The U.S. Treasury Department last week issued guidance on complying with the Iran nuclear deal that removes some of the risks for companies considering business there in the wake of the deal’s implementation, sanctions lawyers said.
The guidance, which came in the form of new FAQs posted last week by Treasury’s Office of Foreign Assets Control, is primarily about questions on General License H, which allows for foreign units of U.S. companies to strike business deals with Iran. While sanctions lawyers had praised the license at its release, questions arose in the months since, they said, as companies attempted to utilize it. Among other things, the lawyers said the guidance clarified some questions about how to wall off Americans serving in critical roles in foreign companies allowed to pursue Iranian business under the nuclear deal.
“It allows companies to operate not as much in the dark” on what they’re allowed to do in Iran, said Zachary Brez, a partner at the firm Ropes & Gray LLP. “It removes some of the risk if you’re a business,” he said.
Mr. Brez pointed to the response in question K-22 in the FAQ document, which said Americans can receive reports on specific transactions conducted in accordance with the general license. He said it was a question that came up often in the months since implementation; board members were concerned they couldn’t review sales reports if anything regarding Iran was included on them.
“You can see the [reports] but not be involved in day-to-day decision-making,” said Mr. Brez.
Richard Matheny, a partner at the firm Goodwin Procter LLP, said one newly answered question, C-16, was “critical.” That response suggested a “blanket recusal policy” for foreign entities establishing procedures for walling off their American employees.
Instituting a blanket policy wouldn’t be considered prohibited activity under the Iranian transaction resolutions, the document said. Mr. Matheny said it was “welcome cleanup guidance for an important provision” of the regulations.
Companies should spend time identifying Americans in critical roles while developing the blanket recusal policy before engaging with Iran, according to a client alert from law firm Herbert Smith Freehills LLP.
“This initial step will reduce significant administrative burdens and compliance risks stemming from any future Iran-related business,” the alert said.