New business opportunities in Iran
Now that the sanctions against Iran have been lifted, the opportunities that have emerged for international business are significant. This country has huge natural resources and a highly educated and predominantly young population of over 80 million people. So although international companies will have to proceed with some caution for the reasons explained below, there are real and profitable business opportunities in this nation.
Many will recall that in July 2015 Iran, along with China, France, Germany, Russia, UK, USA and the High Representative of the EU agreed to a Comprehensive Plan of Action aimed at removing trade sanctions to Iran.
A few days ago (Saturday, January 16, 2016) the International Atomic Energy Agency has confirmed that met Iran has complied with its nuclear obligations.
In return, most EU sanctions on Iran have finally been lifted. For its part, the US has lifted secondary sanctions aimed at non-US individuals and companies, which were designed to deter the international community of doing business with Iran. Primary penalties, ie, sanctions for US individuals and companies remain.
As a result, UK, Europe and all international non-US companies are now able, at least in principle, to do business with Iran.
But even for US companies there are certain exceptions. For example, USA has issued a general license allowing non-US entities owned or controlled by US people (for example, a European subsidiary of a US company) to participate in transactions with Iran. The license (general license H) is available here
In turn, non-US entities also require a specific license to re-export US-origin products (or items containing 10% or more of controlled US content) to Iran.
It is also anticipated that other jurisdictions will lift their own sanctions against Iran, as Switzerland has apparently already done, for example.
To avoid falling into punishable activities, the EU and the US have published guides that intend to clarify which businesses are allowed and which are not with Iran. The guides are available below:
However, international banks need time to feel comfortable with the processing of payments in connection with Iranian funds. The origin of concern is largely due to a fear of US sanctions. However, the agreement confirms that international banks can generally engage in transactions with Iranian banks without fear of US sanctions provided they do not occur in the jurisdiction of the United States.
In addition, international banks still have to make sure about the source of funds from Iran and destination of payments made to this country. Leaving aside sanctions, banks already have measures to prevent and control money laundering. Iranians need only to catch up with these and other international standards.
Lastly, some sanctions will remain and a number of institutions shall continue to be subject to sanctions. So it will be important to ensure all companies comply with what has been legally agreed at the international level.
Source: Stephenson Harwood LLP