On Friday, OFAC updated the following questions in its separate Frequently Asked Questions (FAQ) document about the sanctions changes under the Joint Comprehensive Plan of Action (JCPOA):
- C.7 and C.15 (Financial and Bank Measures)
- K.19 (Foreign Entities Owned or Controlled by U.S. Persons)
In addition, 3 new questions (M.10, 11 and 12) related to Due Diligence were added:
M. 10. Is it sanctionable for non-U.S. persons to engage in transactions with an entity that is not on the SDN List, but that is minority owned, or that is controlled in whole or in part, by an Iranian or Iran-related person on the SDN List?
It is not necessarily sanctionable for a non-U.S. person to engage in transactions with an entity that is not on the SDN List but that is minority owned, or that is controlled in whole or in part, by an Iranian or Iran-related person on the SDN List. However, OFAC recommends exercising caution when engaging in transactions with such entities to ensure that such transactions do not involve Iranian or Iran-related persons on the SDN List (see FAQ A.6). [10-07-2016]
M. 11. For non-U.S. persons conducting due diligence on a potential Iranian counterparty, does OFAC consider only checking the SDN List to be sufficient due diligence?
Screening the names of Iranian counterparties against the SDN List is a step that would generally be expected, but that is not necessarily sufficient (see FAQ A.6). In addition to checking the SDN List, non-U.S. persons should consult with their local regulators regarding due diligence expectations in their domestic jurisdictions. In particular, the non-U.S. person should ensure that its due diligence procedures conform to its internal risk-assessment and overall compliance policies, which – in addition to other business considerations – should be based on best practices of the particular industry at issue and conform to guidance and expectations of the non-U.S. person’s home country regulators. OFAC suggests maintaining records documenting those due diligence efforts (see FAQ M.2). [10-07-2016]
M. 12. Does OFAC expect non-U.S. financial institutions to conduct due diligence on their customer’s Iranian customers?
OFAC considers the appropriate level of due diligence to depend on the financial institution’s role in a transaction (see FAQ 116). While OFAC would consider it a best practice for a non-U.S. financial institution to perform due diligence on its own customers, OFAC does not expect a non-U.S. financial institution to repeat the due diligence its customers have performed on an Iranian customer unless the non-U.S. financial institution has reason to believe that those processes are insufficient. Non-U.S. financial institutions should consult with their local regulators regarding due diligence expectations in their domestic jurisdictions. [10-07-2016]