While the nuclear-related secondary sanctions were lifted from Iran as part of the Joint Comprehensive Plan of Action (JCPOA), the primary prohibitions and restrictions of the Iran sanctions program remain in place. This means that U.S. persons remain prohibited from doing business in or with Iran.
The JCPOA was completed in 2015 and the negotiations involved China, France, Russia, the United Kingdom, the United States, Germany, the European Union, and Iran.
The Iran sanctions program dates back from right after the Iranian Revolution and the U.S. hostage crisis. President Clinton expanded the sanctions in 1995 when he issued a comprehensive ban on U.S. trade and investment in Iran under the International Emergency Economic Powers Act (IEEPA). Additional executive orders, laws and regulations have been enacted by the U.S., which have strengthened economic and trade sanctions on Iran.
These sanctions have had brought implications economically for the regime, as unemployment has risen over the years and Iran has become more isolated from the international community. While recent reports would give the impression that most of the sanctions have been lifted as part of the JCPOA, this is not the case, as it only impacted existing U.S. law regarding secondary sanctions.
These secondary sanctions target non-U.S. persons for wholly non-U.S. conduct that occurs entirely outside of U.S. jurisdiction. Primary sanctions reach only to individuals subject to the jurisdiction of the U.S.
For those who do business with Iran and are subject to U.S. jurisdiction, direct and indirect transactions are prohibited without a license or applicable exception. Those who violate them can deal with stiff penalties. ZTE was just ordered to pay a settlement for its violation of exporting rules in attempting to hide its U.S. materials being sold to Iran.
“ZTE Corporation not only violated export controls that keep sensitive American technology out of the hands of hostile regimes like Iran’s…they lied to federal investigators and even deceived their own counsel and internal investigators about their illegal acts,” said Attorney General Jeff Sessions in a statement. “This plea agreement holds them accountable, and makes clear that our government will use every tool we have to punish companies who would violate our laws.”
Even when it comes to the secondary sanctions, the JCPOA did not remove all of them. For instance, foreign financial institutions who knowingly facilitate transactions with Iranian SDNs are still subject to secondary sanctions. But in addition, the OFAC has the authority to designate foreign persons and companies to any one of the designated persons lists described above. If an Iranian person or entity is on one of the numerous government lists, then U.S. persons, and, depending on the program, foreign persons, are not allowed to do business with such persons or entities nor with any person who does business with such persons or entities.
These designations can occur under sanctions programs that do not directly target Iran, but may affect Iranian entities and individuals, such as programs that target terrorism, human rights abuses, and weapons of mass destruction. The OFAC has made it clear that it will continue to rigorously to enforce existing sanctions.
President Trump responded to Iran’s testing of ballistic missiles with additional sanctions on 25 entities and individuals. The U.S. is also considering a foreign terrorist organization designation for the Islamic Revolutionary Guard Corps (IRGC).