, Implementation Day
“Implementation Day” – the lifting of sanctions following Iran’s compliance with the Joint Comprehensive Plan of Action (JCPOA) – came around more swiftly than some had anticipated at the time that the JCPOA was initially agreed. Anyone not expecting compliance to be achieved so rapidly will be feeling the pressure to get fully up to speed with this new landscape.
Media reports have understandably focused upon the potential outcomes, threats and opportunities generated by the removal of sanctions, which have taken on particular complexion given the historically low global oil prices and Iran’s stated intention of boosting oil production.
Such issues aside, the situation remains a challenging one for compliance professionals in the immediate term, not least because many sanctions will remain in force beyond Implementation Day – for example, those relating to human rights violations and those against individuals on the terrorism sanctions lists. Notably, a large number of US sanctions against Iran are outside of the scope of the JCPOA and therefore will remain in place: while “secondary” sanctions will be lifted, “primary” sanctions continue.
The process of fully unravelling the sanctions regime may well be a stop-and-start affair, and many commentators highlight the potential for “snap back” (i.e. the reinstatement of sanctions in the event that Iran fails to uphold the conditions of the JCPOA). This presents a powerful disincentive against the immediate pursuit of longer-term business activities within the jurisdiction until the situation has stabilised. Many financial institutions may choose to proceed with caution in the short term with regards to facilitating transactions with Iran.
Indeed, some have pointed out that the relatively smooth path that Iran made towards Implementation Day may not provide an accurate indication of likely future progress under the JCPOA. The question is whether Iran’s leaders will remain as committed to honouring the terms of the JCPOA after the country’s forthcoming Parliamentary elections in February. The volatile nature of the sanctions environment was highlighted by the imposition of new sanctions by the US – in connection with Iran’s missile programme – just days after Implementation Day.
For those in compliance the challenge of navigating this shifting landscape, and communicating potential pitfalls to the business, seems likely to persist well into 2016.
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