© Akin Gump Strauss Hauer & Feld LLP

The Iran Nuclear Deal – Impact of U.S. Sanctions Relief on UAE Companies

October 11, 2015 The Oberoi Hotel Business Bay Dubai, United Arab Emirates Presented By: Jonathan Poling and Mac Fadlallah Akin Gump Strauss Hauer & Feld LLP

akingump.com

Source: United States Department of State

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The content contained herein is provided for informational purposes only and does NOT substitute for legal advice. Given the broad prohibitions in effect on Iran (and which will continue to be in effect even after the Joint Comprehensive

Plan of Action is implemented), it is highly advisable to seek counsel with respect to any specific activities involving Iran or Iranian persons.

FOR MORE INFORMATION PLEASE CONTACT:

Mahmoud (Mac) Fadlallah Boulevard Plaza Tower Two, 23rd Floor P.O. Box 120109 Dubai, United Arab Emirates Direct: +971 4.317.3030 Fax: +971 4.409.6850 Email: mfadlallah@akingump.com

Jonathan Poling Robert S. Strauss Building 1333 New Hampshire Ave NW Washington, DC 20036 Direct: +1 (202) 887-4029 Fax: +1 (202) 887-4288 Email: jpoling@akingump.com

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Agenda

ABC Dubai Welcome Remarks Akin Gump Introduction Overview of U.S. Sanctions ● Applicability to Non-U.S. Persons ● Penalties and Enforcement

Overview of the Iran Nuclear Deal ● What’s Changing? ● What’s Not Changing?

Key Takeaways – Compliance Do’s and Don’ts Questions & Answers

Akin Gump Introduction

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Our Firm & International Trade Practice Founded in 1945, Akin Gump is now one of the world’s largest law firms. 900+ lawyers globally, 50+ dedicated international trade advisors Unique footprint with U.S. attorneys focused on non-U.S. clients Dubai, Abu Dhabi, London, Geneva, Singapore and Hong Kong

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Overview of U.S. Sanctions

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Overview of U.S. Sanctions Dozens of sanctions programs administered by the U.S. Department

of the Treasury, Office of Foreign Assets Control (“OFAC”)

Broadly prohibit certain types of dealings: ● With specific countries/governments (e.g., Iran, Syria) ● Involving specific activities/sectors (e.g., Russian energy sector) ● With specific individuals/entities in both sanctioned and non-sanctioned

countries (e.g., UAE has approx. 150 sanctioned parties)

ALL sanctions programs apply to U.S. persons (“primary sanctions”) ● SOME apply to non-U.S. subsidiaries/affiliates of U.S. persons

SOME apply directly to non-U.S. persons (“secondary sanctions”) 6

Current U.S. Sanctions Programs Iran Cuba Sudan Syria Crimea

Burma North Korea Russia Ukraine

Iraq DRC CAR Belarus Cote

d’Ivoire Lebanon

Liberia Libya Somalia Yemen Balkans Zimbabwe Venezuela

Comprehensive Hybrid List-Based

Overview of U.S. Sanctions – Capturing Non-U.S. Person Activities “Secondary sanctions” against Iran apply directly to non-U.S. and U.S.

persons ● Includes both individuals and entities – essentially anyone in the world can be caught

“Primary sanctions” (all programs on the last slide) apply directly to U.S. persons but can capture activities of non-U.S. persons. For example: ● Providing material support to a sanctioned individual or entity ● Engaging in a range of sanctionable activities (e.g., cyber activities posing

a significant threat to the United States, corruption in Syria, providing goods, technology or services to assist or enable internet disruption in Syria, etc.)

● Causing a U.S. person to violate sanctions laws – UAE companies employing U.S. person employees

● Causing a U.S. person to violate sanctions laws – dealing in U.S. dollar denominated transactions (see next slide)

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U.S. Dollar Transactions – Capturing Non-U.S. Person Activities

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UAE Buyer

UAE Seller

Enter into contract for sale of goods

Instructs B

uyer’s U

AE Bank

U.S. Correspondent Banks Buyer’s UAE Bank and Seller’s UAE

Bank have U.S. correspondent banks to clear U.S. dollar transactions

Penalties and Enforcement Penalty amounts and types can vary by sanctions regime. In general:

Enforcement ● Aggressive enforcement against both U.S. and non-U.S. companies ● Enforcement against individuals for knowing or willful actions

Business Impact ● Reputational concerns paramount – headlines can be extremely damaging ● High-caliber business partners expect world-class compliance processes

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Civil Greater of USD 250,000 or twice the transaction value, per violation

Criminal USD 1 million and/or up to 20 years imprisonment, per violation

Blacklisting U.S. and many non-U.S. companies prohibited from virtually all dealings with you

Other Mandated external monitors and audits, executives terminated and clawbacks on pay, denial of financing, denial of export licensing, etc.

