Editor’s Note: Much has changed since this article was originally – written in May 2011. Please refer to the January 2, 2017 blog on our sister blog USSanctions.com titled OFAC Sanctions and Personal Affairs in Iran.
I received a call from a friend’s relative today in Los Angeles who was experiencing some difficulty receiving wired funds from her husband in Iran. She asked me if she needed an OFAC (Office of Foreign Assets Control) license. While I was amazed that a non-lawyer, fairly recent arrival to the U.S. was even familiar with OFAC (much less so the case among the Iranian-American community when I started practicing this area of law roughly 6 years ago), her question highlighted to me the fact that people are still in the dark about funds transfer. There seems to be quite a bit of inaccurate information going around – some by self-styled “experts.” Although some experienced lawyers have posted some valuable information online, it seems a lot of what is making the rounds is not entirely correct.
You generally do not need an OFAC license to transfer personal funds from Iran to the United States if it is for family members or yourself.
Let’s say you have a personal bank account in Iran in a non-sanctioned bank in Iran (e.g., Parsian, Saman, Karafarin, etc.) that you have had since before you obtained your U.S. Permanent Residency and want to bring the money here to the U.S. for personal use, such as paying your children’s tuition, or buying a family home, etc.
Generally speaking, this does not need a license. Although as a U.S. person you certainly need a license to liquidate property and/or engage in transactions in Iran (for example, to sell a house, factory, plot of land, etc.) you generally do not need a license to transfer money sitting in the bank (unless it happens to be in a sanctioned bank like Bank Saderat or Melli) to yourself or your children, relatives, etc. for personal use. Also, the transfer cannot be related Note that the involvement of even a single entity on the Specially Designated Nationals (SDN) list (such as Bank Saderat, Bank Tejarat, Bank Sepah, etc.) in the transaction can cause your money to become blocked by the bank, and petitioning for the release of blocked funds is no easy task. Also you should still submit an affidavit to your bank in the U.S. before the wire comes in (more on that later).
You can submit a license application to OFAC requesting a license to transfer the funds to the United States, but chances are that OFAC will respond by telling you that such transfer does not need a license provided you are in compliance with all applicable laws. In other words, OFAC will not issue a license, but ask that you make sure that the transfer is lawful – for example, no SDNs are involved in the transfer, and the funds must constitute a non-commercial family remittance, etc.
Note the above generally applies to situations in which a U.S. person is bringing his/her own funds to the U.S., or if a person in the U.S. is receiving family remittances from somebody in Iran. It does not cover every situation involving the transfer of funds, including but not limited to, for example, a non-U.S. person in Iran wants to invest or deposit money in the United States for safe keeping – one should always seek written guidance from OFAC on issues like this.
Make sure to file an affidavit with your U.S. bank when expecting a funds transfer into your U.S. account.
In addition to making sure the money does not pass through SDNs and comes into the U.S. through a non-sanctioned, non-Iranian, non-U.S. bank in a third country (such as the UAE or Turkey), you should also make sure the money enters the U.S. through the formal financial system (in other words, not through a personal havaleh) and that you file an affidavit with your bank in the U.S. before the wire comes in, letting the bank know that this transfer is legitimate. This generally takes the form of a written statement that you (as the beneficiary) will sign. It should be well-written, accurate, and thorough, covering all the regulatory aspects. The affidavit is of course a sworn statement, and it goes without saying that you should not lie!
Do not forget, however, that if you need to deal (for example, sell a property) in Iran to bring the proceeds , you must apply for a specific license from OFAC as this requires selling and retaining services from Iran, which are prohibited by the ITR absent authorization. This specific license must be issued before you begin doing anything in Iran involving hiring services (such as a real estate broker, lawyer, translator in Iran) or selling the property. According to one OFAC Licensing Officer I recently spoke with, the time window for approvals now is between 60-90 days, so this is not something that can be rushed. If you want to sell your property in four months, you should probably apply for the license very soon. As OFAC itself notes, having an application pending does not excuse you from compliance. In other words, do not engage in the tasks you requested approval for until you have the license in hand.
Bottom line: Much like most areas of regulatory law, the ITR and other regulations governing trade and transactions with Iran are exceptionally technical and nuanced. Therefore, one should take great care to be in compliance. Naturally, this requires obtaining the best advice possible. You should never guess or assume in this area of law – and always seek the advice of an attorney who is experienced in this area of law if you ever have any questions. It goes without saying that U.S. sanctions laws are a very serious matter and should not be taken lightly.