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November 01, 2015 

US and EU Temporarily Suspend Certain Sanctions on Belarus

By Glen Kelley, Doug Jacobson and Michael Burton, Jacobson Burton Kelley PLLC 

The United States and European Union last week announced that the targeted sanctions against Belarus that were first imposed in 2004 will be relaxed effective October 30, 2015. 

Although the sanctions relief at this point is of limited duration and scope, it will allow new transactions with Belneftekhim State Concern for Oil and Chemistry, one of Belarus' largest groups of companies. 

For several months EU officials had been signaling that the EU might suspend certain sanctions targeting Belarusian companies and individuals, if the Belarusian government took steps to better respect political and social rights. With the Belarusian government’s release of political prisoners in August, and elections in October that were perceived to involve less government intimidation of the opposition than in recent years, the EU is taking the view that this condition has been met.

On October 29, 2015 the EU announced the suspension of most, but not all, of its sanctions against Belarus. The EU sanctions suspensions are effective as of October 31, 2015, the date each year when the EU sanctions targeting Belarusian companies and individuals either expire or are renewed.

In a less widely expected move, on October 29 the US also suspended many of its sanctions targeting certain Belarusian companies on the US list of Specially Designated Nationals and Blocked Persons ("SDN list"), effective October 30. In announcing the suspension, a US State Department spokesperson commented that “this limited reprieve from sanctions opens the door to expanded commercial ties for the Belarusian economy”.

The key documents on the EU side include an implementing regulation, available here. On the US side, the US Treasury Department's Office of Foreign Assets Control (“OFAC”) issued Belarus General License No. 2 that can be found here

Subject to a number of caveats mentioned below, OFAC Belarus General License 2 provides that "All transactions otherwise prohibited by Executive Order 13405 involving the following named entities, or any entities that are owned, individually or in the aggregate, directly or indirectly, 50 percent or more by one or more of the following named entities, are authorized":
  • Belarusian Oil Trade House
  • Belneftekhim (formally known as Belneftekhim State Concern for Oil and Chemistry)
  • Belneftekhim USA, Inc.
  • Belshina OAO
  • Grodno Azot OAO
  • Grodno Khimvolokno OAO
  • Lakokraska OAO
  • Naftan OAO
  • Polotsk Steklovolokno OAO
The OFAC and EU measures are particularly significant for US and EU petroleum and petrochemical companies, which had largely been prohibited from engaging in many transactions in Belarus due to the pervasive and non-transparent roles these entities play. In particular, the Belneftekhim Concern has numerous affiliates that are widely involved in Belarus' oil and gas sector. 

At the same time, OFAC's general license does not authorize transactions, directly or indirectly, with any other person whose property and interests in property are blocked pursuant to the Belarus sanctions program. Also, the US sanctions relief only applies to prospective transactions with the named entities, meaning the blocked (frozen) assets of the named entities must remain blocked.

Please note that the Belarusian entities covered by the OFAC general license remain on the SDN list even through sanctions against them have been suspended, so automated sanctions screening systems may continue to pick up any references to these entities.

While the US and EU actions clearly were coordinated and intended to complement each other, there are some important practical differences in the US and EU sanctions and the sanctions relief, including the following.

First, the EU sanctions suspensions have effect only for four months, through February 29, 2016, while the US suspensions will remain in place for six months, unless modified by OFAC, until April 30, 2016. Whether the sanctions will remain suspended will be evaluated early next year by the EU and US governments.

Second, the EU suspended its sanctions on many Belarusian individuals and government officials, including President Lukashenko. By contrast, the US did not suspend any sanctions targeting Lukashenko or any other individuals.

Third, the impact of sanctions designations on the subsidiaries and other affiliates of designated persons is different under EU and US sanctions, and arguably broader on the US side:
  • Under EU sanctions it is prohibited to indirectly make available funds or other economic resources to a designated person, and this could for example impact some transactions with a non-designated subsidiary of a designated person.
  • On the US side, under OFAC's "50% rule", an entity is considered “blocked by operation of law" (subject to asset freezing), even if it is not on the SDN list, if one or more persons on the SDN list have a 50% or greater ownership interest in that entity. The Belarus sanctions program was the initial context for OFAC to release the 50% rule.
OFAC's 50% rule was particularly challenging to apply under the Belarus sanctions because Belneftekhim is widely understood to be effectively a holding company for the government’s extensive interests in companies across the Belarusian economy, in many cases through non-transparent structures. The suspension of US sanctions on Belneftekhim and other entities should mitigate this compliance challenge, though certain transactions may still be prohibited if they involve President Lukashenko or any other person who remains on the SDN list. We expect that OFAC would approach the degree of involvement by an individual blocked person similar to the manner its approach under the Russia/Ukraine sanctions program.

Fourth, the US has imposed a reporting requirement on US persons that engage in transactions with any of the Belarusian entities for which sanctions are suspended. The EU has not imposed such a special reporting requirement. US persons must submit reports must to the US Department of State within 15 days of any transaction or series of transactions that have an aggregate value exceeding US $10,000.

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October 19, 2015 

US and EU Mark "Adoption Day" of Iran Nuclear Agreement

While US and EU Mark Adoption Day of the Iran Nuclear Agreement, Current Sanctions Regime on Iran Will Remain in Effect Until Implementation Day

By Glen Kelley, Doug Jacobson and Michael Burton, Jacobson Burton Kelley PLLC

We continue to follow the gradual progress by the United States, the EU, Iran and other countries towards the implementation next year of sanctions relief under the July 2015 agreement with Iran, formally called the Joint Comprehensive Plan of Action (“JCPOA”).

