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Iran sanctions update - June 2019

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A central feature of the Trump administration's foreign policy was the withdrawal of the US from the Joint Comprehensive Plan of Agreement (JCPOA) President Trump has not been shy in sharing his criticism of the JCPOA Opponents of the deal thought that the concessions made by Iran did not warrant the relief provided by the US and the EU Since May 2018 the Trump administration has embarked upon a maximum pressure' strategy, with the stated aim of reducing Iranian oil exports to zero That aim is part of a wider objective to negotiate a more comprehensive agreement with Iran that restricts the development nuclear arms and ballistic missiles A significant part of the maximum pressure approach has been to deny the Iranian government revenue, including revenue derived from oil exports Whilst the snap back reintroduced the US Iran sanctions against non US persons, it did not completely prohibit the import of Iranian oil Several of the major oil importing nations were granted 6 month waivers' from any penalties for importing Iranian oil That 6 month period ended on 1 May with the US announcing that no further waivers will be givenOn 8 May the President Trump issued an Executive Order introducing sanctions against Iran's metals industry Specifically the following sanctions have been introduced 1 to block all property and interests in property in the possession or control of any US person of any person determined by the US toeither operate in the iron, steel, aluminium or copper sectors of Iran, or to own, control or operate an entity that is part of the these sectorsknowingly engage on or after 8 May in a significant transaction for sale, supply, transfer to Iran of significant goods or services used in connection with the iron, steel, aluminium or copper sectors of Iranknowingly engage on or after 8 May in a significant transaction for purchase, acquisition, sale, transport or marketing of iron, iron products, aluminium, aluminium products, steel, steel products, copper, or copper products from Iran2 to impose on a foreign financial institution where it has been determined that the foreign financial institution has on or after 8 May knowingly conducted or facilitated any significant financial transactionfor the sale, supply or transfer to Iran of significant goods and services used in connection with the iron, steel, aluminium or copper sectors of Iranpurchase, acquisition, sale , transport or marketing of iron, iron products, aluminium, aluminium products, steel, steel products, copper,nbsp or copper products from Iranfor or on behalf of any person whose property and interests in property are blocked by virtue of the Executive OrderWhilst the Trump administration has increased the sanctions against Iran, Britain, France and Germany are endeavouring to launch INSTEX a barter system that is designed to facilitate trade between Iran and Europe INSTEX is not yet operational and one the challenges involves ensuring that the Iranian counterpart barter system registered in March as the Special Trade and Finance Institute (STFI) is compliant with the Financial Action Task Force (FATF) the money laundering requirements More recently the Iranian government is reported to have sent letters to the leaders of Britain, France, Germany, the EU and China calling upon them to facilitate Iran's access to the international banking system and free restrictions on the import of Iranian oil, within 60 days Failure to do so will it is reported, lead to the resumption by Iran of uranium enrichment above the limits specified in the JCPOA nbspThe EU for its part has indicated that it does not accept the ultimatum and has urged Iran to comply with the JCPOA A failure by the Iran to do so could ultimately lead to a snap back of the EU sanctions and a return to the pre JCPOA positionThe current tension in the different approach of the US and EU is leading to further difficulties as the Blocking Regulation introduced by the EU has not had the effect desired, most likely because those who trade with Iran are fearful of what that Iranian trade might do to their US interests With certain of the nuclear and military restrictions in the JPOCA coming up on the horizon and given the current state of the relations between Iran and the US, and the between the EU and the US) the more likely outcome at this stage appears to be a renegotiation of the JCPOA rather than the parties returning to full performance of it Given the increasing complexity of the Iran sanctions position the recommended action remains Due diligence to understand and anticipate riskRegularly update training, policies, procedures andInclude sanctions clauses in all agreements, and identify and assign sanctions risks If you have any queries about this note or about sanctions more generally please touch base with your usual contact at Ince or the author, Brian Boahene

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