OFAC May 8, 2018 Iran Sanctions FAQ: Wind-Down

2. WIND-DOWN

2.1. How long is the wind-down period and what types of activities are allowed?

The U.S. government has a past practice of working with U.S. or third-country companies to minimize the impact of sanctions on the legitimate activities of those parties undertaken prior to the imposition of sanctions.

To implement the May 8, 2018 NSPM, the Departments of State and of the Treasury will establish a 90-day and a 180-day wind-down period, as applicable, for activities involving Iran that were consistent with the U.S. sanctions lifting under the JCPOA. (See FAQs 1.2. and 1.3. above for a list of activities subject to the 90-day or 180-day wind- down period.)

Consistent with this guidance from the President, the Department of State has revoked certain statutory waivers issued to implement the JCPOA sanctions relief, issued the necessary sanctions waivers to provide for an appropriate wind-down period, and plans to take appropriate action to keep such waivers in place for the duration of the relevant wind-down period, i.e., until August 6, 2018, or November 4, 2018, depending on the activity. Non-U.S., non-Iranian persons are advised to use these time periods to wind- down their activities with or involving Iran that will become sanctionable at the end of the applicable wind-down period.

 

In the event that a non-U.S, non-Iranian person is owed payment after the conclusion of the wind-down period on August 6, 2018, or November 4, 2018, as applicable, for goods or services fully provided or delivered to an Iranian counterparty prior to August 6, 2018, or November 4, 2018, as applicable, pursuant to a written contract or written agreement entered into prior to May 8, 2018, and such activities were consistent with U.S. sanctions in effect at the time of delivery or provision, the U.S. government would allow the non- U.S., non-Iranian person to receive payment for those goods or services according to the terms of the written contract or written agreement. Similarly, if a non-U.S., non-Iranian person is owed repayment after August 6, 2018, or November 4, 2018, as applicable, for loans or credits extended to an Iranian counterparty prior to the end of the 90-day or 180- day wind-down period, as applicable, provided that such loans or credits were extended pursuant to a written contract or written agreement entered into prior to May 8, 2018, and such activities were consistent with U.S. sanctions in effect at the time the loans or credits were extended, the U.S. government would allow the non-U.S., non-Iranian person to receive repayment of the related debt or obligation according to the terms of the written contract or written agreement. This allowance is designed for non-U.S., non- Iranian parties to be made whole for debts and obligations owed or due to them for goods or services fully provided or delivered or loans or credit extended to an Iranian party prior to the end of the 90-day or 180-day wind-down period, as applicable. Any payments would need to be consistent with U.S. sanctions, including that payments could not involve U.S. persons or the U.S. financial system, unless the transactions are exempt from regulation or authorized by OFAC.

Consistent with the conditions described above, OFAC will take steps to allow U.S. persons and U.S.-owned or -controlled foreign entities until August 6, 2018, or November 4, 2018, as applicable, to wind down operations in or business involving Iran conducted pursuant to an OFAC authorization, and to receive payments according to the terms of the written contract or written agreement entered into prior to May 8, 2018, for goods or services fully provided or delivered pursuant to an OFAC authorization. As soon as administratively feasible, OFAC intends, via Federal Register publication, to replace General License H, General License I, and the general licenses set forth at 31 C.F.R. §§ 560.534 and 560.535 (relating to trade in Iranian-origin carpets and foodstuffs) with more narrowly scoped authorizations to allow U.S. persons and, as appropriate, U.S.-owned or -controlled foreign entities, to engage in all transactions ordinarily incident and necessary to wind down activities that were previously authorized pursuant to General License H, General License I, or the general licenses set forth at 31 C.F.R.

§§ 560.534 and 560.535 and to receive payments according to the terms of the written contract or written agreement entered into prior to May 8, 2018, for goods or services fully provided or delivered pursuant to an OFAC authorization.

The provision or delivery of additional goods or services and/or the extension of additional loans or credits to an Iranian counterparty after August 6, 2018, or November 4, 2018, as applicable, including pursuant to written contracts or written agreements entered into prior to May 8, 2018, may result in the imposition of U.S. sanctions unless such activities are exempt from regulation, authorized by OFAC, or otherwise not sanctionable.

The U.S. government would evaluate matters falling outside the above parameters on a case-by-case basis.

See FAQs 1.2. and 1.3. above for a list of activities subject to the 90-day or 180-day wind-down period. [05-08-2018]

2.2. Can I engage in new activity involving Iran if the activity will not extend beyond the end of the relevant wind-down period?

At the end of the wind-down periods, the State Department does not expect to issue further broad waivers of relevant statutory authorities, and OFAC plans to revoke the general and specific licenses issued in connection with the sanctions relief provided under the JCPOA that may remain in effect as of that time. (See FAQs 4.1.-4.5. for more details on the wind-down approach for general and specific licenses.) Prior to August 6, 2018, or November 4, 2018, as applicable, persons engaging in activity consistent with the U.S. sanctions relief specified in the JCPOA should take the steps necessary to wind down operations by that date to avoid exposure to sanctions or an enforcement action when the applicable wind-down period ends. When considering a potential enforcement or sanctions action with respect to activities engaged in after August 6, 2018, or November 4, 2018, as applicable, OFAC will evaluate efforts and steps taken to wind down activities and will assess whether any new business was entered into involving Iran during the applicable wind-down period. [05-08-2018]

 

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