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Dentons US LLP
Unpacking the JPASanctions Compliance from the Inside Out for Global Companies
WebinarFebruary 5, 2014
Michael Zolandz, Partner, Dentons US LLPPeter Feldman, Managing Associate, Dentons US LLPInna Tsimerman, Chief Privacy & International Trade Counsel, Marsh & McLennan Companies, Inc.
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Overview
February 5, 2014
• Context for the JPA (or "JPOA")
• Key Sectors of Relief
• "Associated Services" – The Challenges of Compliance for the Insurance Industry
• Outlook
• Questions and Answers
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Context for the JPA
February 5, 2014
• Longstanding concern about Iran's nuclear program
• Framework of international sanctions - nuclear, terrorism, human rights
• Rouhani Government
• US, China, France, Russia, UK and Germany (P5+1) negotiations
• Groundswell of support in US Congress for new expansion of US sanctions
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Context for the JPA
February 5, 2014
Interim agreement announced on November 23, 2013
•First part of a two-part "deal" - intended to establish framework for negotiating comprehensive accord•Iran agrees to suspend parts of its nuclear program and permit increased inspections and monitoring of its nuclear facilities•In exchange, the P5+1 agreed to provide targeted sanctions relief to certain sectors
"limited, temporary, targeted and reversible relief""
•Limited relief, which does not affect the vast majority of existing sanctions•Temporary in duration -- 6 months, but renewable•Targeted to certain sectors•Contingent upon Iranian performance; can be revoked or reversed by P5+1 without advance notice
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Context for the JPA
February 5, 2014
• Became effective on January 20, 2014• Requires national-level
implementation (and EU)
• Approximately two months between JPA agreement and implementation
• Implementing agreement not public
• January 20, 2014 Guidance from US Government• Guidance document
• Answers to FAQs
• Statement of Licensing Policy
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JPA Key Aspects
February 5, 2014
Relief is for Non-US Persons
Blacklisted parties remain
blacklisted - mostly
Major sanctions
architecture remains
JPA is temporary
and conditional
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• Banking and Insurance• Release $4.25 billion in frozen Iranian assets in several tranches
• Establish a "humanitarian channel" for food, medicine, and medical device exports
• US Treasury will notify any institution permitted to participate in these activities
• Exports of Iranian Crude• Only to China, India, Japan, South Korea, Taiwan and Turkey
• Limited to maintenance of "current average levels"
• Authorizes transactions with NIOC and NITC
• Tidewater ports remain blacklisted and off-limits
• "Associated services”
Key Sectors for Relief
February 5, 2014
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Other Key Sectors for Relief
February 5, 2014
Petrochemicals
Gold and Precious Metals
Iran's Auto Sector
Commercial Passenger
Aviation
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"Associated Services"
February 5, 2014
"Any necessary service - including insurance,
transportation or financial service - ordinarily incident to
the underlying activity”
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Compliance Challenges
February 5, 2014
JPA contains strict limitations that will make compliance a challenge
• Duration of relief • JPA only covers activities and "associated services" that
take place exclusively within the 6-month period (January 20, 2014 - July 20, 2014)
• No grandfathering - sanctions automatically reimposed upon lapse of JPA
• Can be revoked at any time, without advance notice
• Scope of relief• Does not provide amnesty or safe harbor for pre-January
20, 2014 activities
• Does not permit transactions with SDNs, unless specifically authorized
• Does not cover activities sanctionable under other authorities (e.g., counter-terrorism)
• Does not apply to US Persons, other than for commercial passenger aviation and humanitarian channel
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"Associated Services" - Challenges for the Insurance Industry
February 5, 2014
• Non-US P&I clubs and other insurers remain cautious about Iran• Many appear not to be changing their position on Iran despite the JPA relief
• As a practical matter, insurance and reinsurance for export of Iranian crude and petrochemicals, for example, may be unusable even during the JPA period• Insurers may continue to be subject to sanctions if claims are paid after July
20, 2014
• Reinsurance may not be available for claims that involve Iranian risk either because:
• Claims could fall outside the JPA period; or• There is US participation in reinsurance
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Outlook
February 5, 2014
• Uncertain policy landscape -- and uncertain JPA implementation
• Enforcement expected to remain a key priority• Existing sanctions not covered by JPA
• Compliance with terms of JPA relief
• Global context - potential for inconsistent implementation
• Other significant risk factors
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Questions?
February 5, 2014
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Global Presence
February 5, 2014
CONFIDENTIAL
Thank you
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© 2014 Dentons
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