Our most recent post on Iran sanctions compliance for US and non-US companies under the JCPOA can be found here

Adoption Day and Implementation Day

Yesterday, October 18, the United States and the EU marked “Adoption Day”, a milestone that follows several initial steps by the US, EU and Iran, pursuant to the phased timeline set out in the JCPOA.

Iran must now satisfy its extensive obligations to scale back its nuclear activities, and the US and EU have formally begun preparing to ease sanctions next year if Iran verifiably meets those commitments. To this end, on October 18 both the US and EU released a number of legal and guidance documents relating to the planned sanctions relief.

It is important to note that none of the sanctions relief will be effective until Iran has satisfied its nuclear-related commitments under the JCPOA.

Once Iran has satisfied its JCPOA conditions and this is verified by the IAEA, the next JCPOA milestone known as “Implementation Day” will be reached. While Iranian officials have ambitiously announced they intend to fulfill their commitments within a few months, this is not widely expected to occur until at least mid-2016.

As we noted in our previous alerts, even if the JCPOA is fully implemented, very little will change with respect to the broad US embargo of Iran. In practical terms, most transactions with Iran, its government, and many targeted Iranian companies will remain prohibited if US persons, US products or US dollar payments are involved.

If the JCPOA is implemented next year, the EU will lift the majority of its sanctions on Iran, and the US will lift the majority of its “secondary” (extraterritorial) sanctions that apply to non-US companies and banks. However, a number of EU sanctions and US secondary sanctions will remain, presenting compliance challenges for many otherwise-permissible transactions by non-US persons.

Key US and EU Documents
The principal legal instruments and guidance issued on October 18 in relation to the anticipated US and EU sanctions relief are as follows:
  • The US Treasury Department's Office of Foreign Assets Control (“OFAC”) issued guidance on frequently asked questions (“FAQ”) related to JCPOA implementation. These are available at
  • The US State Department issued “contingent waivers” of the US secondary sanctions covered by the JCPOA, which will not become effective until Implementation Day. These are available at
  • A Decision and two implementing Regulations issued by the Council of the European Union, setting out the precise parameters of the EU sanctions that will be lifted if Implementation Day is reached. These are available at

Sanctions Compliance Issues Worth Noting

There is little that is new or unexpected in the documents released by the US on October 18, 2015. However, the following points are worth noting:
  • Until Implementation Day, non-US persons could be penalized by the US government for entering into certain types of contracts with Iran, its government or sanctioned Iranian persons. The OFAC FAQ guidance indicates that this could include contacts “that are contingent on the implementation of sanctions relief under the JCPOA”, meaning contracts that will not be performed until applicable sanctions are lifted.
  • If US sanctions relief occurs next year, many entities owned or controlled by the Iranian government will be removed from the primary US sanctions list (the list of Specially Designated Nationals, or “SDN List”). However, all Iranian government entities will remain “blocked”, and OFAC officials have publicly stated that those removed from the SDN List likely will be included in a special new list of blocked entities.
  • Many of these Iranian government entities play an important role in the Iranian economy, so it will be important to know whether they can be involved in transactions carried out pursuant to any JCPOA sanctions relief that is implemented next year. The new State Department guidance suggests that these entities could be involved in transactions that are authorized pursuant to the JCPOA, including any export from the US of commercial passenger aircraft or related equipment and services that is specifically licensed by OFAC.
  • On the other hand, it appears from the State Department guidance that the US secondary sanctions to be suspended on Implementation Day will remain in effect for transactions involving entities or individuals that remain on the SDN List. This could complicate US sanctions compliance for non-US persons after the JCPOA is implemented. It is possible non-US persons with no ties or connections to the United States could still be penalized under US secondary sanctions for engaging in certain activities relating to Iran, such as support for the Iranian oil and gas, shipping or shipbuilding sectors, or for providing insurance or reinsurance related to those activities, if any person on the shortened SDN List is involved.
  • The Joint Commission called for under the JCPOA, consisting of high-level representatives of the US, EU, Iran and the five other countries party to the JCPOA, has been formed and will have its first meetings this week. The commission may soon begin hearing complaints from both sides that actions are falling short of commitments, for example by Iran regarding the anticipated US sanctions relief, and by the other parties regarding Iranian action to dismantle its nuclear program and other Iranian actions. The US will be represented on the Joint Commission by, among others, Ambassador Stephen Mull, who heads up a new State Department office for JCPOA implementation.

OFAC has reiterated on numerous occasions that it intends to publish on its website detailed guidance on the implementation of US sanctions relief under the JCPOA. We expect this to be posted several weeks before Implementation Day occurs next year.

We will continue to monitor the sanctions relief under the JCPOA and will issue further updates when significant developments occur.

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October 13, 2015 

Brian Nilsson is now Serving as Deputy Assistant Secretary of State for Defense Trade Controls

Effective today, October 13, 2015, Brian Nilsson will serve as the Deputy Assistant Secretary of State for Defense Trade Controls and will manage the Directorate of Defense Trade Controls (DDTC) in the State Department's Political-Military Affairs.

Mr. Nilsson has extensive experience with U.S. export control matters, having served for the past seven years on the White House National Security Council (NSC) as the Director of Nonproliferation and Export Controls, chairing the White House Export Control Reform Task Force. 

Prior to joining the NSC Mr. Nilsson held many positions at the Commerce Department’s Bureau of Industry and Security (BIS), including Deputy Director of the Foreign Policy Controls Division, Acting Director of the Office of Strategic Trade and Foreign Policy Controls, Senior Advisor to the Assistant Secretary of Commerce for Export Administration, acting Deputy Assistant Secretary on behalf of the Assistant Secretary and Chairman of the Operating Committee (OC) for Export Policy.

