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Memorandum

Client Alert: Implications of Iran Ballistic Missile Tests

February 3, 2017

On Friday, February 3, 2017, the U.S. Department of the Treasury announced the addition of 13 individuals and 12 companies to the Specially Designated Nationals ("SDN") list, which is a register of people and organizations with whom U.S. persons are prohibited from doing business.  The newly named SDNs consist of individuals and entities linked to Iran's recent ballistic missile test launch, and to Iran's Islamic Revolutionary Guard Corps' Qods Force.  While these additions to the SDN list have been described in the media as newly imposed sanctions, there have not been any changes to the U.S. sanctions regime with respect to Iran.

As explained in a previous client alert dated January 19, 2016,
1 the U.S. joined the European Union ("EU") and United Nations ("UN") in lifting2 a number of their nuclear-related sanctions on Iran, including so-called "secondary sanctions," and sanctions on foreign subsidiaries of U.S. persons.  The Joint Comprehensive Plan of Action ("JCPOA"), as the Iran nuclear deal is known, includes a "snap back" provision, which provides that if Iran violates the agreement, the sanctions that have been suspended or lifted will be reimplemented.  The Acting Director of the Treasury Department's Office of Foreign Asset Control has stated that the addition of individuals and entities to the SDN list today in connection with Iran's ballistic missile test launch is outside the scope of the JCPOA.

President Donald Trump has publicly criticized the JCPOA and challenged Iran, but has neither taken any steps towards reimplementation of suspended sanctions nor imposed additional sanctions to date.  Nevertheless, it is important for both U.S. persons and foreign corporations doing business with Iran to consider the implications of a reimplementation of sanctions that have been lifted or suspended as a result of the JCPOA.

We will continue to monitor all developments in this area.

If you have any questions or concerns about U.S. sanctions against Iran, please contact Bruce G. Paulsen (212-574-1533), Benay L. Josselson (212-574-1455), Michael W. Broz (212-574-1272) or Noah S. Czarny (212-574-1642) at Seward & Kissel.

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1   http://www.sewkis.com/pubs/xprPubDetail.aspx?xpST=PubDetail&pub=736 

2   The Treasury Department's Office of Foreign Asset Control uses the word "lifted" in the guidance it has issued, but the U.S. sanctions prohibiting certain conduct that is now permitted under the JCPOA have not actually been repealed or permanently terminated at this time as the word suggests.  Rather, the U.S. government has implemented changes to the sanctions regime as referenced in this memorandum by: (1) issuing waivers of certain statutory sanctions provisions; (2) committing to refrain from exercising certain discretionary sanctions authorities; (3) removing certain individuals and entities from OFAC's sanctions lists; and (4) revoking certain Executive Orders and specified sections of Executive Orders.

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About Seward & Kissel LLP

Seward & Kissel LLP, founded in 1890, is a leading U.S. law firm with an international reputation for excellence. We have offices in New York City and Washington, D.C.

Our practice primarily focuses on corporate, litigation and restructuring/bankruptcy work for clients seeking legal expertise in the financial services, corporate finance and capital markets areas.  The Firm is particularly well known for its representation of major commercial banks, investment banking firms, investment advisers and related investment funds (including mutual funds and hedge funds), master servicers, servicers, investors, distressed trade brokers, liquidity providers, hedge fund administrators,  broker-dealers, institutional investors and transportation companies (particularly in the shipping area). 

Notices

 

This memo  may be considered attorney marketing and/or advertising. Prior results do not guarantee a similar outcome.  The information contained in this memo is for informational purposes only and is not intended and should not be considered to be legal advice on any subject matter.  As such, recipients of this memo, whether clients or otherwise, should not act or refrain from acting on the basis of any information included in this memo without seeking appropriate legal or other professional advice.  This information is presented without any warranty or representation as to its accuracy or completeness, or whether it reflects the most current legal developments.