As we reported in January 2016, the Office of Foreign Assets Control (OFAC) published General License H in conjunction with the implementation of the Joint Comprehensive Plan of Action (JCPOA). At that time, the European Union removed many of the sanctions that had prevented European-based companies from engaging in trade with Iran. The United States suspended its “secondary” sanctions that had targeted European and other non-U.S. companies that had engaged in Iran-related transactions. In contrast, the United States maintained nearly all of its “primary” sanctions preventing U.S.-based companies from engaging in trade with Iran, and those sanctions normally extend to foreign subsidiaries of U.S. parents.
General License H was designed to level the playing field – it authorized foreign subsidiaries of U.S. parents to engage in many Iran-related transactions, provided that those foreign subsidiaries excluded U.S. persons and the U.S. financial system from those transactions.
On June 27, OFAC revoked General License H pursuant to the United States’ withdrawal from the JCPOA. As a result, U.S. secondary sanctions will “snap back” into effect. OFAC presumably concluded that, just as non-U.S. companies will be subject to sanctions if they engage in many types of Iran-related transactions after a wind-down period, non-U.S. subsidiaries of U.S. parents no longer required General License H.
OFAC has added § 560.537 to the Iranian Transactions and Sanctions Regulations (ITSR) to authorize through 11:59 p.m. Eastern Standard Time on Nov. 4, 2018, all transactions and activities that are ordinarily incident and necessary to the wind-down of transactions relating to foreign entities owned or controlled by a United States person that were previously authorized under General License H.
An archival version of General License H remains posted on OFAC’s website to aid persons in determining which activities were not sanctionable or prohibited while the authorization was in effect and how best to wind down such activity.
U.S.-based companies that had modified policies and procedures to enable their non-U.S. subsidiaries to take advantage of General License H should consult § 560.537, and the guidance published by OFAC.
For your convenience, we reproduce ITSR § 560.537 below.
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