U.S. administration imposes limited new sanctions against Iran

On February 3, 2017, the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) added a number individuals and entities to its Specially Designated Nationals ("SDNs") list of blocked persons. OFAC stated that such actions were taken in response to Iran's development of a ballistic missile program.

The newly sanctioned persons include several Iranian officials, as well as persons and entities based in the United Arab Emirates, Lebanon and China, presumably in connection with their alleged assistance or support for Iran's ballistic missile program. Several persons allegedly linked to the Islamic Revolutionary Guard Corps ("IRGC") were also sanctioned.

As a result of such sanctions, U.S. persons are prohibited from engaging in virtually all transactions with the sanctioned persons and are obligated to block any assets of such sanctioned persons.

Notably, despite earlier statements made by the White House that Iran has violated the Joint Comprehensive Plan of Action ("JCPOA"), the new sanctions were imposed outside of the framework of the JCPOA, suggesting that the new administration may proceed incrementally in seeking to adjust U.S. policy with respect to Iran. The move nevertheless suggests a degree of sanctions risk for non-U.S. companies that have entered into or are planning to enter into Iran in reliance on the JCPOA's sanctions relief, calling for appropriate due diligence and termination rights in the case that their counterparties become designated as SDNs. In addition, parties who supply goods and services to Iran should ensure that, in addition to counterparty screening, the end use of such goods or services will not implicate any terrorism, proliferation or human rights concerns, as the U.S. authorities retain broad authority to impose sanctions based on transactions that "materially support" such activities notwithstanding the JCPOA.

The trajectory of the new Administration's approach to implementation of the JCPOA remains to be seen, and Herbert Smith Freehills' New York office continues to closely monitor developments in this area.