President Obama Extends Iran Sanctions to Foreign Subsidiaries of U.S. Companies

The stakes for doing business with Iran just went up. J. Scott Maberry and Matthew Riemer of law firm Sheppard Mullin explain:

“… President Obama … issued Executive Order No. 13,628, extending U.S. Iran sanctions to cover foreign subsidiaries of U.S. parent companies, a prohibition that did not exist until promulgated in [Iran Threat Reduction and Syria Human Rights Act (ITRA)]. The Executive Order implements ITRA Section 218 … by providing that:

‘No entity owned or controlled by a United States person and established or maintained outside the United States may knowingly engage in any transaction, directly or indirectly, with the Government of Iran or any person subject to the jurisdiction of the Government of Iran, if that transaction would be prohibited by [the pre-existing Iran sanctions]…” 

The Executive Order gives no quarter for existing contracts, and authorizes standard Office of Foreign Assets Control penalties against the U.S. person controlling the foreign entity. However, Subsection 4(c) of the Order provides that civil penalties shall not apply if the U.S. person divests or terminates its business with the foreign subsidiary not later than February 6, 2013.”

Read the update, Sanctions on Foreign Subsidiaries Implemented Under Iran Threat Reduction Act - Sheppard Mullin Richter & Hampton LLP»