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The Sending Money to Those in Iran: Check with OFAC First

May 7, 2012 We get questions all the time about individuals seeking to transfer funds to Iran to help out family members. Many of those inquiring into how one legally transfers money to Iran have done some reading on the Iranian Transactions Regulations (ITR) and the other sanctions programs administered by the United States Department of the Treasury's Office of Foreign Assets Control (OFAC) and believe that their transactions fall under a general license authorization for noncommercial family remittances and are therefore authorized under 31 C.F.R. 560.516(a)(2). Well, sometimes they are right and sometimes they are wrong. Here are some considerations one should think about before proceeding with a remittance to Iran which they believe is authorized under 31 C.F.R. 560.516(a)(2). 1. Is it really non-commercial? Those seeking to transfer funds to or from Iran under the general license authority found at 31 C.F.R. 560.516(a)(2) should consider whether or not the transaction is truly non-commercial. For example, was the money derived from some type of sale? Is it being sent to an Iranian bank account held by a U.S. person? The key is to consider whether or not there is some prohibited activity being carried out in relation to the funds. 2. What does your bank say about it? The hard truth is that sometimes U.S. depository institutions are even more strict than OFAC when it comes to dealings with Iran. For example, some U.S. banks have a zero tolerance policy in regards to transactions with some nexus to Iran. This means they will not process a transaction even if it is authorized pursuant to a general or specific license issued from OFAC. As such, it makes sense to engage with your bank to determine what their stance will be on transferring funds to Iran under 31 C.F.R. 560.516(a)(2) before attempting to do so. 3. How will the funds be transferred? If you answered by having cash exchanged in Iran upon placing cash into an account here in the U.S., you are definitely in the wrong. This is what the government commonly considers a hawala transfer. Remember all authorized transactions must utilize funds transfers that are made through a third country foreign financial institution not on the OFAC SDN List. As such, funds must be wired out of the U.S. depository institution in order to meet the requirements of this general license. The general license found at 31 C.F.R. 560.516(a)(2) is a great tool for those seeking to give gifts to or help out family members in Iran. However, the requirements must be followed and it is wise not to stretch the interpretation of the general license in order to attempt a transaction which may not be authorized under that general license. As always with OFAC be cautious and obtain interpretative guidance when necessary.

The author of this article is Erich Ferrari, an attorney specializing in OFAC matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.