Anthony Dearth, who has been serving as the Acting DAS for the past three and half months, will return to his duties as Director of the Office of Defense Trade Controls Licensing.

September 21, 2015 

US Issues Regulations Further Easing US Sanctions on Cuba but Significant Restrictions and Compliance Challenges Remain

By Glen Kelley, Doug Jacobson and Michael Burton, Jacobson Burton Kelley PLLC

On September 21, 2015 the Treasury Department's Office of Foreign Assets Control (OFAC) and the Commerce Department's Bureau of Industry and Security (BIS) issued final regulations making additional changes to the US financial and trade embargo of Cuba.

These changes build on changes in the embargo from earlier in 2015, including:

  • The January 2015 expansion of authorized categories of trade and commercial activity between the US and Cuba; and 
  • The July 2015 removal of Cuba from the US list of state sponsors of terrorism. 
While the recent changes expand the scope of authorized travel and business by US persons and companies in Cuba, most financial, investment, services and business transactions with Cuba remain prohibited and significant sanctions and export compliance challenges remain.

This is particularly true since some members of the US Congress have expressed their displeasure by the Obama Administration's regulatory efforts to chip away the existing embargo and it is likely that Congress will continue to pressure OFAC and BIS to enforce those restrictions that remain in place.

As a result, US companies and their controlled foreign affiliates exploring business opportunities in Cuba must be vigilant to ensure they remain compliant with the ever-changing regulations on Cuba, which have made compliance challenges more complex.

Practical impact of changes to Cuba embargo

The September 21, 2015 changes to OFAC's Cuban Assets Control Regulations (CACR) and BIS's Export Administration Regulations (EAR), which can be found here (OFAC) and here (BIS), make possible some limited additional trade and transactions by US companies with Cuba. However, any new opportunities will be subject to navigating the broad remaining prohibitions under the embargo, and the perhaps even more difficult Cuban regulatory and business environment. Many activities now authorized by the US will not be possible pending further authorizations or other action by the Cuban government.

Overall, in recent years the thaw in US-Cuba relations and the expansion of US travel and commercial exports to Cuba seem to have primarily benefited non-US companies that already have a substantial local presence. For the foreseeable future that trend is likely to continue.

The following is a summary of the September 21, 2015 changes to the CACR and EAR.

Authorized business activity and physical presence in Cuba

Authorized physical presence in Cuba

The amendments to OFAC's CACR for the first time authorize certain US companies, and non-US companies owned or controlled by US persons, are now generally authorized to establish a physical presence in Cuba, including offices, warehouses or retail outlets. This applies only to companies engaged in the following categories of authorized transactions with Cuba, most of which were established or expanded either in the January or September 2015 changes:

(a) Exporters of certain authorized goods to Cuba, including food and agricultural products; medicine and certain medical devices; materials and equipment for use on privately-owned buildings; equipment and supplies for private sector Cuban entrepreneurs; and tools and equipment for private agricultural activity

(b) Authorized air and vessel carriers and other providers of authorized travel services (but a physical presence in Cuba is not authorized for the purpose of providing lodging services)

(c) Providers of authorized telecommunications and Internet-based services to companies and individuals in Cuba

(d) Companies carrying authorized cargo, parcel or mail to or from Cuba

(e) Organizations involved in authorized educational or religious activities

(f) News bureaus in Cuba.

Any companies not within one of these six categories are not authorized to establish a physical presence in Cuba.

Physical presence - practical aspects

As part of establishing an authorized local presence in Cuba, companies may send US employees to reside and work in Cuba, and may hire local employees as well. They may open local bank accounts and fund them, including by wire transfer, provided the funds are used only for authorized activities in Cuba. When such local accounts are closed, the funds must be sent by wire transfer to a US bank.

Two related authorizations are noteworthy. First, BIS has generally authorized the export to Cuba of goods and technology to help establish an authorized physical presence, if those goods are not tightly restricted under US export controls. Items are authorized if they are EAR99 or are controlled for AT (anti-terrorism) reasons only.

Second, other US persons generally are not restricted from dealing with the authorized Cuban operations of these types of companies, notwithstanding the fact that US persons are otherwise generally prohibited from dealing with any person or business operations in Cuba.

Changes in US export controls

Several of the existing categories of authorized trade and commercial transactions were broadened by the September 2015 changes to the EAR and related policy guidance. For example, under certain circumstances, goods authorized for export to the Cuban private sector can be sold to Cuban state-owned enterprises, if they are resold or distributed to the private sector. This highlights a major impediment to exports to Cuba since nearly all items sold to Cuba must be purchased and imported by Cuban state-owned enterprises.

Of potentially greater significance to a broader universe of companies are the July 2015 regulatory changes following the removal of the Cuba terrorism designation that made possible exports to Cuba of a wide range of items covered under BIS license exceptions (general authorizations).

The July 2015 changes to the EAR also removed US jurisdiction over the reexport to Cuba of certain items produced outside the US containing up to 25% US-origin content. The prior de minimis threshold had been 10 percent for many years. Note that all US-origin content counts toward the 25 percent threshold, even if it is EAR99 (not identified on the US Commerce Control List).

Telecommunications and internet-based services

Under the September 2015 amendments to OFAC's CACR, US providers of authorized telecommunications and internet services in Cuba may maintain a more substantial local presence than other categories of US companies:

(1) These US companies may establish Cuban subsidiaries, branches, joint ventures, franchises or other business relationships with any Cuban person including ETECSA, the Cuban government telecoms monopoly.

(2) Unlike other categories of US companies, they are generally authorized to put in place arrangements for licensing and marketing of the authorized telecom and Internet-based services.