Key Takeaways on U.S. Sanctions for UAE Companies UAE companies have exposure to U.S. sanctions risks if they… Employ U.S. person employees; Transact in U.S. dollars; Deal with U.S. sanctioned countries; Deal with U.S. sanctioned parties …without a sanctions compliance program to manage this risk. The U.S. government will (and in some cases must) consider the existence of

a meaningful sanctions compliance program as a mitigating factor when deciding whether to pursue an enforcement action

Penalties for non-compliance are severe

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Overview of the Iran Nuclear Deal

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Overview of the Iran Nuclear Deal Landmark deal reached between the EU/E3+3 (aka P5+1) and Iran ● European Union, UK, France, Germany,

China, Russia, and the United States

Iran gets sanctions relief in exchange for halting its nuclear program

Deal finalized in July 2015, but not yet implemented!

IAEA must verify that Iran has complied with nuclear-related commitments

Implementation expected mid-2016 and is subject to a “snap-back” of sanctions if Iran fails to continue to meet its obligations under the deal

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Source: United States Department of State

Overview of the Iran Nuclear Deal – Timeline

24 Nov 2013

• JPOA Announced

• Limited, temporary, and reversible sanctions relief

20 January 2014

• JPOA implementation begins

• Continues in effect today

14 July 2015

• JCPOA announced

20 July 2015

• UNSCR 2231 adopted

• Endorses JCPOA

• Terminates UN sanctions on Implementation Day, except arms embargoes

April-October

2016

• Implementation Day

• Expected April to June 2016

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Pre-Iran Deal Today (JPOA) Post-Implementation (JCPOA – mid-2016)

U.S. Persons

(e.g., U.S. Companies)

No dealings without a license

Limited and narrow licenses

available (e.g., food & medicine, personal communications)

No dealings without a license

Licensing now also available

for civil aviation safety

No dealings without a license Licensing will also be available for

carpets and foodstuffs, and expanded civil aviation licensing

Non-U.S. Persons Owned or Controlled

by U.S. Persons (e.g., UAE

subsidiaries of U.S. companies)

No dealings without a license General License will be available to engage in certain activities in which non-U.S. persons may

engage

Non-U.S. Persons

(e.g., UAE Companies)

Sanctioned for dealings involving several Iranian

industries or parties

Certain dealings with few Iranian industries

authorized

Authorizes dealings with several additional Iranian industries and previously

designated parties

The Iran Nuclear Deal – What’s Changing?

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?

The Iran Nuclear Deal – What’s Changing?

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The Iranian Nuclear Deal – What’s Changing? Industries Directly Affected

Automotive Commercial Aerospace Energy (Oil &

Gas) & Petrochemicals

Financial, Banking & Insurance

Gold, Other Precious Metals,

Banknotes & Coinage

Graphite & Raw or Semi-Finished

Metals (e.g., Aluminum, Steel)

Shipping, Shipbuilding,

Ports & Transportation

Technology & Software

Previously Authorized:

Food, Medicine, and Medical

Products Agricultural

Commodities Internet and

Personal Communications

The Iran Nuclear Deal – What’s NOT Changing? Activities (even if within the industries listed on the

last slide) that could materially contribute to Iranian government activities involving: ● International terrorism; ● WMD proliferation; ● Biological/chemical weapons; ● Advanced conventional weapons

Human rights-related sanctions will remain in place: ● Asset freezes, designations, and visa restrictions ● Targeting Iranian government officials responsible for human

rights abuses and individuals acting on their behalf

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The Iran Nuclear Deal – What’s NOT Changing? Terrorism-related financial sanctions will

remain in place: ● Sanctions aimed at Iran’s support for terrorist

organizations (e.g., Hamas, Hezbollah, and Islamic Jihad)

● Sanctions on non-U.S. financial institutions that facilitate financial transactions for Iran’s Revolutionary Guard Corps (IRGC)

● Certain Iranian financial institutions will remain blocked, including Bank Saderat and Mehr Bank

