Nina Mohseni: Iran sanctions lifted! But wait…which sanctions?
Thursday, January 28, 2016 at 2:28AM
Nina Mohseni in Iran, OFAC, Office of Foreign Assets Control, Shahid Rajaee, Tidewater Middle East Co, trade sanctions

U.S. Secretary of State John Kerry with Iranian Foreign Minister Mohammad Javad Zarif (State Department photo) If you’re a U.S. company -- unless you’re a food, medicine/medical supplies, or civil aircraft/parts supplier -- you still cannot have anything to do with Iran, even after the so-called lifting of sanctions as part of the nuclear accord known as the Joint Comprehensive Plan of Action.

What has changed is that your foreign subsidiaries can once again, for the first time since October 2012, deal with Iran pursuant to newly issued Office of Foreign Assets Control (OFAC) General License H

General License H authorizes U.S.-owned or U.S.-controlled foreign entities to do business in Iran, including with the government of Iran, subject of course to some limitations. For example, your foreign subsidiary cannot:

Also, the strict prohibition on any type of “facilitation” of Iran-related transactions by U.S. persons is alive and well, meaning the U.S. parent company and any U.S. persons will need to be completely walled off in nearly every aspect from its subsidiary’s dealings in Iran -- except for two narrow, technical exceptions carved out in the license: The U.S. parent is authorized to 1) alter its operating policies and 2) make available to the foreign sub any automated and globally integrated computer, accounting, email, telecommunications, or other business support system to the extent necessary to allow the foreign sub to conduct authorized business in Iran.

For U.S. companies with foreign subsidiaries thinking about doing business in Iran, a reminder about the SDN List and real-world compliance challenges might be helpful:

The Specially Designated Nationals (SDN) List, OFAC’s main blacklist, calls upon companies, whether U.S. or foreign, to literally screen each and every entity that has any ownership interest in the Iranian entity with whom you wish to deal. This is because, since August 2014, it is considered a violation to deal with any company that is owned 50% or more in the aggregate by SDNs. (Think about it. Before August 2014, you only had to worry about identifying majority owners; now, you’re supposed to identify and screen every owner to see if SDN ownership adds up to 50%.)

In theory, this sounds like a pain (even if you’re lucky enough to get complete information regarding ownership). In practice, it sounds all but impossible. 

Consider for example that any transaction that takes place at Shahid Rajaee, the main container terminal at Iranian port city Bandar Abbas on the Strait of Hormuz, could be subject to sanctions enforcement. This is because the container terminal operator, Tidewater Middle East Co., responsible for some 90 percent of Iranian container traffic and with operations at six other Iranian ports, is an SDN.

I've heard it cited that only 17% of Iranian business is truly private, and that the IRGC (the Revolutionary Guards or Iranian Revolutionary Guard Corps), also an SDN, has interests in the rest of the economy, either overtly or through front companies. 

It’s going to be tough to “Know Your Customer” in Iran. But at least for now, most U.S. companies are on the sidelines and won’t have that burden.

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Nina Mohseni is an associate attorney at Sandler, Travis & Rosenberg in Chicago where she practices customs and international trade law.  She is the vice president of the Chicago chapter of the Organization of Women in International Trade (OWIT Chicago) and vice chair of the Chicago Bar Association’s International Corporate and Trade Law Committee.

Article originally appeared on The FCPA Blog (http://www.fcpablog.com/).
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