Also, most Internet-based services previously authorized for provision to Cuban persons may now also be provided to Cuban government entities. This reduces the compliance burden that US Internet service providers had faced in seeking to ensure that no recipient of such services is a governmental person. This is a pragmatic approach for the government, given the reality that the sector is still government dominated.

Changes to travel and carrier services and aviation sector

Authorized travel transactions

Twelve categories of authorized travel by US persons to Cuba were established or expanded in January 2015. Although legislative constraints would complicate the creation of additional categories of authorized travel, several of the existing categories were broadened in the September 2015 changes.

Anecdotal evidence also suggests that, since January, OFAC has been interpreting some of the travel general licenses in an uncharacteristically broad manner, including the general license covering market research activities. On the other hand, some members of Congress have expressed concern over the use of general licenses to authorize such a broad range of travel.

Authorized travelers in Cuba may now open local bank accounts and may fund them, including by wire transfer, as long as the funds are used only for their authorized travel while in Cuba.

Vessels and aircraft to Cuba

Vessels are now generally authorized to travel between the US and Cuba and to remain in Cuba for up to 14 days, including the provision of on-board lodging (which may be intended to help make possible US-to-Cuba cruises), subject to obtaining required Cuban government authorizations.

General aviation (i.e., private aircraft flights) are now generally authorized to Cuba, and US aircraft may remain in Cuba for up to 7 days, under license exception AVS pursuant to BIS’s Export Administration Regulations. However, the crew operating the aircraft will still require a specific license from OFAC to travel to Cuba since it is unlikely that they will fall within one of the 12 categories of generally licensed travel. This presents a significant practical limitation that warrants additional guidance from OFAC, particularly in the case of aircraft on temporary sojourn in furtherance of one of the 12 authorized travel categories.

OFAC also has added to its regulations the guidance it released several months ago regarding the categories of US and Cuban persons whom carriers may transport to and from Cuba.

Safety of flight licenses

It is now possible to seek specific licenses (transaction-specific authorizations) from BIS to export to Cuba equipment and technology that is located in the US, or is otherwise subject to US export control regulations, for safety of flight purposes.

We expect this specific licensing program will look a lot like the existing programs for other embargoed countries, including Iran (although Iran aviation-related licenses are issued by OFAC, not BIS).

Credit card and banking transactions

Credit card transactions

OFAC has greatly broadened the January 2015 authorization of US credit card network activity in Cuba. It appears that US credit card operators are generally authorized to process credit card transactions of individuals traveling in Cuba, regardless of whether they are US persons or are traveling under any of the 12 categories of authorized travel.

Note that the preceding point is based on new OFAC guidance stating that its regulations authorize “all transactions incident to the processing and payment of credit and debit cards transactions for third-country nationals traveling to, from, or within Cuba”, even if they “may not fall within the 12 categories of authorized travel”.

US Dollar funds transfers

In January 2015, OFAC made several potentially important changes in the banking sanctions on Cuba:
  • Since then, US banks have been generally authorized to reject (refuse to process) rather than block (freeze) funds transfers involving foreign parties that do not involve either a US person or the Cuban government. 
  • US banks have also been generally authorized to process such funds transfers if related to a transaction that a US person would be authorized to carry out. 

Now, under the September 2015 changes, US banks may retroactively unblock (unfreeze) and return funds that would have qualified for such treatment had they been submitted after the September 2015 changes entered into effect.

Other potential practical effects of these changes

Services to Cubans outside Cuba

The September 2015 OFAC regulation modifies the remaining restrictions on US companies, and non-US companies owned or controlled by US persons, on providing services to Cubans located outside of Cuba, provided the services do not relate to commercial exports of goods or services to or from Cuba.

The restrictions on non-US subsidiaries of US companies providing services to Cuban nationals (particularly in Europe, Canada and Mexico) had presented very serious compliance challenges, as they directly conflicted with local non-discrimination and sanctions blocking laws.

Authorization of related transactions

OFAC and BIS have made an effort in the September 2015 changes to make possible related transactions that are necessary and ordinarily incident to the trade and commercial activities in and with Cuba that are now authorized.

However, some additional clarification might be needed in this area. As previously noted, the OFAC regulations do not authorize the crew of aircraft and vessels authorized to travel to Cuba during the 7- or 14-day period that the aircraft or vessel may remain in Cuba. Thus, an OFAC specific license is needed until further changes are made to the CACR.

Legal services to and from Cuba

It is also now possible for US lawyers to be paid for legal services provided to Cuba or Cuban persons without first having to seek a specific license (authorization) from OFAC, subject to some limitations and reporting requirements.

Generally, it is also now authorized for US persons to seek and obtain legal services from persons in Cuba, which should simplify the process of engaging local Cuban counsel necessary to navigate the local regulatory environment.

Humanitarian and educational activities

OFAC and BIS have expanded the humanitarian and educational activities that are authorized for US persons, including a new authorization of certain microfinance programs in Cuba, and certain standardized testing and Internet-based undergraduate courses provided to Cubans.


While the further relaxation of the Cuba embargo is a positive development, many restrictions and compliance challenges remain. We urge caution for US companies and their controlled foreign affiliates seeking to enter the Cuban market.

That being said, the existing limited commercial channels are slowly being expanded, but there is still a long way to go before US and Cuba commercial and financial relations are normalized.

Disclaimer: The information contained herein is for general informational and compliance purposes and does not constitute legal advice. This information is not intended to facilitate or otherwise assist in any prohibited transaction involving Cuba, nor is it intended to evade or avoid any applicable US sanctions. Qualified counsel should be consulted with respect to any specific transaction contemplated with Cuba.

