With reference to our previous report on the EU economic sanctions relief for Iran published on January 16, 2016, please find set out below an update on the US sanctions against Cuba and the Iran sanctions relief.
I. US sanctions against Cuba
For decades the Cuban market has been largely off-limits to US companies and products. However, changes to US policy on Cuba present unprecedented opportunities for global businesses. In September 2015 and in January 2016, the US eased its sanctions on Cuba when recent amendments to the Cuban Assets Control Regulations (CACR) and Export Administration Regulations (EAR) came into effect. The Office of Foreign Assets Control (OFAC) and the Bureau of Industry and Security (BIS) amended CACR and EAR in accordance with the Obama Administration’s ongoing policy of easing sanctions against Cuba. The CACR and EAR amendments broaden the scope of authorized US transactions with Cuban persons in various sectors, including internet, telecommunications, finance, insurance, and travel.
Amendments to CACR and EAR have prompted investors and companies to speculate on potential new markets in Cuba. Notably, however, OFAC guidance makes explicit that the embargo remains in place and that most transactions between persons subject to US jurisdiction and Cuba are strictly prohibited, unless specifically authorized. As companies expand into the Cuban market, understanding these rules will be paramount in ensuring compliance and minimizing risk.
The above information is relevant for companies who are planning to do business in Cuba and which have a US nexus, and therefore fall within the scope of the extraterritorial jurisdiction of US sanctions regulations.
II. Iranian banks reconnected to SWIFT system
According to officials of Global transaction network SWIFT, a number of Iranian banks were reconnected to the SWIFT system, allowing them to resume cross-border transactions with foreign banks after sanctions were lifted on January 16, 2016. It is expected that other Iranian banks will follow shortly. This is important as it opens up the possibility of transferring and receiving funds from and to Iranian parties. In this regard it should be noted that some banks will remain a restricted party under US and EU sanction legislation and therefore not allowed to business with Iran.
In this respect it should be noted that not only certain banks remain a restricted party, but there are also other entities/persons that remain subject to EU/US sanctions. It therefore remains of utmost importance when doing business with Iran that in all cases it is ascertained whether the (potential) Iranian party is not a restricted party. This means you must properly screen your counterparty.
To underline the importance of proper screening, we refer to the recent case where the United States Bureau of Industry and Security (BIS) announced that it had acted against five parties who were attempting to sell two US origin aircraft to Caspian Airlines, an airline designated by OFAC in 2014 “for its support for terrorism, sanctions that are not being lifted under the Joint Comprehensive Plan of Action (JCPOA).”
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