Our office has received numerous inquiries regarding whether U.S. persons can use money that they have legally transferred to the U.S. from Iran as a down payment for a home mortgage in the U.S. The answer is YES. But U.S. persons should be aware that to avoid delays or additional fees from the lending bank it is their responsibility to prepare all documents attesting to their compliance with the Iranian Transactions and Sanctions Regulations (ITSR) prior to applying for the mortgage.
Under ITSR money from several sources can be legally transferred from Iran to the U.S. U.S. persons are permitted to transfer non-commercial family remittances, such as an inheritance or a gift from family members, and proceeds from the sale of real property in Iran, provided that they acquired the property before becoming U.S. persons or inherited it afterwards. Additionally, OFAC has licensed U.S. persons to engage in certain other transactions in Iran and with Iranian entities. For more information on permitted transfers please consult our blog.
Although funds from these sources may be transferred from Iran to the U.S., no banking relationship exists between the two countries. This means that the only authorized way to transfer funds is through a currency exchange broker in Iran (a “sarafi”). When using a currency exchange broker, one, in essence, sells the Iranian currency (rials/toman) to the broker in exchange for U.S. dollars, which the broker delivers to the United States by one of two methods. The broker can 1) wire the funds to the United States via a third country bank, or 2) find a customer or an agent to deposit the funds directly into the recipient’s account in the United States. We STRONGLY recommend that you use the first method of transfer, because the second method is VERY dangerous and has frequently embroiled unwitting recipients in illegal activities.
The complexities associated with legal transfers of money from Iran can create additional problems when recipients try to use that money in the U.S. Though U.S. persons may to use money from Iran in the U.S. – for example, to make a down payment for a home mortgage – lending banks are cautious when accepting these funds, as it is difficult for them to verify that both the money and the transfer comply with ITSR and don’t involve designated Iranian entities. Verifying this information can create delays for the borrower, causing the house falls out of escrow. Moreover, the lending bank may charge higher fees, or in some cases even reject a down payment and refuse to issue a loan. Therefore, it is very important to prepare all the documents – including translations – attesting to the money’s and the transfer’s compliance with ITSR prior to applying for a home mortgage loan. These documents include deeds of sale and transfers of title in Iran, letters granting gifts, copies of wills, or any documents related to Iranian attorneys or courts, if they were used. Additionally, be sure to obtain receipts from the currency exchange broker in Iran and verify that the funds were transferred through a valid third country bank and did not involve any designated entities or individuals.
If you are considering transferring funds from Iran and using those funds for purchasing a home in the U.S., we advising you to consult an experienced OFAC attorney, or contact our firm with any questions at (310) 780-6360 or by email via our website.