September 17, 2015 

Iran Sanctions Compliance Considerations Under the Joint Comprehensive Plan of Action

By Glen Kelley, Doug Jacobson and Michael Burton, Jacobson Burton Kelley PLLC

Since the Joint Comprehensive Plan of Action (JCPOA) between the P5+1 countries and Iran was announced in mid-July, the focus has been on whether the US Congress could pass a resolution of disapproval. Now that the deadline has passed and the JCPOA has passed the first hurdle, the attention will now turn to implementation of the sanctions relief by various countries and the corresponding impact on companies once the JCPOA's Implementation Day takes place, which is likely to occur in mid-2016. 

The JCPOA provides for a lifting of a majority of the EU economic and trade sanctions on Iran, and the suspension of a majority of the US secondary (extraterritorial) sanctions on Iran. 

JCPOA Sanctions Compliance Considerations

In our July 24, 2015 post on International Trade Law News, we addressed a number of recurring questions that our US and non-US clients are facing in assessing the JCPOA and the potential practical impact if it is implemented next year. The following are a number of the key compliance-related considerations from that post and a few additional ones based on questions that we have received during the past few weeks:
  • Manage Your Company’s Expectations and Don’t Jump the Gun. Have realistic expectations regarding sanctions relief under the JCPOA and permitted business development activities (see below). Most countries are not likely to implement sanctions relief until mid-2016 and US primary and secondary sanctions will remain unchanged until the IAEA verifies that Iran has met its obligations under the JCPOA.
  • Despite Some Reports, the US Embargo on Iran Will Remain Nearly Unchanged. While many EU sanctions on Iran will be lifted if the JCPOA is implemented, the broadest US sanctions on Iran, including the prohibitions applicable to US persons, US companies and US-origin products will remain essentially unchanged.
  • A General License to Authorize non-US Affiliates of US Companies to Conduct Business with Iran Will be Issued, but Facilitation and Other Risks Remain. The US Government is expected to authorize non-US entities that are owned or controlled by a US person, such as a non-US subsidiary of a US company, to engage in activities with Iran that are consistent with the terms of the JCPOA. We understand that this authorization is likely to take the form of a general license from the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) that will be issued in the coming months. Although this general license represents an opportunity for some non-US companies affiliated with US companies to conduct business with Iran, there will be a significant risk of US persons unlawfully facilitating their non-US affiliates’ lawful transactions involving Iran. While the scope of authorized activities will depend on the breadth of authorization in the general license, more information will be available once the general license is published by OFAC. We encourage you to read the general license carefully and consult counsel as needed to determine what activities are permissible.
  • US Companies Should be Cautious Toward Relaxing any Existing Policies Prohibiting Their Foreign Affiliates Trading with Iran. OFAC views a change in existing policy specifically to enable business with Iran to be form of prohibited facilitation. It is important to have a good understanding of this issue before approving any change in policy as it relates to doing business with Iran.
  • Pay Attention to Remaining US Secondary Sanctions and Blocked Parties in Iran. Some US secondary (extraterritorial) sanctions on Iran are expected to remain in place once the JCPOA is implemented. For example, more than 200 Iranian-linked companies and individuals will remain on OFAC's Specially Designated Nationals (SDN) List, including major Iranian firms in the military, defense, banking engineering, construction and energy fields. Secondary sanctions continue to apply to all of these Iran-related individuals and entities and therefore will remain problematic, even for non-US persons.
  • Early Entrants Might not be Compliant. While competitors might commence activity involving Iran or Iranian companies, this does not mean that business is compliant with the laws of the US or other countries. OFAC, the Commerce Department's Bureau of Industry and Security (BIS) and the Department of Homeland Security, will be closely monitoring transactions with Iran, both before and after the JCPOA is implemented and enforcement of the applicable Iran sanctions will remain a priority for the US.
  • Financial Institutions are Likely to Remain Conservative Regarding Iran. In light of the wave of large penalties assessed against banks in the EU and elsewhere for alleged violations of OFAC sanctions and New York State banking regulations, we expect that many banks will continue to be conservative with regard to sanctions compliance and treat themselves as subject to US law, notwithstanding their being incorporated outside the US, due to their dependence on US correspondent banking relationships. It is important to consider this factor with regard to payment and financing that might relate to authorized activities involving Iran, including humanitarian items that are currently permissible to be exported to Iran under OFAC general and specific licenses.
  • US Export and Reexport Controls Will Remain in Place. Goods, software and technology subject to US law (which includes US origin products and products containing more than a de minimis amount of US content) still will require US authorization for export or reexport to Iran. While certain general licenses authorize limited export activity (e.g., food, agricultural commodities, medicine, medical devices and personal telecommunications equipment) and reexports of non-controlled items by non-US persons outside the United States are not prohibited, any transactions involving controlled items or US persons will still require a license from OFAC or BIS. As a result, non-US companies must determine whether the items they manufacture or procure are subject to US law and should recognize that US suppliers are likely to remain vigilant regarding potential end-use of their products in Iran.
  • Business Risks If Sanctions are Reimposed on Iran. Should Iran violate its commitments once sanctions have been suspended, the JCPOA includes mechanisms to "snap them back" into place. In fact, the US could restore sanctions within a matter of days in some cases. The JCPOA does not include any grandfather clause that would protect preexisting contracts against the snap-back of sanctions. While the US will not retroactively penalize permissible activities while the JCPOA is in place, the US will require any prohibited activity to cease if sanctions are reimposed. Thus, if the US reimposes sanctions in 2018, a contract that was entered into in 2016 gives it no special status under the JCPOA and any new transactions taking place under that contract will be subject to sanctions as any new contract would be. In light of this risk companies should consult counsel regarding appropriate contractual safeguards to ensure ongoing compliance. 
Business Development Activities in Iran

As JCPOA implementation seems more likely, many companies and financial institutions will be interested in engaging in general discussions and research to better understand the Iranian market, and to identify potential opportunities to explore once the JCPOA is implemented. We set out below a few key principles to bear in mind in any such discussions or market research.

