sanction, as well as export control provisions.
As previously reported, the legislative framework to lift the EU sanctions was put in place in October 2015 following the adoption of Council Regulation 2015/1861, Council Implementing Regulation 2015/1862 and Council Decision 2015/1863.
As of Implementation Day, the following activities and associated services are now permitted for EU individuals and companies:
Financial, banking and insurance measures
- Transfers of funds between EU persons, entities or bodies, including EU financial and credit institutions, and non-listed Iranian persons, entities or bodies including Iranian financial and credit institutions.
- The opening of branches, subsidiaries or representative offices of non-listed Iranian banks in Member States.
- Provision of export credit, guarantees or insurance and other financial support.
Oil, gas and petrochemical sectors
- Import, purchase, swap and transport of crude oil and petroleum products from Iran.
- Export (by EU persons) of oil, gas and petrochemical equipment or technology; provision of related technical assistance including training to any Iranian person, in or outside Iran, or for use in Iran.
- Investment in Iranian sectors of oil, gas, and petrochemicals.
Shipping, shipbuilding and transport sectors
- Sale, supply transfer or export of naval equipment and technology for ship building, maintenance or refit to Iran or to any Iranian person engaged in the sector.
- Design construction – or participation in the design and construction – of cargo vessels and oil tankers for Iran or Iranian persons.
- Provision of vessels; designed or used for the transport or storage of oil and petrochemical products to Iranian persons entities or bodies.
- Provision of flagging and classification services.
- Cargo flights operated by Iranian carriers or originating from Iran have access to EU Members States airport.
- Cargos to and from Iran of previously prohibited items will no longer be subject to inspection seizure and disposal by EU Member States.
Sale, supply, purchase, transfer, export or transfer of gold, other precious metals and diamonds to/from or for the Government of Iran, its public bodies, corporations and agencies or the Central Bank of Iran.
- Provision of related brokering, finance and security services.
- Delivery of newly printed or minted banknotes and coinage for the Central Bank of Iran.
Subject to license, the following items can now also be sold, supplied, transferred or exported to any Iranian person, entity or body or for use in Iran:
- Nuclear-related goods and technology as specified on the Nuclear Suppliers Group (NSG) Trigger List and NSG Dual-Use List and listed in Annex I of Council Regulation (EU) 267/2012.
- Nuclear-related goods and technology as listed in Annex II of Council Regulation (EU) 267/2012.
- Metals: certain graphite and raw or semi-finished metals.
- Enterprise Resource Planning software, including updates.
- Provision of technical assistance, brokering services, or financial assistance related to any of the above.
From January 16, 2016, certain persons and entities have also been delisted from UN listings and EU autonomous listings. Consequently, these persons are no longer subject to an asset freeze, the prohibition on making funds available to them or and a visa ban.
Some EU measures and sanctions remain in place, however, as these are deemed to be outside the scope of the JCPOA. In particular:
- Sanctions imposed by the EU with respect to the human rights situation in Iran, support for terrorism and other grounds will remain in place.
- Iranian persons listed under EU terrorism and Syria sanctions regimes or any other EU sanctions regime will continue to be subject to restrictive measures under these regimes.
- The EU arms embargo and missile technology sanctions and restrictions will remain in place until “Transition Day” (October 18, 2023), as well as continuing restrictive measures on certain individuals.
In addition, EU companies that fall under U.S. jurisdiction – for example those with U.S. operations, which act in the United States in relation to a transaction or which are owned or controlled by U.S. persons – remain subject to U.S. primary sanctions. Transactions in U.S. dollars which transit the U.S. financial system are deemed to involve activity in the United States. Although EU companies owned or controlled by U.S. persons are subject to U.S. sanctions prohibitions, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) has issued General License H which broadly authorizes such U.S.-owned or controlled companies to engage in business with Iran, subject to certain restrictions, as further described here.
Furthermore, even EU companies that are not subject to U.S. primary sanctions can be subject to secondary sanctions (i.e. punitive measures imposed by the U.S. government on non-U.S. persons). These can include attempts to evade sanctions or conducting transactions with supporting entities on the Treasury Department’s List of Specially Designated Nationals or other similar lists.
Finally, and perhaps most shocking to European companies, European companies that export to Iran products or services of U.S. origin or that contain more than 10% U.S. origin technology must obtain a license from the U.S. government in order to export the foreign-manufactured product to Iran.