Trade Compliance Flash: JCPOA General Licenses Revoked; Wind Down Licenses Issued

International Alert
06.27.2018

On Tuesday, June 27, the U.S. government revoked the general licenses that had been in effect since implementation of the Joint Comprehensive Plan of Action (JCPOA) in January 2016. The revocation of these licenses, with immediate effect, had been expected since the May 8, 2018 announcement that the United States had withdrawn from the Iran nuclear deal memorialized in the JCPOA. In place of the general licenses, OFAC issued licenses valid through the expiration of the applicable wind down period that authorize the wind down of activities previously authorized by the general licenses and made certain conforming changes to previously issued FAQs. However, the June 27 actions have no impact on the schedule for reimposing secondary sanctions, as announced on May 8.

The revoked licenses were General License H, which authorized non-U.S. subsidiaries of U.S. companies to engage in certain activities in Iran, as well as certain related activities of the U.S. parents of such subsidiaries; General License I, which authorized negotiation of contingent contracts for activities eligible for the now-rescinded Statement of Licensing Policy for Activities Related to the Export or Re-export to Iran of Commercial Passenger Aircraft and Related Parts and Services (JCPOA SLP); and the general licenses authorizing the importation into the United States of, and dealings in, Iranian-origin carpets and foodstuffs and related letters of credit and brokering services that had been incorporated into the Iranian Transactions and Sanctions Regulations (ITSR) as sections 560.534 and 560.535.

General License H

OFAC announced the revocation of General License H (GL H) in a posting on its website. No advance notice or grace period was provided. Simultaneously, OFAC announced that it would be amending the ITSR, effective June 27, 2018, to include a general license (to be added as a new section 560.537), authorizing, "through 11:59 p.m. eastern standard time on November 4, 2018, all transactions and activities that are ordinarily incident and necessary to the wind down of transactions relating to foreign entities owned or controlled by a United States person that were previously authorized under General License H." The Federal Register notice in which the amendment will be published provides that "[a]fter 11:59 p.m. eastern standard time on November 4, 2018, no further transactions are authorized under § 560.537" and OFAC has hinted that applications for specific licenses extending the wind down period will not be reviewed favorably.

General License I

OFAC also announced the revocation of General License I (GL I) in a website posting without providing any advance notice or grace period, and simultaneously announced that it would be adding a new section 560.536 to the ITSR, also effective June 27, 2018, containing a general license that will authorize, "through 11:59 p.m. eastern daylight time on August 6, 2018, all transactions and activities that are ordinarily incident and necessary to the wind down of transactions related to the negotiation of contingent contracts for activities that were, at the time of the negotiation, eligible for authorization under the JCPOA SLP." Again, the Federal Register notice of the amendment makes clear that "[a]fter 11:59 p.m. eastern daylight time on August 6, 2018, no further transactions are authorized under § 560.536."

Carpets and Foodstuffs General Licenses

OFAC is amending ITSR § 560.534 to replace the previous general license authorizing the importation into the United States of, and dealings in, certain Iranian-origin foodstuffs and carpets with a narrower general license authorizing "through 11:59 p.m. eastern daylight time on August 6, 2018, ... all transactions and activities that are ordinarily incident and necessary to the wind down of transactions that were previously authorized under § 560.534. After 11:59 p.m. eastern daylight time on August 6, 2018, no further transactions are authorized under amended § 560.534." In a related action, OFAC also will amend section 560.535 of the ITSR to reduce it to a wind down license authorizing, "through 11:59 p.m. eastern daylight time on August 6, 2018, only …transactions and activities that are ordinarily incident and necessary to the wind down of transactions that were previously authorized under § 560.535 [i.e., certain letters of credit and brokering activities related to activities under the former carpets and foodstuffs general license]. After 11:59 p.m. eastern daylight time on August 6, 2018, no further transactions are authorized under amended § 560.535." 

Implications for Compliance

Revocation of the general licenses removes any doubt about whether new activities under the general licenses may be undertaken during the wind down period. U.S. persons and non-U.S. entities owned or controlled by U.S. persons who may have been relying on the general licenses must cease new activities immediately and begin winding down existing authorized business as soon as possible in order to ensure completion of any necessary wind down activities prior to the expiration of the applicable wind down period. Companies currently engaged in activities covered by the new general licenses should not expect OFAC to extend the wind down general licenses or issue specific licenses to allow such transactions to continue after the applicable wind down period ends, and will risk an enforcement action if their covered transactions extend beyond the applicable wind down periods.


For more information, please contact:

Brian J. Fleming, bfleming@milchev.com, 202-626-5871

Barbara D. Linney, blinney@milchev.com, 202-626-5806

Collmann Griffin, cgriffin@milchev.com, 202-626-5836

Patrick M. Stewart*

*Former Miller & Chevalier attorney


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