OFAC Sanctions and Personal Affairs in Iran

2017 has started and a new administration will be in the White House in less than three weeks. January 16 will mark exactly a year since implementation of the Joint Comprehensive Plan of Action (the “JCPOA”, also referred to commonly as the nuclear deal) between Iran and the “P5+1” (the United States, United Kingdom, France, Russia, China, and Germany).  I notice that many still read my blog post on our sister blog MENALawyer.com titled Do you need a license to bring money from Iran? which I wrote in May 2011! It’s time to revisit this topic given that so much has changed and the sheer amount of confusion that still exists.  This post is not a summary of all regulations impacting the personal affairs of Iranian-Americans, nor even the recent changes. It may be useful in illustrating what issues are still concerns, however.

Understand what a “U.S. person” is.

The Iranian Transactions and Sanctions Regulations, 31 Part 560 (the “ITSR“), which is one of the main bodies of U.S. sanctions laws that impact Iranian-Americans, primarily covers “United States persons.” This means any U.S. citizen or Permanent Resident (Green Card holder) wherever they are (including Iran), but also means anybody physically in the United States (such as on a tourist visa).  There are no exceptions for also having Iranian citizenship or Canadian or UK citizenship for that matter. If you are a U.S. citizen or Permanent Resident or if you are physically in the U.S., you are a U.S. person and are under the same restrictions as all other U.S. persons.

Transactions versus Amounts

While the amount of funds to be transferred from Iran to the United States is important for OFAC purposes, it is key to address each “type” of funds differently – the rules on selling certain property are in some ways different from the rules on selling shares of stock, or receiving a family gift or inheritance, depending on the facts. These nuances must be recognized.

Selling Property in Iran – Seller Beware!

This remains a pressing issue.  If you are a U.S. person under the ITSR you will need a specific license from the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) for many property sales and related services.  There are certain limited cases in which real property (i.e., real estate) can be sold under general license (i.e., you will not need to apply to OFAC for a specific license) so long as the transaction conforms to OFAC’s many regulations, such as not dealing with certain parties, transferring the funds the right way. This does not cover sales of things that are not real property, like household items, shares of stock, businesses, etc.

Iranian Bank Accounts

Again, many still do not realize this, but as a U.S. person, you cannot open or maintain a bank account in any Iranian financial institution, whether that financial institution is on the OFAC Specially Designated Nationals (SDN) list or not, unless you have a specific license.   Further, you cannot cause anybody else to open a bank account for you, for example, under that person’s name.  The transfer of funds from Iran to the United States is highly regulated and must be done in a legally compliant way.

Funds Transfers out of Iran and U.S. Bank Accounts

The language of the JCPOA technically enables foreign, non-U.S. banks to work with their Iranian counterparts. In other words, there is no real legal bar on an Iranian bank being able to wire funds to say a European bank, which could in turn send those funds to an individual’s account in the United States.  This, however, has not really happened as many banks around the world are afraid of dealing with Iran.  As such, the vast majority of personal transfers out of Iran use exchange houses (so called “Sarrafis”).  This is not necessarily illegal, provided one deals with the right parties, and that the transfer otherwise complies with U.S. regulations.   Furthermore, banks in the United States increasingly want to be assured that the funds that are coming into your account are compliant, and as such, they often ask us for supporting documentation, like affidavits, etc. to prevent account closure or sending the wire back to the transmitter (e.g., in Dubai, Turkey, Kuwait, Hong Kong, etc.).

Conclusion

In sum, it is key to make sure you have a correct grasp of the regulations. First off, understand that U.S. unilateral sanctions on Iran continue to exist, and that these regulations continue to have a ripple effect on even third country businesses.  Your status as a U.S. person still substantially limits the scope of what you can lawfully do with Iran.  While U.S. policy generally favors the divestment from Iran by U.S. persons, one must make sure the transfer complies with all aspects of the law, and this does not stop at just OFAC regulations.  The regulations remain complex and they are not a place for guesswork.  This is especially key given the very vigilant enforcement of sanctions violations, which shows no sign of subsiding even with the new administration.

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An international trade and regulatory lawyer.

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This website aims to provide notes and commentary on international legal, business, and political developments in economic and other sanctions. It is intended solely for information and entertainment purposes and should in no way be construed as legal advice. If you have any questions or are unclear on any of the subject matters addressed or discussed on this site, please consult a licensed legal professional. Views presented in the comments and outside links do not necessarily reflect those of the website author. All external links on this website to articles and documents are external and provided for informational purposes only. They have no relation to the author of this website unless specified otherwise.

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Copyright 2017 Farhad R. Alavi.
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