Strike Alert: New US sanctions imposed against Iran’s metals industry
On 8 May 2019 President Trump issued an Executive Order (EO) which imposes sanctions in respect of the iron, steel, aluminium, and copper sectors of Iran with the aim of targeting the Iranian government’s development of a nuclear weapon and intercontinental ballistic missiles, by denying them a revenue stream through the export of these products. A copy of the EO can be viewed here.
The EO provides the US Office of Foreign Asset Control (OFAC) with authority to impose blocking sanctions on any person, including non-US persons who are determined:
- to be operating in the iron, steel, aluminium, or copper sector of Iran, or who owns, controls, or operates an entity that is part of the iron, steel, aluminium, or copper sector of Iran
- to have knowingly engaged in a significant transaction for the sale, supply, or transfer to Iran of significant goods or services used in connection with the iron, steel, aluminium, or copper sectors of Iran
- to have knowingly engaged in a significant transaction for the purchase, acquisition, sale, transport, or marketing of iron, iron products, aluminium, aluminium products, steel, steel products, copper, or copper products from Iran
- to have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services in support of any person whose property and interests in property are blocked pursuant to the EO
- to be owned or controlled by, or to have acted or purported to act for or on behalf of, directly or indirectly, any person whose property and interests in property are blocked pursuant to the EO.
The EO also provides OFAC with authority to impose correspondent account or payable-through account sanctions in the US on foreign financial institutions who are determined to have facilitated any of the above financial transactions.
Wind down period
According to FAQs issued by OFAC which can be viewed here, non-US persons will have 90 days (ie until 6 August 2019) to wind down the above transactions to avoid exposure to sanctions. However, the guidance provides that new business entered into after 8 May 'will not be considered wind-down activity and could be sanctioned even during the winding down period' (FAQ no. 668).
Further details are provided in a client alert issued by Freehill Hogan & Mahar LLP which can be viewed here.