With US lawmakers aiming to broaden sanctions ahead of elections in Iran next month, the authorities have been cracking down on violators.
Just this week the US Treasury Department blacklisted a UAE firm for evading Iran oil sanctions. All of this raises very pertinent questions. How far reaching are the various sanctions against Iran and how do they impact businesses in the UAE, one of Iran’s largest trading partners?
Given the UAE’s longstanding trade relationship with Iran, the applicability of international sanctions at a local level is a highly relevant consideration in the context of everyday business.
Individual and corporate exposure to these sanctions is potentially wider with a significant percentage of expatriate employees in the UAE, and the wider region, working across all kinds of industries, and international companies set up in various free zones as well as acting as nominated shareholders in regional companies.
As a general comment, the US has, as a nation, taken the strongest standpoint on sanctions against Iran.
Since the late 1970s and early 1980s, the US has imposed various waves of sanctions, to a point where US sanctions prohibit almost all trade with Iran, with some minor exceptions relating to medical and agricultural equipment, as well as humanitarian assistance.
In the US there are two primary forms of sanctions on business activities with Iran, namely the Office of Foreign Assets Control sanctions which apply to “US persons” being US citizens, companies incorporated in the US and any individual who is in the US. The second is the Comprehensive Iran Sanctions Accountability and Divestment Act (or CISADA), which applies to both US persons and “non-US persons.”
Between 2006 and 2010 the United Nations ratified four rounds of sanctions against Iran. UN sanctions over this time have included a ban on the supply of heavy weaponry and nuclear-related technology as well as a block on Iranian arms exports and a prohibition on the supply and sale of specified items to key individuals and listed companies pursuant to UN Security Council resolutions.
The European Union separately imposed its own restrictions on trade in materials which could be used for uranium enrichment and has put in place an asset freeze on certain individuals and organisations in Iran, which the EU believes are assisting in the country’s nuclear weapons programme.
The EU also recently blacklisted the export to Iran of key equipment and technology for the refining and production of natural gas.
In response to the issue of an International Atomic Energy Agency (IAEA) report on potential nuclear developments, countries such as the UK, Canada, Switzerland, Japan and Australia have also imposed separate bilateral sanctions on Iran.
Against this backdrop, it is very important that employees and companies, particularly those coming from EU member states and of US origin are aware of what regulations may apply to their regional trade, as well as to their individual employment circumstances, which may or may not allow for the capability to legally do business with an Iranian entity.
A detailed analysis and consideration is often necessary as to which form of sanctions – whether US, EU or UN – are applicable to local business relations and trade with Iran from a company or employee level. The relevant legislation is detailed and reasonably complex and there is significant overlap as to applicability and which individuals and entities are subject to potential ramifications.
In terms of regulatory control on trade with Iran, it is a fast and ever-changing picture that we deal with and in terms of individual trade relationships, it is extremely important that each transaction be considered carefully on a case-by-case basis to ensure potential exposure is avoided as and when an opportunity in or with Iran arises.
Knowing precisely whatthe relevant obligations are in relation to sanctions and knowing what the potential ramifications can be is absolutely imperative for all business people, including employees.
The need to get across the content of relevant and applicable sanctions legislation, particularly for those that need to consider the legislation of their birthplace is a must. Seeking well considered and detailed advice in respect of the applicability of Iran sanctions to any proposed transactions is a necessity in the current climate.
Any company transacting or doing business with Iran should put in place robust corporate governance and risk mitigating frameworks to ensure compliance with the broad spectrum of sanctions legislation which may apply throughout the region and beyond.