Generally speaking, it is not prohibited under current US or EU sanctions to engage in exploratory and non-binding business discussions about the Iranian market, including with Iranian companies and individuals, either within or outside of Iran.

It is also generally not prohibited to provide information to other parties regarding potential business or projects in Iran if the information is clearly in the public domain (meaning it is published on a website or a widely available printed publication). However, gathering or formulating public domain information into a new document or communication takes that information out of the public domain. Also be careful regarding technology in the public domain, as its treatment under US sanctions regulations can depend on the export controls classification of that technology. 

Generally Prohibited Activities Involving Iran

On the other hand, the following business development activities are generally prohibited under current US sanctions and those that are expected to remain in place after the JCPOA is implemented. These prohibitions may be applicable if any US company or other US person is involved (any US citizen or permanent resident, company formed under US law or non-US citizen located in the US), or if there is any other sufficient nexus (connection) to the US:
  •  No Specifics. No specific transactions should be discussed or negotiated with Iranian companies or individuals.
  • No Contracts, Even if Executory. It is generally prohibited to enter into any contract, agreement or memorandum of understanding, whether written or oral, with regard to potential business or projects in Iran, involving any Iranian government agency or entity, or involving any US-sanctioned person. This is generally impermissible even if the document is made conditional on the lifting of sanctions.
  • No Services to Iran. It is also generally prohibited for companies and individuals subject to US jurisdiction to take any action that could be considered a “service” to any such person, including steps to prepare to enter into or perform an agreement. This includes any action that might confer a benefit, directly or indirectly, on any person in Iran, Iranian government agency or entity, or US-sanctioned person.
  • No Pre-Performance Activities in Anticipation of Market Opening. There should not be any planning or preparation of products or services intended for the Iranian market, in preparation for the easing of sanctions. If no US person or other US nexus is involved, it would not be prohibited to carry out such work if it is general in nature and is not undertaken for any particular potential Iranian customer.    
In other words, talking with and thinking about Iran is not prohibited, but business activity related to Iran still is until the sanctions are formally relaxed. In addition, under US secondary sanctions, some of which are expected to remain after JCPOA implementation, a non-US person or company can be penalized for entering into significant agreements relating to certain targeted sectors, persons and activities relating to Iran, its government, Iranian persons or Iranian-origin petroleum products. We expect that the US government will release guidance in the coming months to clarify which secondary sanctions will remain in place after JCPOA implementation. 

Iran Sanctions Enforcement Will Remain High

Various US Government law enforcement agencies, including OFAC and BIS's Office of Export Enforcement, will continue to monitor closely US and non-US business activities involving Iran to see if any companies have overstepped the bounds of US primary and secondary sanctions or the limited sanctions relief in the Joint Plan of Action announced in November 2013.

The US Government has stressed that they will continue to “vigorously enforce" all US sanctions that have not been suspended. We believe that Iran remains the primary target of US sanctions and export control enforcement and will continue to generate a large number of enforcement cases. 

Other Considerations

Despite many media reports to the contrary, much of the complex US sanctions architecture on Iran will remain in place after JCPOA implementation.

A full analysis should be carried out prior to engaging in any negotiations or other business activity, other than the generally permissible activities set out above, relating to Iran, its government or US-sanctioned persons. This analysis should include US sanctions considerations if the proposed conduct would involve any US person or other US nexus, or any sectors, persons or activities covered by US secondary sanctions.

For further information, see for our contact information.   
Disclaimer: The information contained herein is for general informational and compliance purposes and does not constitute legal advice. This information is not intended to facilitate or otherwise assist in any prohibited transaction involving Iran, nor is it intended to evade or avoid any applicable US sanctions. Qualified counsel should be consulted with respect to any specific transaction contemplated with Iran.

September 08, 2015 

Registration Now Open for BIS Update Conference on Export Controls to be Held November 2-4, 2015 in Washington, DC

Registration has now opened for the US Department of Commerce’s Bureau of Industry and Security (BIS)  annual BIS Update Conference on export controls and policy, which will be held at the Washington Hilton hotel in Washington, DC from November 2-4, 2015. 

As we have previously noted, BIS Update has taken on more importance in the export controls community since many defense articles that were once subject to the ITAR are now subject to the jurisdiction of the Export Administration Regulations administered by BIS's Munitions Control Division due to the export control reform process. 

BIS has also played a key role in the new sanctions imposed on Russia and Crimea. Changes to the US embargo on Cuba administered by BIS, as well as the future changes to the sanctions on Iran administered by OFAC, will likely be on this year's agenda. Past BIS Update conferences have included speakers from OFAC on sanctions-related matters. 

The link to the BIS registration site can be found here: (click on the red Register Now link at the bottom of the page).

The preliminary Update program agenda can be found here:

Note that the registration and payment sites are separate. Once you register you have to go to the site to make payment by credit card, ACH or PayPal. 

If you have not yet made hotel reservations your registration email confirmation will include a link to the hotel reservation site. 

Given the number of defense companies that are now subject to the EAR we recommend that you register as early as possible.
In response to several question I have received, non-U.S. citizens are certainly eligible to attend BIS Update and anyone involved in trade compliance is welcome to attend the program.

Use the search box on the right side of this page to see summaries of prior BIS Update conferences that we have prepared. 

August 13, 2015 

International Sanctions Lawyer Glen Kelley Joins Jacobson Burton Kelley PLLC

Today, international trade law firm Jacobson Burton PLLC added leading international sanctions lawyer Glen N. Kelley as a member, opening a New York office and changing the name of the firm to Jacobson Burton Kelley PLLC. 

