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.

On April 2, 2015, the parameters for a Joint Comprehensive Plan of Action (JCPOA) by the P5+1 and Iran were announced to the world. This announcement has led many Iranian-Americans to believe there will be an immediate suspension or termination of U.S. sanctions on Iran.  However, this is not true. The only sanctions relief in force is the relief provided pursuant to the JPOA reached on November 24, 2013 and extended through June 30, 201. Therefore, as of today and until a JCPOA is concluded, all U.S. sanctions remain in place and will continue to be enforced by the U.S. government. The article below provides a brief summary of pertinent aspects of the current U.S. sanctions against Iran.

The Department of Treasury’s Office of Foreign Assets Control (OFAC) is the government agency responsible for administering and enforcing U.S. economic sanctions programs against countries and groups of individuals viewed as a threat to the United States. The main body of U.S. sanctions law pertaining to Iran is known as the Iranian Transactions and Sanctions Regulations, 31 C.F.R. Part 560, or ITSR (formerly known as the Iranian Transactions Regulations or ITR). Contrary to popular belief, the Iran sanctions have been in existence for decades and are not a recent legal development. What has happened, however, is that in recent years, we have seen the U.S. government enforce the sanctions regulations more aggressively than at any other point in history. For this reason, more Iranian-Americans have been more directly impacted by the regulations and therefore more Iranian-Americans have become aware of the issue.

In general, the goal of OFAC’s sanctions programs against Iran has been to prohibit “U.S. persons” (i.e. citizens and legal permanent residents) from engaging in transactions with the government of Iran, with persons in Iran, or in transactions where the benefit is realized in Iran thereby putting pressure on and crippling Iran’s economy. However, we have seen in the past years that these sanctions have also had a grave impact on Iranian-Americans living in the United States. In some instances, citizens and legal residents have inadvertently found themselves in possible violation of federal laws either because they were not aware of the law or did not understand the scope of the regulations. In other cases, individuals who seemingly acted within the law have had bank accounts closed, been stopped or harassed by various U.S. government officials upon entering the United States, been questioned by the Federal Bureau of Investigations, been arrested, been prosecuted and, in the worst of cases, even imprisoned. However, if Iranian-Americans can educate themselves on the law, they will be able to take steps to protect themselves against needless legal complications.

According to OFAC’s regulations, U.S. persons as defined above, are prohibited from engaging in any and all financial transactions and importation/exportation of goods and services from/to Iran unless OFAC has issued a license permitting the transaction.

An OFAC license allows an individual or entity to engage in an activity that would otherwise be prohibited. In general, OFAC issues two types of licenses: general and specific. A general license is when OFAC states that a certain activity is permitted for all U.S. persons. In that case, if the conduct or transaction at issue falls within the scope of the general license, then any person or entity may engage in that conduct and/or transaction and no specific license or authorization from OFAC will be necessary.

If an individual or entity wishes to engage in an activity that is not generally licensed, then that that individual or entity will need to apply for a specific license that will specifically authorize that person or entity to carry out the conduct at issue.

The following are general licenses issued by OFAC that generally allow U.S. persons to engage in certain types of transactions with Iran. Please be advised that this a is a short list focusing on the types of transactions most Iranian-Americans inquire about. The complete list is too exhaustive to be addressed one article.

Non-Commercial Personal Remittances: The receipt of non-commercial family money from Iran has always been authorized under OFAC’s regulations. However, Section 560.550 of the ITSR clarifies the procedure for such transfers. According to the current regulations, non-commercial personal remittance (such as an inheritance or gift from family members) to or from Iran is authorized if the transfer is processed by a United States depository institution or United States registered broker or dealer in securities; the transfer does not involve debiting or crediting an Iranian account; the transfer is not by, to, or through the Government of Iran.

The Sale of Certain Real Property: Section 560.543 of ITSR generally authorizes individuals who are U.S. persons to engage in transactions necessary and ordinarily incident to the sale of physical property in Iran and to transfer the proceeds to the United States. Please note that such real property must have been acquired either before the individual became a U.S. person, or it must have been inherited from persons in Iran. Authorized transactions include, but are not limited to, hiring an attorney, funds agent, and real estate broker.

