By Farhad R. Alavi
Iran Sanctions (U.S. Department of the Treasury)
economic and political instability in Iran is causing many Iranian-Americans to
sell properties in Iran they did not sell before moving to the United States, be
it offices, farmland, factories, or even former family homes. A number of
others are going through Iranian courts to reclaim properties that were seized
by the government after the revolution. What most Iranian-Americans
unfortunately do not know is that U.S. laws require U.S. persons (as defined by
the applicable regulations) to obtain a license from the Treasury Department to
engage in transactions related to the sale of their personal property in Iran.
Many of them also do not know that they cannot invest in Iran, or that the
definition for investment is broader than what they may think. What's more, the
rules do not stop there.
What most Iranian-Americans unfortunately do not know is
that U.S. laws require U.S. persons (as defined by the applicable
regulations) to obtain a license from the Treasury Department to engage
in transactions related to the sale of their personal property in Iran.
U.S. sanctions against Iran are very strict and
comprehensive. Most day to day activities are subject to the regulation of the
U.S. Treasury Department's Office of Foreign Assets Control (OFAC), which is
tasked with enforcing the Iranian Transactions Regulations (ITR), a body of
regulations governing the trade in goods, services, and technology between the
United States and Iran. The ITR is very comprehensive - it addresses
commercial, personal, charitable, and other activities.
The sanctions apply to generally all "U.S.
Persons." You are a U.S. person if you are a U.S. citizen or Permanent Resident
(Green Card holder), even if you do not live in the United States. You are also
a U.S. person if you are merely physically in the United States. Therefore,
irrespective of your Iranian or possibly any third country citizenship (e.g.,
Canada), you are still a U.S. person if you meet the above definition.
To illustrate the breadth of U.S. sanctions,
let's first test your basic knowledge of U.S. sanctions on Iran.
True or False?
1. Iranian-Americans do not need a license to sell properties or hire a
lawyer to reclaim confiscated properties in Iran.
U.S. laws prohibit U.S. persons from engaging in certain transactions such as
selling or brokering in Iran unless they are licensed. As an example, a U.S.
citizen traveling to Iran to sell his or her house should first obtain a license
from OFAC. Otherwise, he or she will violate U.S. laws not only by selling the
home, but also by hiring a lawyer or realtor in Iran to help him or her in the
sale of the property. This is also applicable for the sale of household
appliances and other property (e.g., cars, jewelry, home furnishings,
etc.). The same law also applies if one tries to reclaim property seized by the
Iranian government. Hiring a lawyer to pursue claims in Iranian courts requires
a license, as one is effectively "importing" an Iranian service (the services of
are allowed to buy real estate in Iran for personal use.
MOST PROBABLY FALSE.
The law is a bit unclear on this. What is clear is that U.S. sanctions on
Iran prohibit new investment in Iran by U.S. persons. Most "purchases" are
also prohibited. OFAC recently announced that it fined an individual
$30,000 for investing in a family catering business in Iran. The facts were
not provided in detail, but it was noteworthy that OFAC fined a relatively
high amount for behavior it considered "non-egregious!" If the home is for
personal use (e.g., a vacation home for you and your family), OFAC
could potentially authorize such a transaction on the grounds that it may
not be considered "investment," but it is absolutely imperative not to do
anything until you have a written confirmation from OFAC (e.g., a
license or a letter).
Buying investment property
is certainly a violation of the ITR.
Iranian-Americans can deposit money in banks in Iran.
For the same reason as above, opening a bank account in Iran and depositing
funds in it can constitute "new investment." