How can I determine whether a transaction is “significant” and subject to secondary sanctions?

Hypothetical:  

A non-US company has an opportunity to make an investment in a company in Iran that operates in that country’s energy sector.  Should it move forward with this investment?

Key Considerations:

  • A non-US company is not prohibited from investing in Iran, so long as there is no US nexus.
  • The non-US company may, however, risk secondary sanctions for certain activity in Iran, including for “significant” transactions related to Iran’s energy sector.
  • There is no definitive answer for whether or not any particular investment would be considered significant by OFAC.  The company should consult the factors that OFAC will consider in evaluating whether any given transaction is “significant,” such as the size, nature, and frequency of the conduct in question as well as its impact on US foreign policy objectives.
  • The company should consider its risk threshold in determining whether or not to move forward with the investment.
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