General License D-1: authorizes the exportation and re-exportation of hardware and software goods/services related to personal communication to Iran. Under this general license, the exportation of the following goods/services is permitted:

  • Fee-Based Services: webhosting; internet connectivity
  • Fee-Based Software
  • List of hardware products: mobile phones; tablets; consumer grade modems; residential grade satellite connectors. For a more complete list please contact our office via our website www.yazdanyarlaw.com
  • Must be consumer grade: commercial grade services NOT permitted
  • Chatting; photo sharing; movie sharing; social networking
  • Importation of software and hardware previously exported to Iran
  • Publically available no cost services to the government of Iran

General License E: authorizes the support of certain humanitarian activities in Iran related to humanitarian projects to meet basic human needs in Iran. These activities include the following:

  • the provision of donated health-related services;
  • operation of orphanages;
  • provision of relief services related to natural disasters;
  • distribution of donated articles, such as food, clothing, and medicine, intended to be used to relieve human suffering;
  • donated training related to any of the foregoing activities;

General license E also authorizes certain activities related to non-commercial reconstruction projects in response to natural disasters in Iran for a period of up to two years following the natural disaster as well as activities related to environmental and wildlife conservation projects in Iran, involving endangered species of fauna and flora and their supporting habitats; and (hefzeh mohiteh zist)

And finally, General License E authorizes activities related to human rights and democracy building projects in Iran. Please note, however, that the transfer of funds for these permitted activities may not exceed USD$500,000 in the aggregate over a 12-month period.

Agricultural commodities and medical devices: § 560.530 of the ITSR generally authorizes the commercial sales, exportation, and reexportation of certain agricultural commodities, medicine, and medical devices meant for the use of the people of Iran (not the government). The list of permitted items may be found on OFAC’s website. You may also request a list of permitted items from our office by emailing us through our website at www.yazdanyarlaw.com

Please note that OFAC publishes a list of individuals and companies owned or controlled by, or acting for or on behalf of, targeted countries. It also lists individuals, groups, and entities, such as terrorists and narcotics traffickers designated under programs that are not country-specific. Collectively, such individuals and companies are called “Specially Designated Nationals” or “SDNs.” Their assets are blocked and U.S. persons are generally prohibited from dealing with them.  You may never deal with SDNs; not even when engaging in generally or specifically authorized conduct. You may access this link at: http://www.treasury.gov/resource-center/sanctions/SDN-List/Pages/default.aspx

It is important to realize that, even when you are dealing with transactions that are authorized by general licenses issued by OFAC, you may still have to take certain legal steps to protect yourself against unintended legal consequences. This is mainly because of the fact that there is no transparent and direct way of sending and/or receiving money or goods between Iran and the United States. As a result, from the U.S. side, it is often difficult for banks and/or government agencies to determine the exact source of funds and/or goods.

For example, as stated above, the receipt of non-commercial money from Iran is legal. Similarly, so are the sale of real property and the transfer of real property proceeds from Iran to the United States. However, as you may know, there is no way to directly send money from Iran to the United States via banks. The only way to send money is through the use of currency exchange brokers (sarrafis). When one sends money via a currency exchange broker, one gives rials to the broker in Iran and purchases “arzeh havalehi” to be wired to the U.S. from a third country. The broker then sends the funds from someone’s account from a third country bank (such as from the Emirates, Europe, China, Kuwait etc). On the U.S. side, the banks can only see money being wired to the recipient’s account from an unrelated account from a third country. The bank has no way of knowing the source of the funds and whether the transaction is permitted or if the transaction required a license. Therefore, to protect themselves, U.S. banks often take steps ranging from rejecting the funds, reporting the transaction to the government, and/or freezing the bank account. In order to avoid these problems, one must take certain legal steps to report such transactions to the appropriate department of your U.S. bank.

Similarly, if you intend to export generally licensed items to Iran, you may need to provide your bank, shipping companies as well as suppliers with certain legal documents that outline the regulations and legality of the underlying transactions. For more information on what steps to take, please contact our office.

And finally, many Iranian-Americans ask if they are allowed to receive funds from Iran by internal transfers from within the US. This means that, instead of receiving a wire from a third country, the recipient would get an internal wire transfer, check or cash deposit from someone inside the United States. In return, that person’s family in Iran would give the dollar equivalent of rials to the appropriate party in Iran. This type of transfer is not permitted and you should never receive funds from Iran in this matter.

As you know, OFAC’s regulations and the current Iran sanctions are extremely complicated. As a result, the application and impact of laws can vary widely based on the specific facts involved. As such, the information contained within this article is for general guidance on matters of interest only. Please be advised that this information should not be used as a substitute for legal counsel. For more specific information on the Iran sanctions, please seek legal counsel from an Iran sanctions specialist.

For a Persian translation of the above text, please click on the following: Iran Sanctions Article Rahavard 2015