Gavin Irwin attended the Export Licensing Symposium, organised by the Department for International Trade, in Westminster, on Tuesday 8th May 2018.
The Office of Financial Sanctions Implementation (‘OFSI’) indicated that they will soon publish guidance “relevant to those involved in importing and exporting, especially those operating in areas where financial sanctions are in force”.
The guidance is likely to be placed on the OFSI website this week but was made available to attendees at the Symposium. Gavin provides a synopsis below.
The financial sanctions regime prohibits anyone from entering into transactions with designated persons. A licence may be obtained from OFSI to permit financial transactions with such designated persons. The trade sanctions regime prohibits exporters from selling goods (generally controlled military or dual-use goods, or goods which are not controlled but in relation to which there are end-user concerns), and/or providing associated services, in certain circumstances. A licence may be obtained from the Export Control Joint Unit (‘ECJU’), through the SPIRE system, to permit such export.
Whilst OFSI deals with ‘who’ and the ECJU deals with ‘what’, the two regimes have a considerable and obvious overlap. However, a lack of familiarity with both could give rise to inadvertent non-compliance by businesses. It would be possible to have a trade licence for export but to breach financial sanctions by receiving payment for the export. To date, OFSI has not provided guidance in relation to the convergence of the two regimes.
The new guidance provides that importers and exporters should:
Just as the Symposium was ending, President Trump announced that the United States will completely withdraw from the Joint Comprehensive Plan of Action (‘JCPOA’). Critically, the other parties to the JCPOA, including the UK, have not withdrawn.
The JCPOA, implemented in January 2016, lifted a raft of nuclear proliferation sanctions, and other more general sanctions, targeting Iran. As a result, all US, pre-JCPOA, nuclear related sanctions will be re-imposed. Further, the US indicated that it may impose new and additional sanctions, going beyond the already highly restrictive sanctions regime which preceded the JCPOA.
The US Department of the Treasury’s Office of Foreign Assets Control (‘OFAC) immediately issued new guidance relating to the action it would take to implement the withdrawal. While many of the pre-JCPOA sanctions will be re-imposed, OFAC will provide ‘wind-down periods’ for certain activities involving Iran.
Following a ’90-day wind-down period’, ending on 6th August 2018, the US government will re-impose the following sanctions:
Following a ‘180-day wind-down period’, ending on 4th November 2018, the US government will re-impose the following sanctions:
Importantly, for UK businesses, OFAC’s guidance discourages non-US persons from engaging in new activity during the wind down period and states that any such new activity will be a factor in future enforcement action taken in relation to conduct after the wind-down period.
It has been reported that European leaders are concerned that the US could use its influence to prevent businesses in other countries that have not re-imposed sanctions on Iran from doing business there. As if to prove the point, President Trump’s new ambassador to Germany, who had been in post for a matter of hours, tweeted that “German companies doing business in Iran should wind down operations immediately.”
The UK, France, Germany and many other European states have expressed “regret and concern” with President Trump’s decision, stating that “[t]ogether, we emphasise our continuing commitment to the JCPOA. This agreement remains important for our shared security.”
A complex, risk-laden, multi-party stand-off has begun. UK persons and businesses are currently in the US’s cross-hairs.
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