The firm's website has changed to

Glen has 14 years of experience in US economic and financial sanctions, trade controls, anti-corruption and anti-money laundering law. He advises financial institutions, private equity firms, and companies across a range of sectors including oil and gas, defense, automotive, aviation, manufacturing, chemicals, food and pharmaceuticals. 

At Jacobson Burton Kelley, Glen will work in tandem with fellow members Douglas N. Jacobson and Michael L. Burton to advise US and non-US companies and financial institutions on compliance, transactional and enforcement matters. 

Michael Burton said “Glen is a first-rate sanctions and trade controls practitioner with a depth and breadth of experience that complements and builds upon our existing offering.” Michael added, “I know that our clients will find, as Doug and I have, that Glen is a capable, effective advisor who is always a pleasure to work with.” 

“I have known and worked with Glen for many years and I am tremendously pleased that he is joining our firm,” said managing partner Doug Jacobson. “With our combined experience, and the opening of our New York office, we are now even better able to provide our clients with efficient and cost-effective solutions to their most complex trade law issues.” 

Commenting on his move to Jacobson Burton Kelley, Glen said “I welcome the opportunity to join two of the most experienced and well known export controls and sanctions practitioners in the US. I look forward to working closely with Doug and Michael to help our clients navigate the ever more challenging requirements of US sanctions and trade law.” 

Glen was previously the chair of the regional leaders of the global sanctions and trade group of a leading international law firm. He has also served as an Attorney Adviser in the US Department of State, receiving Honor Awards for his work on matters involving Iran and Iraq. 

About the Firm 

Jacobson Burton Kelley PLLC is a Washington, DC and New York based international trade law firm that advises US and non-US companies and financial institutions on international trade law. Our practice includes export controls, economic and trade sanctions, US customs, imports and trade remedies, anti-bribery and anti-money laundering law, and other trade regulatory matters. We guide our clients through strategy, licensing, compliance and enforcement issues that arise in their business operations, exports and imports and cross-border transactions. 

Jacobson Burton Kelley is a member of the Trusted Trade Alliance, and has a strategic alliance with Los Angeles-based attorney Abby Walsh, founder of the True Compliance Group.

August 12, 2015 

World ECR Releases Special Report: "U.S.A. 2015: Key Trends and Challenges in Export Controls and Sanctions"

The London-based journal of export controls and sanctions, World ECR, recently released a special report focusing on U.S. export controls and sanctions issues.

The report, entitled U.S.A. 2015: Key trends and challenges in export controls and sanctions, includes three in-depth pieces which cover topics of particular relevance to the export control and sanctions landscape: 

  • The impact of evolving U.S.-Cuba and U.S.-Iran relations 
  • The effectiveness of U.S. export control reform
  • The challenges that digital technology poses for compliance
It also includes a piece introducing legal advisors who specialize in export controls and sanctions.

The report features quotes from Jacobson Burton PLLC attorneys Doug Jacobson and Michael Burton and a profile of the firm, as well as quotes from and profiles of other prominent U.S.-based lawyers and firms in the export controls and sanctions field. The full report can be accessed below.

Please note that World ECR is hosting "The World ECR Export Controls and Sanctions Forum 2015" in the Washington, D.C. area on September 21-22, 2015. The forum, which will be held at the Crystal Gateway Marriott Hotel, will include presentations and sessions on a variety of U.S. and non-U.S. export control and sanctions topics. More information on this program can be found here.


July 24, 2015 

Questions and Answers on the Iran Nuclear Agreement (JCPOA) and Impact on Iran Sanctions

By Doug Jacobson, Jacobson Burton PLLC

Here are answers to some of the frequently asked questions we have been receiving from US and non-US companies following the July 14, 2015 announcement of the Joint Comprehensive Plan of Action (JCPOA) between the P5+1 countries and Iran on Iran's nuclear program.

What would you advise companies now wanting to trade with Iran? 

Answer: The key piece of advice I have been providing to clients following the July 14, 2015 JCPOA announcement is to have realistic expectations, to understand the limited scope of the US sanctions relief contained in the JCPOA, the major hurdles in the way of its implementation, and to avoid media reports that contain general information only. We should not expect to see any US sanctions relief for several months, and most likely not until mid 2016. Sales and marketing staff should work very closely with their in-house and outside compliance resources to determine what is permissible and what is not. In the meantime, and for the next few months, the activity with Iran that was prohibited on July 13, 2015, the day before the announcement, remains prohibited today and until further notice from the Treasury Department's Office of Foreign Assets Control (OFAC). 

What misconceptions are out there that need to be corrected regarding sanctions on Iran? 

Answer: For most US-based companies, even if the JCPOA is approved by Congress and after several months is implemented in full, there will be little impact on US companies. The US agreed to lift only selected sanctions on Iran, such as secondary (extraterritorial) nuclear sanctions that restrict the activities of non-US persons with Iran. This means there will be relief only from sanctions on transactions outside the United States, not involving US persons or products sourced from the US. The US primary sanctions that prohibit most US goods from being exported to Iran and generally prohibit US persons from engaging in transactions with Iran will remain in effect until modified by the US Congress. In other words, once this agreement is implemented, which will not be until early 2016, US policy will be very similar to what it was in 2010, which is before the US secondary sanctions on Iran were first imposed. 

What mistakes do companies need to avoid in connection with potential business with Iran? 