Iran will remain a country of money-laundering concern ● Financial institutions will still be exposed to some risk

when conducting business involving Iran. 19

The Iran Nuclear Deal – What’s NOT Changing? Embargo on exporting U.S. origin items (including goods,

software and technology) to Iran remains in place – including items made in the United States, and items made outside the United States: ● With as little as 10% U.S.-origin content ● With any percentage of certain sensitive U.S. content ● Based on certain sensitive U.S. technology

U.S. Securities and Exchange Commission (SEC) reporting requirements ● Currently, SEC continues to require domestic and foreign issuers to

report many transactions or dealings (including those by their non-U.S. affiliates) involving Iran

● Reporting requirement applies even when the underlying activity is legal/licensed

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What’s NOT Changing? – U.S. State Divestment Sanctions

21 Sources: CLS; NASRA; Reuters. 9/4/2015 * Nevada requires the public pension system to report on exposure to companies that do business in Iran, but does not mandate divestment

Key Takeaways – Compliance Do’s and Don’ts

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DOs Ensure you have a meaningful

compliance program in place before doing business in Iran

Permissible to have general discussions about the Iranian market with Iranian or non-Iranian persons

Permissible to travel to Iran Permissible to hire Iranian persons not

“ordinarily resident” in Iran to advertise or provide preexisting marketing materials in Iran Creation of new materials specifically for the

Iranian market is prohibited

Key Takeaways – Compliance Do’s and Don’ts Before JCPOA Implementation

DON’Ts Exchange goods, technical information,

or services with Iran or an Iranian persons without a clear basis of authorization

Enter into contracts with an Iranian person (or with a non-Iranian person for the provision of goods or services in Iran) or engage agents or representatives in Iran. Prohibition applies to executory contracts

(i.e., those conditioned upon JCPOA implementation), and whether the contracts are oral or written, enforceable or non-enforceable (MoUs, SoIs, etc.)

1. Ensure the deal is fully implemented before initiating any activity

2. Conduct thorough KYC diligence and screening on all parties to each transaction

3. Have a clear understanding of the anticipated end-uses of the items provided to ensure no prohibited uses (e.g., nuclear, military, etc.)

4. Understand whether any items (goods, software, or technology) to be sent to Iran are subject to U.S. export control laws

5. Ensure U.S. persons are not involved in any Iran-related transaction, including U.S. national employees or U.S. intermediaries (e.g., U.S. financial institutions)

6. Implement exit mechanism in any Iran-related contracts to unwind transactions in the event of sanctions “snap-back”

7. Review existing contracts & policies to ensure consistency with contemplated activities 24

Key Takeaways – Compliance Do’s and Don’ts Before and After JCPOA Implementation

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FOR MORE INFORMATION PLEASE CONTACT:

INTERNATIONAL PRACTICE

Akin Gump is a leading international legal practice with more than 900 lawyers, working in 21 locations worldwide.

Mahmoud (Mac) Fadlallah Boulevard Plaza Tower Two, 23rd Floor P.O. Box 120109 Dubai, United Arab Emirates Direct: +971 4.317.3030 Fax: +971 4.409.6850 Email: mfadlallah@akingump.com

Jonathan Poling Robert S. Strauss Building 1333 New Hampshire Ave NW Washington, DC 20036 Direct: +1 (202) 887-4029 Fax: +1 (202) 887-4288 Email: jpoling@akingump.com

Slide Number 1Slide Number 2AgendaAkin Gump IntroductionOur Firm & International Trade PracticeOverview of U.S. SanctionsOverview of U.S. SanctionsCurrent U.S. Sanctions ProgramsOverview of U.S. Sanctions – Capturing Non-U.S. Person ActivitiesU.S. Dollar Transactions – Capturing Non-U.S. Person ActivitiesPenalties and EnforcementKey Takeaways on U.S. Sanctions for UAE CompaniesOverview of the Iran Nuclear DealOverview of the Iran Nuclear DealOverview of the Iran Nuclear Deal – TimelineThe Iran Nuclear Deal – What’s Changing?The Iran Nuclear Deal – What’s Changing?The Iranian Nuclear Deal – What’s Changing?�Industries Directly AffectedThe Iran Nuclear Deal – What’s NOT Changing?The Iran Nuclear Deal – What’s NOT Changing?The Iran Nuclear Deal – What’s NOT Changing?What’s NOT Changing? – U.S. State Divestment SanctionsKey Takeaways – Compliance Do’s and Don’tsKey Takeaways – Compliance Do’s and Don’ts�Before JCPOA ImplementationKey Takeaways – Compliance Do’s and Don’ts�Before and After JCPOA ImplementationSlide Number 26