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EU officials on Tuesday issued guidance on a “blocking” regulation designed to shield European firms from the effect of newly re-imposed U.S. sanctions against Iran, but left key questions unaddressed and did not estimate how the rule would work in practice, say analysts.

European banks seeking to wind down business with Iran for fear of violating the U.S. sanctions against the country must first obtain a license or risk punitive action under an EU blocking regulation designed to counter the measures.

On Tuesday, three months after unilaterally withdrawing from a global nuclear deal, the White House renewed sanctions against Iran’s use of U.S. dollars, gold and other precious metals; and prohibitions against acquiring Iranian debt, holding Iranian rials in offshore accounts or otherwise conducting significant transactions in the currency.

The EU blocking regulation, which took effect at the same time, requires firms in the European Union to disregard those sanctions and disclose any “events arising” that damage them financially, the European Commission warned in guidance.

The guidance clarifies some of the steps firms must take to comply but offers them only limited protection against potentially ruinous U.S. enforcement actions, fines or even criminal prosecutions, Sara Nordin, counsel with White & Case in Geneva, said.

“There are still a lot of question marks,” Nordin said.

The guidance establishes that firms can sue for U.S. assets in the European Union to defray any losses from complying with the blocking regulation, or, alternatively, apply for licenses to comply with the U.S. sanctions if not doing so would “seriously damage” their interests or those of the bloc.

The regulation, which expands on a 1996 measure that blocks U.S. sanctions against Libya and Cuba, also bars EU courts from enforcing overseas rulings based on U.S. sanctions previously suspended by the 2015 nuclear accord with Iran.

Member states must ensure “full compliance” through domestic legislation, and levy “effective, proportionate and dissuasive” penalties in response to any breaches, the Commission said.

But the guidance neither indicates how EU officials will administer licenses nor provides details on how national authorities should enforce the rule.

Answering those questions soon is of critical importance to the financial services industry: a second round of U.S. sanctions, including secondary sanctions against foreign financial institutions that transact with certain Iranian lenders, takes effect in November.

Secondary sanctions apply even if the transactions do not involve U.S. dollars or otherwise cross U.S. jurisdiction.

David Lorello, an attorney at Covington & Burling in London, said European financial institutions that have at some point engaged in Iran-linked business should “carefully review” the EU regulation, which does not prohibit compliance with all U.S. sanctions against Iran.

Firms that identify any transactions covered by the blocking measure should consider notifying the Commission and applying for a license to comply with U.S. sanctions re-imposed Tuesday, Lorello said.

“The probability of U.S. authorities making concessions to European firms to do business in Iran appears to be very low, so a larger proportion of any licensing activity would presumably be with the EU,” he said.

Enforcement

The Commission said it plans to take a range of factors into account when reviewing licensing applications, including whether the firm is already under investigation for allegedly violating U.S. sanctions or has previously paid a monetary penalty for doing so.

Given the level of disagreement between EU and U.S. authorities over the Iran deal, the financial services industry and others should anticipate a strong push for robust enforcement of the EU blocking regulation, Jasper Helder, an attorney with Akin Gump in London, said.

“People used to think the choice is between being bitten by the U.S. dog or the European mouse, but given the political sensitivities I would not be so sure,” Helder said. “If you want to err on the side of caution, it makes sense to apply for a license.”

The blocking measure on its own does not appear to have persuaded the reported handful of small and midsized European banks that sought ties with Iran since 2015 to hold course.

When contacted by ACAMS moneylaundering.com, Swiss lender Banque de Commerce et de Placements, German lender DZ Bank and Austria’s Oberbank confirmed plans to eliminate trade finance operations and other transactions with Iranian banks and companies.

U.S. sanctions-related fines have made EU penalties seem insignificant by comparison.

A 2013 German regulation, for example, prescribes a maximum €500,000 fine against firms that comply with certain sanctions not issued by the European Union or United Nations. In 2015, French lender BNP Paribas paid $9 billion for violating U.S. sanctions against Iran, Cuba and Sudan.

Nordin, the Geneva-based lawyer, said banks that decide to cease Iran-linked business to avoid U.S. sanctions may expedite the process by applying jointly for licenses, but may not have to apply for anything if they can show that such a decision was commercial in nature.

“It’s very interesting that the guidance acknowledges that EU entities still have a choice, and relevant business could be ceased based on other factors,” Nordin said. “If banks make decisions resulting in U.S. sanctions compliance and are able to document that they’re ceasing Iran-related transactions [based on] financial considerations, then that’s also a possibility.”

Re-instituting U.S. sanctions against Iran suspended by the 2015 agreement also renews pressure on the Belgium-based Society for Worldwide Interbank Financial Telecommunication, or Swift, which administers messages and instructions attached to global transfers of funds, to again sever ties to Iranian banks.

Under orders from the European Union, Swift reluctantly cut off dozens of Iranian lenders in 2012 to comply with U.S. sanctions, but the current situation is “very different,” said Fiona Hamilton, a London-based research director at Volante Technologies, which supplies solutions to banks that enable Swift payments and other asset class integration and processing.

“The U.S. government sanctioning Swift would have such a catastrophic effect on their own financial system, it really would be the Americans cutting off their nose despite their face,” she said.