IRAN SANCTIONS WHERE ARE WE NOW?: 27 APRIL 2016 JOHN SIMPSON, MANAGING PARTNER INCE & CO SINGAPORE LLP
Overview 1. Joint Comprehensive Plan of Action 2. Overview of updated Singapore, EU and US sanctions regimes 3. Impact of changes 4. Remaining risks and problems 2
What s your position on doing business in Iran? 1. Not involved, but wondering if we should consider doing business in Iran 2. Our business is currently exploring options 3. We are already doing business in Iran 3
Joint Comprehensive Plan of Action ( JCPoA ) Finalisation Day: 14 July 2015 Adoption Day: 18 October 2015 Implementation Day: 16 January 2016 Transition Day: 20 October 2023 UNSCR Termination Day: 20 October 2025 4
Singapore position Singapore enforces the following Iran sanctions regulations: United Nations (Sanctions Iran) Regulation 2014; and Monetary Authority of Singapore (Sanctions and Freezing of Assets of Persons Iran) Regulations 2007 Certain MAS Prohibitions lifted: 28 January 2016 5
What sanctions have been removed? Nuclear related sanctions have largely been lifted Includes many shipping/trading activities 298 entities and 34 persons de-listed Includes Central Bank of Iran, NIOC, IRISL and NITC 6
What sanctions remain in place against Iran? 7
Items subject to authorisation regime Wide restrictions requiring prior authorisation for trades involving: Goods listed in Nuclear Suppliers Group list (Annex I, EU Regulation 267/2012) Goods that could contribute to nuclearrelated activities (Annex II, EU Regulation) Software for use in nuclear/military industries (Annex VIIA, EU Regulation) Graphite and certain raw / semi-finished metals (Annex VIIB, EU Regulation) 8
Until when? Sanctions under EU Regulation 267/2012 will remain in place until either: Transition Day (2023); or UNSCR Termination Day (2025). 9
Iran - US Sanctions 10
What sanctions have been removed? US changes less drastic Most US secondary/extraterritorial sanctions involving non-us persons lifted More favourable licensing policies implemented Over 400 individuals and entities removed from OFAC s SDN list, including Iran Air, IRISL, NIOC and NITC Iranian foodstuffs and carpets can now be imported into the US 11
The lifting of secondary sanctions 12
What sanctions remain in place? 13
US sanctions General Licence H 16 January 2016, OFAC issued general license to remove restrictions on foreign subsidiaries of US companies engaging in transactions with Iran US foreign subsidiaries still prohibited from: exporting goods, technology, or services from US to Iran (with limited exceptions) transferring funds in connection with Iran-related transactions transactions with SDNs, Iranian military or law enforcement US parent can engage in activities related to "establishment or alteration of operating policies and procedures" to allow the foreign subsidiary to begin Iran-related activity 14
What s the impact? 15
Remaining risks and problems snap back Remaining US sanctions practical implications Banking 16
The snap back provision Article 37 JCPoA If Iran misbehaves then sanctions will be re-imposed Grandfathering no retroactive effect 17
Impact of remaining US primary sanctions US sanctions against Iran still apply to all: US persons USD transactions US (re)insurers Vessels / rigs with US content 18
Insurance and reinsurance Reinsurance may be US based Implications for insurers / assureds Chicken clauses 19
Banking difficulties US banks prohibited from clearing USD transactions linked to Iran Some banks, especially those linked to US/EU, do not want to process payments linked to any sanctioned country Banks may be subject to tighter restrictions/internal policies A number of banks have been fined by the US authorities for past breaches of sanctions 20
BRIBERY AND CORRUPTION Transparency International ratings: Country Score Rank Iran 27/100 130/168 Singapore 85/100 8/168 UK 81/100 10/168 Score: 0 = highly corrupt / 100 = clean 21
Restrictions imposed by Saudi Arabia and Bahrain Iranian vessels prohibited from entering Bahrain and Saudi Arabia Bahrain ban on Bahraini flagged vessels from entering Iranian ports All other vessels that have called in Iran within last 3 ports require approval to enter Bahraini waters Import or transhipment of Iranian origin cargo not permitted by Saudi Arabia 22
US Visa issues Impact on anyone who has visited Iran since 2011 23
Sanctions checklist Do US or EU sanctions apply? Will payments be made in USD? Does the contract involve US origin or US controlled goods? Have you carried out sanctions checks against the other parties to ensure they are no longer sanctioned? Have you carried out sanctions checks against the cargo to ensure that this is no longer restricted? Have you checked with your bank to ensure that it is willing to carry out payments relating to intended business? Have you checked with your insurer to ensure that your cover is not prejudiced? What about the insurance of the vessel/rig/cargo? If financing is in place in relation to the vessel/rig, have you checked that this is not prejudiced? Have you saved all the evidence showing that you have carried out the due diligence referred to above? 24
john.simpson@incelaw.com Beijing Dubai Hamburg Hong Kong Le Havre London Monaco Paris Piraeus Shanghai Singapore