It’s been a long time since I wrote about this topic, but it remains one of perennial interest for many. Unlike many developing countries, Iran is a perhaps a net sender rather than receiver of family remittances. This therefore constantly begs questions by people in the United States as to how they can obtain money from Iran, whether it’s gifts from parents and grandparents, inheritance, or the sale of their own property. The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC), which has jurisdiction over most individual transactions involving the U.S. and U.S. persons and Iran, regularly issues new regulations and statements on a wide range of sanctions programs. In studying this particular issue, however, the Iranian Transactions and Sanctions Regulations, 31 CFR Part 560 (the ITSR) is arguably the cornerstone regulatory framework.
Below are a few things to consider when looking at the legal issues surrounding the receipt of family remittances from Iran.
- Does it need an OFAC license? Many think you generally need an OFAC license to receive Iranian-origin money, or that money under some given threshold does not need a license (this may be the result of hearsay and a rumor mill). The reality is that the actual amount at issue is not what determines whether you need a license. There is no magical threshold – in other words, transfers of all sizes fall under OFAC’s jurisdiction. Furthermore, licenses, where applicable, are not necessarily just for bringing money – oftentimes, the actual transaction that gives rise to the money needs a specific license. If you think a general license applies, meaning you will not need to apply for a specific license, then make sure your analysis is correct and true to the letter of the law.
Therefore, determining whether a specific license is needed is extremely fact specific, and can depend on a slew of factors – for example, if there is an asset involved, does it need an OFAC license to be sold? Who are the parties involved? What are the source of funds? Are these funds in an Iranian bank subject to blocking? Are any parties designated by OFAC as Specially Designated Nationals (SDNs) involved at any stage of the transaction? Does the money movement have a weird step? These are just a few.
- Have you checked the logistics of sending and receiving the funds? Your compliance obligations do not stop when the funds leave your (or your relative’s) hands in Iran. Ensuring funds are sent in a manner compliant with OFAC regulations is critical – certain entities (e.g., certain banks and exchangers, be they in or outside Iran) cannot be used or dealt with without a specific OFAC license. Certain methods of transfer (e.g., hawala between individuals in Iran and the US) are generally prohibited.
- Does your bank know about the transfer? As many know, funds bound for the US from Iran do not get wired from Iran to the US, rather they get wired from third country banks, e.g., in jurisdictions like Turkey or Malaysia. This may look suspicious to your bank, and banks know Iran relies heavily on third country exchangers for procuring certain goods and services that are blocked by sanctions. As such, banks often reject such wires as such transfers could look like sanctions violations. The onus is arguably on the customer (the recipient) to communicate that to the bank. This is something certain counsel often do – providing documents to a bank’s compliance department to support the argument that their client’s transfer is lawful. While this is not required by law, banks generally want these documents and they can help prevent an erroneous rejection of a wire, or an closure of a client’s account due to a misperceived level of risk.
- Are you otherwise complying with OFAC’s regulations? OFAC regulations are broad and cover a wide host of activities, and it’s therefore critical to ensure that all rules are being followed. There are also bank policies – banks often embrace positions more conservative than what is required by the sanctions. As such, your goal is effectively to make everyone happy. Also, among other things, there are recordkeeping requirements for transactions involving Iran – make sure not to forget those.
The bottom line is that laws and regulations constantly evolve, and the issue of remittances brings forth two issues – not just law but also logistics – even if the law does not change, bank risk preferences can change and de facto “best practices” can and have evolved. Again, in other words, you have to keep everybody happy – not just the government but also your bank. Iran was (at least until late February when Russia invaded Ukraine) the largest sanctions program maintained by the US in its history. Accordingly transactions involving Iran should be seen for what they are – dealings in a country under comprehensive sanctions and in an adversarial relationship with the United States. Accordingly, even transactions that may seem innocuous should be afforded diligence and care to follow the law – Iran is not Japan or Switzerland, and certainly not under the eyes of US law.