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BAFT, TCH and ABA comment on the JCPOA and EU Blocking regulation Conflict

by BAFT | Aug 10, 2018
A joint letter regarding the conflict of law presented by the snap back of sanctions under the Joint Comprehensive Plan of Action (JCPOA) and the EU Blocking regulation has been submitted by BAFT, TCH and ABA.

On August 1, BAFT, the ABA, and The Clearing House (the “Associations”) submitted a letter (attached) to OFAC regarding the situation for banks and their employees created by the conflict in law between the US sanctions on Iran following the withdrawal of the US from JCPOA and the amended EU blocking statute.  Among other things, the US sanctions: (1) require persons subject to the jurisdiction of the US to block (seize and freeze) Iranian assets and to refuse to do business with Iran and Iranian persons; and (2) impose penalties (“secondary sanctions”) upon persons not subject to US jurisdiction that do business with Iran or Iranian persons.  The amended EU blocking regulation counteracts the US sanctions.  The regulation essentially requires EU natural persons and legal entities and natural persons within the jurisdiction of the EU not to comply with the US sanctions.

On August 10, the Associations and six member banks met with OFAC to articulate the concerns, scenarios, and risks posed by the conflict of law and expressed the need to protect individuals/institutions trying, but unable, to comply with the intent of the laws given their inherent conflict.  OFAC denied a request for a general license that would permit the rejection, rather than, blocking of Iranian property.  It also dismissed the need for public guidance that would clarify some ambiguous provisions of the US sanctions to resolve a conflict with the EU regulation.  In response to a question from BAFT, OFAC commented that neither EU government authorities nor EU industry associations had contacted it with concerns about the conflict of laws.

OFAC stated that it might reconsider this position if the banks provided evidence of actual adverse legal action or concrete data on future risks and harm.  Next week, the Associations will finalize and distribute a survey to collect such information from members.  Responses must be received by September 21 so that the information can be provided to OFAC shortly thereafter.

If this conflict of laws matter is of concern to your institution, please:

1.   Ensure that someone from your institution contacts BAFT staff (Stacey Facter at sfacter@baft.org or Samantha Pelosi at spelosi@baft.org);

2.   Respond to the survey with the information necessary to re-present the case to OFAC;

3.   Contact EU and national government authorities and industry associations regarding the concerns of banks located within the EU and encourage them to join our efforts; and

4.   Remain informed of your institution’s advocacy efforts and other tools that could be deployed to assist the broader community.


To view the document please visit our Comment Letters section on our Library of Documents Page