After months of preparations, January 16, 2016 was “Implementation Day” – the day when the world’s sanctions on Iran were officially rolled back. On January 16, the International Atomic Energy Agency determined that Iran had significantly reduced its nuclear program. In exchange, under the agreement finalized with Iran and the United States last July, many Iranian assets were unfrozen, money could transfer between Iran and the European Union without special authorization, and the United States stopped its efforts to prevent Iranian crude oil sales.
Despite the anticipated sanctions relief, however, these changes will not impact most U.S. companies. Instead, the terminated sanctions were focused on preventing foreign entities from conducting specific transactions in Iran in the energy, financial, civil aviation and automotive industries. The U.S. statutory sanctions – including the prohibition on U.S. trade with Iran – still remain in place. For the majority of American companies, this means they still cannot legally engage in transactions with Iran.
The sanctions roll-back is good news for European subsidiaries of U.S. companies, who can more freely conduct business in Iran, so long as they keep their operations and communications separate from the U.S. parent corporation. European Union member states also have many more opportunities, as they can now import and sell Iranian crude oil and gas, allow Iranian banks to open in their country and Iranian cargo flights to land at their airports, and have cancelled existing visa bans. The one silver lining for American consumers (if not U.S. companies): Iranian pistachios, caviar and carpets can now be exported to the United States. It is now up to Congress to determine whether the remaining U.S. sanctions on Iran should be terminated as well.
With the changes to both the Iran and Cuba sanctions programs, companies should take this opportunity to review and update their policies and procedures. It is also a good time for companies to conduct an external audit under auspices of legal counsel to review the actual conduct of business operators and third party agents, given the increased enforcement in this area by the U.S. and foreign governments. Preventing issues before they arise is the better course. But if issues are uncovered early through a proactive audit, then it will give the company the opportunity to consider voluntarily disclosing any alleged violations to the appropriate government agency to maximize available mitigation protections. Finally, the prominent changes in international sanctions regimes provide a good opportunity for senior management to reaffirm its commitment to compliance with international trade laws and actively mandate training of personnel.