Answer: Companies must avoid relying on rumors and unofficial information. They must make decisions based on specific guidance provided by the US Office of Foreign Assets Control, the Bureau of Industry and Security and other US regulatory agencies. Just because a competitor may be undertaking an activity in Iran or involving Iranian entities does not mean that it is compliant with US laws or the laws of other countries. The broad sanctions imposed on Iran by the EU and many other countries will also remain unchanged for the next several months and some countries, such as Canada, have indicated that they may choose to maintain the existing sanctions. 

On what sectors of the Iranian economy will the sanctions be lifted first and what sectors will take longer? 

Answer: For US based companies, the only significant changes to the current primary sanctions on Iran, once implemented in 2016, will be to allow for the sale and lease of commercial passenger aircraft and related parts to Iran for civilian end-use, upon receipt of a license from OFAC. In addition, OFAC will license non-US entities that are owned or controlled by a US person, such as a non-US subsidiary of a US company, to engage in activities with Iran that are consistent with the JCPOA. It is not yet clear whether OFAC will issue a general license authorizing such transactions or if each company will need to obtain its own specific license. In addition, the US will again allow the importation into the US of Iranian-origin carpets and food, which were permitted from 2000 through 2010. The US secondary (extraterritorial) sanctions relief will affect the activities of non-US companies in many other sectors in Iran, including energy, metals, automotive and shipping, insurance and banking. 

Will the JCPOA impact the current US policy on exports of permitted medical and agricultural products to Iran?

Answer: No. As noted, there will be limited changes on the US primary sanctions on Iran. OFAC's licensing policy for food, medicine, medical devices and agricultural commodities will not change under the JCPOA. As a result, the exports of these items still require a general or specific license to be exported to Iran. It is possible, although not certain, that payments for authorized items through European or Asian banks may be easier as a result of the JCPOA but direct Iran-US banking transactions will remain prohibited. In addition, there are many ports in Iran that will remain off limits due to the port operators being on the SDN List. The sanctions relief in the JCPOA is not expected to change the current policy since those sanctions were imposed for non-nuclear reasons.

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July 21, 2015 

U.S. GSP Renewal and Refund Update

By Doug Jacobson, Jacobson Burton PLLC

As a result of the recent renewal by Congress of the expired Generalized System of Preferences (GSP) program, US Customs and Border Protection (CBP) has announced that the normal GSP process will resume on July 29, 2015. On that date, U.S. importers will be able to have their customs brokers file entry summaries on imports of GSP eligible products without the payment of estimated duties.

In addition, because GSP was renewed retroactively to July 31, 2013, US importers are now eligible to receive retroactive benefits on GSP eligible imports that entered the U.S. between July 31, 2013 and July 29, 2015. 

However, because Bangladesh and Russia have lost their GSP eligibility, retroactive and future GSP benefits on imports from Bangladesh and Russia are not eligible for refunds or future GSP claims.

CBP has also posted a list of GSP-related frequently asked questions, which can be found here.

CBP’s instructions for obtaining GSP refunds are set forth below.


US GSP Refund Process

A. Automation

Recognizing the impact that retroactive renewal and consequent numerous re-liquidations will have on both importers and CBP, CBP developed a mechanism to facilitate refunds for entries submitted during the lapse period  using the Special Program Indicator (SPI) for GSP (with the letter "A," "A+," or "A*") as a prefix to the tariff number. We expect to begin automated processing of these shortly after the effective date.

B. Formal/Informal Entries

CBP will liquidate or reliquidate all affected entry summaries and refund any duties deposited (without interest) for items qualifying for GSP and for which requests for liquidation or reliquidation are timely filed. Field locations will not issue GSP refunds except as instructed to do so by CBP Headquarters.

If as stated above, an ABI entry summary was filed with payment of estimated duties using the Special Program Indicator (SPI) for GSP (with the letter "A," "A+," or "A*") as a prefix to the tariff number, no further action by the filer is required; filings with the SPI "A," "A+," or "A*" will be treated as confirming requests for refunds.

If an ABI entry summary was filed with payment of estimated duties without the use of the SPI "A," "A+," or "A*" as a prefix to the tariff number, a refund of duties deposited must be requested in writing as described below for non-ABI entry summaries.

Non-ABI filers must request a refund in writing from the Port Director at the port of entry by December 28, 2015, regardless if they previously designated a refund on the Customs Form 7501 by using the SPI "A," "A+," or "A*" code. The request may cover either single entry summaries or all entry summaries filed by an individual filer at a single port. To expedite refunds, CBP recommends the following information be included in each letter:

A statement requesting a refund, as provided by section 201 of Title II of the Trade Preferences Extension Act of 2015;

An enumeration of the entry numbers and line items for which refunds are requested; and

The amount requested to be refunded for each line item and the total amount owed (not including interest) for all entry summaries.

C. Mail Entries

The addressees on mail entries must request a refund of GSP duties (not including interest) and return it, along with a copy of the CF 3419A, to the appropriate International Mail Branch (address listed on bottom right hand corner of CF 3419A). It is essential that a copy of the CF 3419A be included, as this will be the only means of identifying whether GSP products have been entered and estimated duties and fees have been paid.

D. Baggage Declarations and Non-ABI Informals

If travelers/importers wrote a statement directly on their Customs declarations (CF 6059B) or informal entries (CF 363 or CF 7501) requesting a refund (not including interest), no further action by the traveler/importer will be required; the statement will be treated as a conforming request for a refund. Failure to request a refund in this manner does not preclude a traveler/importer from otherwise making a timely request in writing, as described above for non-ABI filers.

Goods Eligible for Retroactive Benefits

The GSP reauthorization provides retroactive benefits only to goods from a country that is a beneficiary of the GSP program as of July 29, 2015. As such, this would exclude countries such as Bangladesh and Russia that lost eligibility between July 31, 2013 and July 29, 2015.




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