Today’s debate over an interim nuclear deal with Iran is rightly focused on the size and scope of sanctions relief Tehran will receive in exchange for temporarily halting its nuclear activities. One widely circulated argument against such a deal is that the attraction of Iran’s market, rendered largely off-limits due to sanctions, is such that companies will attempt to secure privileged positions by reentering at the first sign that the U.S. Treasury Department is tapping the brakes, leading to the dissolution of the current sanctions regime.

Chief among those asserting that any relief of sanctions pressure will trigger an international rush back into the Iranian market is Israeli prime minister Benjamin Netanyahu. Appearing on CNN’s State of the Union, Netanyahu warned that “if all of a sudden you take off the pressure, everybody will understand that you are heading south. You’re really going to be in danger of crumbling the sanctions regime.” However, the idea that firms would deliberately violate existing U.S. and EU sanctions, under the assumption that enforcement actions would not be forthcoming, stretches the bounds of credulity. Companies would need to unlearn the recent and painful lessons taught to them by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) and state regulators such as the New York Department of Financial Services.

Under the terms of the purported interim deal, the U.S. would offer Iran under $10 billion in sanctions relief, including approximately $3 billion in Iranian oil proceeds held in escrow accounts as mandated by the Iran Threat Reduction and Syria Human Rights Act of 2012. Sanctions on auto sales, petrochemicals, aircraft parts, and precious metals like gold would also be relaxed. The most devastating banking and oil sanctions, which have effectively cut Iran off from the global financial system, would remain in place pending a final deal.

Unintentionally, opponents of the interim deal do an excellent job of articulating why today’s sanctions will not dissolve in the event of a six-month pause. Skeptics warn that given the questions surrounding Iran’s past nuclear activities, Tehran is merely playing for time and that any interim deal will in fact be as far as Iran is willing to go. But executives and the compliance staff of any company considering a reentry into the Iranian market also know this history and will be forced to consider the possibility that even following an interim deal, talks may break down, Iran may renege on its commitments, and sanctions may be reimposed. Any firm that rushed back into the Iranian market beyond the scope of existing sanctions would then be left with significant regulatory exposure, having to explain itself in a political atmosphere poisoned by the failure of the P5+1 talks. Newer, tougher sanctions would surely follow, along with calls to redouble efforts to identify and punish violators.

Even if punishment would not be immediate in every case, the international business community knows that OFAC has a long memory. The massive penalties levied in recent years were not usually the result of recent actions; for the most part, these fines were in response to offenses that occurred years earlier. Regulatory agencies are not likely to forget past transgressions, particularly given the financial windfall that accompanies these settlements. Due to these risks, any corporate board wishing to deliberately run afoul of existing law in order to secure the short-term economic benefits of Iran-related trade would almost certainly be rebuffed by its compliance team. As Brookings Institution scholar Suzanne Maloney notes, “it is an absurd assertion to suggest that companies are going to begin streaming back into Iran at a time when the sanctions that prevent any normal kind of business transactions will remain in place and the legal liability, not just on institutions but on individuals, is enormous.”

It is highly questionable that in this scenario OFAC would look kindly upon these blatant violations. Despite a slowdown in the number of designations during the Rouhani presidency, OFAC has not displayed any reluctance to continue targeting violators and has maintained the number of enforcement actions issued in the five months since Rouhani’s election compared to the five prior months. The New York Department of Financial Services, which holds immense power given New York City’s important role in the global financial system, has also proven in the past that it is willing to go beyond federal agencies in investigating and penalizing sanctions violations.

Companies and financial institutions have been reluctant to engage in risky behavior following regulatory action, even if the activities were technically legal or even encouraged by the U.S. government. In 2005, Riggs Bank, long known for its role as the banker of choice for foreign embassies in the United States, was fined $25 million for violating Anti-Money Laundering regulations related to these accounts. Following the fine, many embassies had trouble finding any bank willing to take on their business, even after the intervention of the U.S. State Department and despite the fact that there was nothing inherently illegal in servicing these accounts. To this day, embassy accounts are a subject of great concern for financial institutions and regulators alike. In his book Treasury’s War, former Assistant Secretary of the Treasury Juan Zarate recounts a similar situation when the State Department had immense difficulty finding a bank to transfer North Korean assets held by Banco Delta Asia, which was subject to a Section 311 designation under the USA PATRIOT Act.

Six years of robust enforcement and serious penalties for violating Iran sanctions have led to the exodus of reputable companies from Iran. These firms will be very wary of investing again without concrete assurances that they will not feel the wrath of U.S. regulatory agencies. As Zarate explained recently—and correctly—relaxing sanctions “isn’t done overnight and it’s not… an on/off switch.” In response to fears that sanctions enforcement will slacken in the event of an interim deal, the Treasury and State Departments have not been quiet, announcing that they will mount a diplomatic campaign to maintain sanctions’ bite. Faced with desk-pounding Treasury officials, anyone looking to skirt sanctions—deal or no-deal—will be well aware that they do so at their own risk. Few, if any, will be willing to do so, even if Iran gets limited relief in an interim deal.

Samuel Cutler is the Policy Adviser at Ferrari & Associates P.C., a Washington D.C. law-firm specializing in U.S. economic sanctions matters.

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