Germany, UK and France, developed a system to shield institutions against US sanctions to Iran (Instex).
If Instex enters into effect, the USA will most likely react to the European vehicle with enhancement and enforcement of sanctions making ineffective the shield system.
Sigal Mandelker (Treasury Department undersecretary for terrorism and financial intelligence) noted that “Engaging in activities that run afoul of U.S. sanctions can result in severe consequences, including a loss of access to the U.S. financial system.”
In addition the department noted the system to be a deceptive practice to circumvent sanctions and that “entities that transact in trade with the Iranian regime through any means may expose themselves to considerable sanctions risk, and Treasury intends to aggressively enforce our authorities.”
Secretary of State, Mr. Michael Pompeo noted that Iranian sanctions exclude humanitarian and medical products, therefore, the Instex system should not be needed.
Nonetheless, any transaction within the scope of sanctions will have applicable consequences to all parties involved in eluding shareholders in application of standard OFAC rules.
The system, if ever into effect, will be under the scrutiny of the department and may prompt further sanctions or more complex sanctions schemes.
