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Could US sanctions against Iran affect EU businesses?

Could US sanctions against Iran affect EU businesses?

On 5th November the US finally re-imposed sanctions against Iran following a six month wind down period. This means that all sanctions which were relaxed following the signature of the Joint Comprehensive Plan of Action (the Iran Deal) have been for the large part re-instated.

So what does all of this mean for your business?

US people and companies are banned from carrying out any oil and gas related activities in Iran, and always have been despite the Iran Deal. However, as we explained in our previous blog in August, which you can access here, it is not just US persons and companies who are affected.

As a European business you might be thinking that the re-imposed US sanctions will not affect you, but previously relaxed “secondary sanctions” have been re-imposed, which means that non-US companies owned or controlled by US persons or companies will also be prohibited from doing business in Iran.

So, before embarking on any transactions in Iran, it will be worth considering whether or not your company has a US parent, or if there are any US persons who sit on your Board. There could even be US persons sitting on your Board who live outside the US, but that could still mean that you fall foul of the sanctions if they have sufficient ownership and control.

Even if you do not fall into the category of being owned or controlled by a US person, you could find yourself in breach by exporting US origin goods to Iran, or by using the US banking system. Many of our clients are finding that even if they do not fall foul of the US sanctions, their banks are unwilling to take the risk involved in processing a transaction related to Iran for fear of being in breach themselves.

The UK, France and Germany have all re-affirmed their commitment to the Iran Deal and have expressed their desire to take appropriate steps to ensure that businesses are not put off from doing business in Iran. This has been shown to some extent by the amendment of the EU Blocking Regulation, which prohibits EU companies from complying with the extra-territorial US measures (the secondary sanctions).

However, with hefty fines available to the US authorities for breach of US sanctions, against what has been to date the largely unenforced EU Blocking Regulation, any EU company with US connections could face a dilemma when it comes to deciding which it would rather risk breaching.

For advice on this or any other sanctions issue please contact Lynne Moss or any other member of the Health, Safety and Corporate Crime team.

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Burness admin