“Maximum Pressure” on Iran Is Back: What This Means for Sanctions and Export Controls

On February 4, 2025, President Trump issued a National Security Presidential Memorandum (NSPM-2) on “Imposing Maximum Pressure on the Government of the Islamic Republic of Iran, Denying Iran All Paths to a Nuclear Weapon, and Countering Iran’s Malign Influence.” NSPM-2 directs U.S. government agencies to take a range of measures to reimpose “maximum pressure” sanctions on Iran. 

However, alongside NSPM-2, the President also commented that he remains interested in a “verified nuclear peace agreement” that would allow Iran to “peacefully grow and prosper,” and that he hopes “we’re not going to have to use it very much,” referring to NSPM-2. Ultimately, the impact of NSPM-2 will depend on how fully it is implemented and how these differing goals interact in the coming months.

On February 6, 2025, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced designations related to an Iranian maritime sanctions evasion network designed to enable the sale of Iranian oil to China to benefit Iran’s military.

What Does NSPM-2 Do?

NSPM-2 does not immediately change any U.S. sanctions, export controls, or other restrictions associated with Iran. Instead, it directs U.S. government departments and agencies to begin acting to re-establish “maximum pressure” on Iran (a reference to the first Trump Administration's campaign against Iran that started in 2018). There are several elements to this approach:

Increased Use of Existing Targeting Measures (i.e., Designation Authorities):

NSPM-2 requires the U.S. Department of the Treasury (Treasury) to “immediately” impose sanctions or other “appropriate enforcement remedies” on persons violating U.S. sanctions on Iran, and to “implement a robust and continual sanctions enforcement campaign.” The objectives of this campaign are to deny Iran revenue and drive its oil exports to zero, which suggests ongoing designations of entities and individuals involved in facilitating Iran’s oil shipments or associated payments, and aggressive domestic enforcement where U.S. persons are involved or there otherwise is a U.S. nexus. NSPM-2 specifically calls out Iran’s exports of crude oil to China (which accounts for the majority of Iran’s oil exports) and potential evasion activities in Gulf countries.

As noted above, the Treasury Department already has announced designations targeting Iran’s oil exports and sanctions evasion soon after NSPM-2 was released, targeting individuals and entities in China, India, and the UAE. These are likely the first step in a sustained and aggressive campaign of designations and enforcement in line with NSPM-2, coupled with diplomatic and private sector pressure.

Know Your Customer’s Customer

NSPM-2 directs Treasury to “evaluate whether financial institutions should adopt a know-your-customer’s-customer (KYCC) standard for Iran-related transactions.” Most financial institutions have already adopted heightened diligence standards with respect to transactions that may involve Iran. But, depending on how any such KYCC requirement is implemented, it could substantially increase the compliance risks and costs for financial institutions, particularly if the requirements extend beyond direct Iran activity and require KYCC for activity involving jurisdictions, products, or customer lines that pose heightened risk of diversion of goods or services to Iran. In addition to traditional financial institutions, this may impact FinTechs and digital asset firms whose users do not to do business with Iran, but the users’ customers do.

Review of U.S. Licenses and Waivers:

NSPM-2 directs State to “modify or rescind [existing] sanctions waivers,” and directs Treasury to “review for modification or rescission any general license, [FAQ], or other guidance that provides Iran or any of its terror proxies any degree of economic or financial relief.” The mandate for Treasury does not require that the agency modify or rescind any specific license or guidance, so whether any changes will be made remains to be seen. Current general licenses include a range of authorizations that could be narrowed or cancelled, including those covering support for international organizations, exports of software, and related services for online communications.

U.S. Diplomatic Push for Snapback of UN Sanctions

NSPM-2 directs the U.S. Ambassador to the UN to “work with key allies to complete the snapback of international sanctions and restrictions on Iran.” The snapback mechanism allows any participant in the Joint Comprehensive Plan of Action (JCPOA) to trigger the re-imposition of UN sanctions by notifying the Security Council of significant non-performance of commitments under the JCPOA. Once triggered, the snapback mechanism results in re-imposition of UN sanctions unless the UN Security Council adopts a resolution to the contrary (meaning that any member of the Security Council with a veto can prevent such a resolution from passing and thus ensure reimposition of sanctions). Although France, Germany, and the UK previously refused to support snapback following the U.S. withdrawal from the JCPOA in 2018, their posture toward Iran changed following Iran’s escalation of its enrichment program (which remains ongoing), its support for Russia’s invasion of Ukraine, and attacks by its regional proxies, including Hamas and the Houthis.

Export Control Campaign

NSPM-2 directs the U.S. Department of Commerce to “conduct a robust and continuous export control enforcement campaign to restrict the flow of technology and components used by the regime for military purposes.” The United States already imposes an embargo on Iran, so this could focus more on stepped-up enforcement to identify and stop transshipment and diversion of items subject to U.S. export controls, and coordination with third-countries.

Enhanced DOJ Enforcement

NSPM-2 directs the U.S. Department of Justice to “pursue all available legal steps” to investigate, disrupt, and prosecute Iranian networks involved in sanctions evasion or a range of other harmful activities. It also calls on the agency to pursue the impoundment of Iranian oil cargoes, and to seek Iranian assets to satisfy legal judgments obtained against Iran by American victims of terrorism. Taken together, the guidance to Treasury and Justice suggests more frequent and aggressive civil and criminal enforcement may be on the horizon, including in how the agencies manage settlements associated with voluntary self-disclosures of violations. This also may lead to increased scrutiny and enforcement on non-U.S. companies who engage in business with Iran.

What to Look for in the Future

• Increased Iran Sanctions Risk: Companies with potential exposure to Iranian oil exports, shipping, financial networks, or other revenue-generating activities will face increased sanctions risks, even if the links to Iran are not apparent. Careful risk assessment and stepped-up diligence will be important to mitigate these risks. 
• KYCC Requirement: Financial institutions, FinTechs, and digital asset firms should monitor for how the KYCC requirement will be implemented, as it could require the financial institution to conduct KYCC for a much wider subset of transactions.
• Change in Guidance, Licensing, and Waivers: Entities with Iran exposure that rely on U.S. general licenses, guidance, or a waiver (particularly any issued during the Biden Administration) should monitor for any changes that Treasury may make in the immediate future to these authorizations as the Trump Administration settles in.
• Track the UN Snapback Diplomatic Push: The UN sanctions, if reimposed, would be mandatory for all UN member states and would substantially escalate tensions with Iran.
• Export Controls Considerations: Companies manufacturing products outside the United States should monitor for whether their products incorporate, or are the direct product of, U.S.-origin technology or software. Additionally, the United States may push allies (e.g., the European Union, Japan, the United Kingdom) to increase monitoring and cooperation with U.S. authorities to detain products being shipped in violation, and identity and penalize the U.S. and foreign parties involved.