Navigating Sanctions on Iran: How Businesses Are Affected (2025)

Iran has been subject to sanctions for over 45 years, with significant expansions and modifications throughout this period.

These sanctions primarily stem from concerns over its nuclear program, human rights abuses, and support for militant groups. Over the decades, they have evolved to target Iran’s economy—particularly its oil and financial sectors—alongside its military and scientific initiatives. Periods of negotiation and temporary relief, such as the 2015 Joint Comprehensive Plan of Action (JCPOA), have been followed by renewed tensions and the reimposition of sanctions by some international entities.

At the same time Iran offers opportunities for business, including a large consumer market, an educated workforce, a diverse economy, and infrastructure investment prospects. The country also holds potential as a regional hub and is increasingly open to foreign investment.

However, businesses looking to establish a presence in Iran must navigate stringent international sanctions, a weak private sector, complex regulatory frameworks, and currency volatility.

This article focuses on the international sanctions impacting Iran and their implications for businesses.

US sanctions on Iran

The United States has implemented a comprehensive sanctions regime against Iran, primarily targeting its nuclear program, missile development, and support for terrorism. Here are the main components of the current US sanctions against Iran:

• Nuclear-related sanctions: The US sanctions aim to prevent Iran from developing nuclear weapons capabilities. These include restrictions on the export of nuclear-related materials and technology, as well as financial transactions related to Iran’s nuclear program.
• Oil and petrochemical sanctions: The US has imposed stringent sanctions on Iran’s oil and petrochemical sectors to disrupt revenue streams that fund its nuclear and military programs.
• Financial restrictions: Financial sanctions prohibit US persons from engaging in transactions with designated Iranian entities and individuals. This includes asset freezes for companies and individuals linked to Iran’s military activities, including those facilitating oil sales.
• Designation of entities and individuals: The US Department of the Treasury regularly designates Iranian entities and individuals involved in supporting terrorism or missile development, which results in asset freezes and travel bans.
• Secondary sanctions: Secondary sanctions threaten non-US entities with penalties if they engage in significant transactions with Iran, especially in sectors like energy and finance. This aims to deter international businesses from dealing with Iran.
• Human rights violations: Sanctions also target individuals and entities responsible for human rights abuses within Iran, further isolating the Iranian government on the international stage.
• Recent developments: In December 2024, the US imposed new sanctions targeting 35 entities and vessels associated with transporting Iranian oil, reinforcing efforts to disrupt financing for Iran’s nuclear ambitions.

These sanctions reflect ongoing US efforts to curb Iran’s regional influence and prevent its development of weapons that could destabilize the Middle East and beyond.

UK sanctions on Iran

The UK enforces sanctions similar to the US, focusing on Iran’s nuclear ambitions and human rights record. These include:

• Asset freezes and travel bans: Targeting Iranian officials and entities tied to nuclear and missile development.
• Trade restrictions: Targeting the export of certain goods and technologies to Iran, especially those related to military applications, such as unmanned aerial vehicles and missile technology. This aims to disrupt Iran’s production capabilities for missiles and drones.
• Sanctioned organizations: Targeting multiple Iranian organizations involved in missile development and military operations as subjects of sanctions, including the Farzanegan Propulsion Systems Design Bureau and the Iranian Space Agency, which are linked to ballistic missile technology.

At the same time, UK law permits trade with Iran in specific sectors, such as agriculture, healthcare, and food and drink. However, UK companies must adhere to UK and UN sanctions as well as UK export controls. Refer to this comprehensive guide to learn how UK firms can conduct legal business in Iran.

UN sanctions on Iran

UN sanctions, endorsed by the Security Council, aim to prevent Iran from developing nuclear weapons. These measures have included:

• Arms embargo: Prohibiting the transfer of military equipment to Iran.
• Nuclear program monitoring: Mandating IAEA inspections to ensure compliance with non-proliferation agreements.
• Targeted asset freezes: Focusing on entities connected to Iran’s nuclear activities.
• Financial transactions: restrictions on financial transactions involving Iranian banks.

While many of these sanctions were eased under the 2015 JCPOA, US withdrawal from the agreement in 2018 renewed pressure on Iran via unilateral measures.

