There has been much discussion of U.S. and EU sanctions changes following Implementation Day under the Joint Comprehensive Plan of Action (“JCPOA”), but a number of countries had imposed sanctions for Iran and it is worth examining how other key markets are adjusting policy. In particular, Canada and Australia recently implemented amendments to their sanctions regimes pertaining to Iran.
Canada had maintained a broad and complex sanctions regime for Iran, as described below. Following the arrival of Implementation Day, Canada took action on February 5, 2016 to remove many of these sanctions, opening a wide variety of permitted economic activity. The sanctions and export controls still in place include:
- A reduced, but still substantial list of designated parties subject to asset freezes.
- Export controls on dual-use and certain other strategic goods and technology. Applications for export permits will be considered on a case-by-case basis, but exports of more sensitive items normally will be denied.
- Prohibition on trade in arms and related material as well as the export of goods, items, material and technology related to uranium enrichment.
- The provision of property, technical or financial assistance and services to Iranian persons for the supply sale, transfer, manufacture or use of products whose export is prohibited.
These rules apply to persons in Canada and Canadian citizens and corporations wherever situated.
Canada’s sanctions regime has been imposed under the United Nations Act implemented by the Regulations Implementing the United Nations Resolutions on Iran (“UN Regulations”) and the Special Economic Measures Act, implemented by the Special Economic Measures (Iran) Regulations (“SEMA Regulations”). With the reforms of February 5, 2016, the following key restrictions have been removed:
- Prohibitions against engaging in and financing the Iranian oil and gas sector or providing services to Iranian vessels.
- Prohibitions against engaging with the Iranian financial sector including the prohibition on opening of correspondent banking accounts in Canada.
- The blanket prohibition on exports to Iran and imports from Iran expect for sensitive items discussed above.
- The prohibition on making investments in Iranian entities.
Like Canada, Australia had maintained a complex sanctions regime for Iran. Australia’s Department of Foreign Affairs and Trade (DFAT) has announced that it will implement plans to lift nuclear-related economic and financial sanctions by making changes to the Charter of the United Nations (Sanctions-Iran) Regulations 2008 and suspending certain provisions of the Autonomous Sanctions Regulations 2011. Australian law will generally permit business with Iran with the following continuing limitations:
- There will be a reduced, but still substantial list of designated parties subject to asset freezes.
- Australia will continue to maintain anti-money laundering controls for Iran. Under the Anti-Money Laundering and Counter-Terrorism Financing (Iran Countermeasures) Regulations 2014, Australian financial institutions are prohibited from providing certain designated services to Iranian persons and entities for transactions exceeding AUD 20,000 unless exempted by the DFAT.
- Restrictions on export to Iran of arms and related material, including some dual use goods, remains in place.
Australia’s revised rules with respect to Iran will no longer prohibit:
- Exports, including – equipment and technology for the oil, gas and petrochemical industry; vessels for transport and storage of oil and gas; gold, diamonds and precious metals; newly issued Iranian bank notes; and certain naval equipment and technology.
- Imports, including – crude oil, petroleum, petrochemical and natural gas products; and gold, diamonds and precious metals from the Government of Iran.
- Provision of technical advice or financial assistance and service for the export of certain goods such as oil and gas, naval equipment or gold, diamonds and precious metals.
- Investment in Iranian companies in the oil, gas and petrochemical sector. Likewise, Iranian entities will be able to invest in Australia’s oil, gas and financial services sector including the establishment of representative offices, subsidiaries and correspondent banking relationships with Australian financial institutions.
Continued monitoring of legal risk
The amendments to the Australian and Canadian sanctions regimes, and continuing sanctions, should be considerations for businesses and banks with exposure to Iran-related transactions or Iranian customers.