JCPOA Authorizes Greater Facilitation by U.S. Companies of Foreign Subsidiaries
While non-U.S. entities could stand to benefit the most from the Jan. 16 rollback of several “secondary” nuclear-related sanctions on Iran, the release action also provides for new limited flexibility for U.S. individuals and entities to get involved in dealings with the country, lawyers said during a webcast on March 9. The new Iran sanctions regulations allow for U.S. nationals and parent companies to more openly practice business facilitation, permitting them greater involvement in determinations about Iran-related dealings by non-U.S. subsidiaries, and more leeway to train, counsel, and advise on new and revised policies, Covington & Burling partner Kimberly Strosnider said during the call. “Typically, U.S. people can’t change policies and procedures to allow a party to engage in business with Iran,” she said. “This is an exception or a carve-out of that.” The new rules aren’t intended to promote day-to-day involvement by U.S. businesses or people in a non-U.S. subsidiary’s actions associated with Iran. “The subsidiary really has to still be independent of the U.S. parent and U.S. persons in its trade with Iran,” Strosnider said.
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Among other things, the Jan. 16-issued General License H (here) allows parent companies to make available to non-U.S. subsidiaries their business support technology, including various types of accounting and email programs, and telecom and other automated and globally integrated systems, for transactions with Iran, she said. But Strosnider cautioned that nobody in the U.S. can handle data entered by the non-U.S. subsidiary. For example, U.S. parent companies are not authorized to approve or conduct data entries. “The point here is that U.S. people aren’t processing or actively facilitating any transactions,” she said. “They’re just running it passively through the system. The system also has to be globally integrated, so it needs to be really broadly available throughout that U.S. parent global organization, including the parent and its non-U.S. sub. That means it’s not a system that’s just set up for the sub to do business in Iran. It’s really something that has a broader purpose.”