Most Iranian-Americans are aware of the fact that certain types of fund transfers relating to Iran are permitted under the current Iran sanctions as administered by the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC).
For example, per Section 560.550 of the Iranian Transactions and Sanctions Regulations (the ITSR), the receipt of non-commercial family money from Iran is currently permitted. Similarly, as outlined in Section 560.543 of ITSR, the sale of real property in Iran and transfer of real property proceeds from Iran to the United States is permitted under the current regulations, provided that the real property at issue was acquired before an individual became a U.S. person or was inherited from persons in Iran after an individual became a U.S. person.
While these transactions are indeed allowed, the fact that there is no banking relationship between Iran and the U.S. still creates an issue that must be addressed. As a result, the only acceptable way to transfer funds from Iran to the U.S. is by using the services of a currency exchange broker in Iran (often referred to as a “sarafi”). When using the services of a money exchange broker, one is in essence selling the Iranian currency (rials/toman) to the broker in Iran and purchasing U.S. dollars to be delivered in the United States. Currency exchange brokers use one of two methods to deliver funds: 1) the broker can wire the funds to the United States via a third country bank or 2) the broker can find a customer or an agent to deposit the funds directly into the recipient’s account in the United States via cash, check, money order or bank transfer. However, this second method of transfer is VERY dangerous in that the recipient does not know who is depositing the funds and whether that person is engaging in any illegal activity.
Furthermore, this type of internal wire transfer has recently led to many cases of fraud resulting in the recipient’s funds being seized and their accounts being closed. In some cases, the recipient has even been investigated by the bank at issue or by various law enforcement agencies.
Our office has seen an increase in this type of investigation in this past year. From what we can deduce, the broker in Iran often works with another third-party broker who has agents in the United States. That agent or representative is supposed to deposit the funds into the recipient’s account in the United States. Instead of doing so however, the agent calls unsuspecting people in the United States posing as an IRS agent and proceeds to tell the caller that he or she is delinquent in payments to the government and that, if they don’t immediately pay the amount due, they will be arrested. They then provide your account number for the deposit. The agent placing the call is often very convincing and the receiver of the call sincerely believes that they are in trouble. As a result, they immediately go into the bank and make a cash, check or money order deposit into the recipient’s account.
In this scheme, the recipient thinks that the deposit is related to the funds coming from Iran and the third-party broker and/or agent ends up taking all of the money (instead of a small percentage that they are entitled to). Resulting in some poor person being defrauded out of their hard earned money. Eventually the defrauded individual realizes that this was a scam and contacts the bank/or local authorities, which then leads to an investigation of the recipient’s account. This investigation often starts at the bank level and then escalates to involve local and in some cases federal law enforcement agencies.
Given that the funds were deposited into the recipient’s account, the recipient appears to be a part of the fraud ring and becomes a prime suspect. Therefore, his or her account(s) will often be frozen or blocked during the duration of the investigation.
In most cases, our office has been able to successfully show that our clients were innocent and that they, too, were a victim of fraud. However, depending how far the matter escalates, this process could take months or even years and it may result in the recipient losing a portion of the funds.
You can protect yourself against these types of money transmittal problems by educating yourself on the legal and proper channels of transferring funds from Iran to the U.S. Fund transfers from Iran should be deposited into a recipient’s account via a wire transfer from a third country and NEVER from inside the United States. Also, before receiving the funds, the recipient should ensure that he or she has filed the proper compliance documents with his or her bank in the United States. For more information regarding this process, please contact our firm at 310-780-6360 or by email via our website www.yazdanyarlaw.com.