The re-imposition of sanctions against Iran by the United States and the impact on the BVI
Following the decision on 8 May of President Donald Trump, the United States of America will withdraw from the Joint Comprehensive Plan of Action (JCPOA) in relation to the Islamic Republic of Iran (Iran) and to effectively re-impose sanctions. For more about the United States’ decision, please see the White House fact sheet and the US State Department’s briefing paper.
The Department of the Treasury’s Office of Foreign Assets Control (OFAC) has produced a paper indicating the guidance on the sanctions that will be re-imposed and the various transitional periods within which the sanctions will be applicable.
There is guidance from the US Department of the Treasury that indicates that as soon as administratively feasible, the OFAC expects to revoke or amend as appropriate, general and specific licenses issued in connection with the JCPOA. At that time, OFAC will issue new authorisations to allow the wind down of transactions and activities that were authorised pursuant to the revoked or amended general and specific licenses. At the end of the 90 day and 180 day wind down periods, the applicable sanctions will be back in full effect.
The European Union (EU) and specifically the governments of the United Kingdom (UK), Germany and France have issued statements expressing their commitment to the JCPOA arrangement.
In the British Virgin Islands (BVI), the directives issued by the BVI Financial Investigation Agency (FIA) prohibiting any dealing with Iran were repealed on 16 November 2016. Our previous note on this subject can be accessed here. With the UK set to leave the EU as a part of Brexit, the BVI will likely follow the EU’s lead in relation to any action the UK takes with Iran.
As of now, subject to the Iran (Restrictive Measures) (Overseas Territories) Order 2011 and the Iran (Sanctions) (Overseas Territories) Order 2016, there is no legislation that restricts BVI persons (including companies) from conducting business with Iranian persons (including companies). That being said, since the legal tender of the BVI is the United States Dollar, the majority of BVI persons and entities have business relationships with US intermediary banks and the proximity of the BVI to the US, BVI persons and entities conducting general business would be encouraged to:
- conduct careful client due diligence checks to ascertain whether there is any Iranian element involved in the transaction;
- document and have on file all of the corporate procedures used to vet and assess the transactions to which the BVI person and entities might be a part of;
- discuss any suspicion with the BVI person or entities’ compliance unit for clearance to act on a transaction; and
- engage with the FIA to the extent necessary.