Suggested read: Understanding the UN Sanctions List in 2024

EU sanctions on Iran

The European Union enforces sanctions alongside diplomatic efforts to sustain the JCPOA. These measures include:

• Trade bans: Restrictions on goods that could contribute to nuclear or missile programs, as well as the sale, supply, transfer, or export of equipment that might be used for internal repression.
• Technical assistance ban: A prohibition on providing technical assistance, brokering services, or financing to any person or entity in Iran, or for use in Iran, if such assistance could be related to internal repression.
• Asset freezes: Targeting entities involved in terrorism or human rights abuses.

Check this comprehensive guide on EU sanctions against Iran for further details.

How businesses are affected

Doing business in Iran requires navigating a complex landscape of sanctions and regulations:

• Sectoral opportunities: Agriculture, pharmaceuticals, and humanitarian goods are less restricted.
• Compliance with sanctions: Ensure alignment with both domestic and international rules, including licenses for specific trades.
• Local partnerships: Collaborate with Iranian businesses familiar with local legal and market frameworks.
• Risk management: Assess geopolitical risks and maintain transparency to avoid inadvertent violations of sanctions.

Businesses must always remain vigilant as the regulatory environment is subject to frequent changes influenced by geopolitical developments.

Suggested read: Effective Sanctions Screening: Best Practices for Preventing Financial Crime

Steps to engage in business in Iran

1. Conduct Due Diligence:

Assess potential partners in Iran to ensure they are not subject to sanctions.

Here are also some sources and websites where you can find detailed information about asset freezes, restrictions, and sanctions related to Iran, as well as Iranian individuals and companies:

1. Office of Foreign Assets Control (OFAC): OFAC, part of the US Department of the Treasury, administers and enforces economic and trade sanctions based on US foreign policy and national security goals. Their website provides information on sanctions programs, including those related to Iran.

2. Iran Sanctions Resource Center: This comprehensive resource from the US Department of the Treasury provides information on sanctions programs related to Iran.

3. European Union (EU) sanctions: The European Union also imposes sanctions on Iran, which are published on the official website of the European External Action Service (EEAS).

4. United Nations Security Council Sanctions Committees: Information on sanctions imposed by the United Nations Security Council, including those related to Iran, can be found on the UN website.

5. Iran Watch: A project by the Wisconsin Project on Nuclear Arms Control that monitors Iran’s nuclear and missile programs, as well as associated economic sanctions.

6. International Atomic Energy Agency (IAEA): The IAEA monitors Iran’s nuclear activities and compliance with international agreements. Its website provides information on Iran’s nuclear program.

Suggested read: How to Check if a Company is Legit

2. Seek legal consultation:

Seek independent legal advice on compliance with sanctions and regulations. This is crucial for understanding the implications of US, UK and EU sanctions if your business has any exposure to the US, UK or EU markets.

3. Identify legitimate payment channels:

Establish clear payment routes that comply with sanctions regulations.

4. Obtain necessary licenses:

Depending on the nature of the business, you may need to apply for specific licenses from OFAC or other regulatory bodies to conduct certain transactions legally.

5. Mitigate risks:

Develop strategies to mitigate reputational, economic, and legal risks associated with operating in Iran. This includes being aware of potential penalties for non-compliance with sanctions.

Challenges

Below are the most frequent challenges businesses seeking to operate in Iran might face.

• Market barriers: Protectionist policies and bureaucratic hurdles can complicate market entry.
• Economic environment: The Iranian economy is influenced by fluctuating oil prices and domestic policy changes, which can affect business operations.
• Reputational risks: Engaging with Iran may lead to scrutiny from stakeholders concerned about human rights issues and geopolitical tensions.

In summary, while there are opportunities for businesses in Iran, careful navigation of the sanctions landscape is critical. Companies must prioritize compliance, conduct thorough due diligence, and seek expert legal advice to minimize risks associated with entering this complex market and operating in it.

• What sanctions are imposed on Iran?

  Sanctions on Iran include restrictions on its oil and financial sectors, arms embargoes, bans on dual-use goods, and targeted measures like asset freezes and travel bans for individuals and entities tied to its nuclear program, terrorism, and human rights abuses.

• Why did the United States decide to sanction Iran?

  The US sanctioned Iran over its nuclear proliferation activities, alleged support for terrorism, human rights abuses, and regional destabilization efforts, starting as early as the 1979 Islamic Revolution and hostage crisis.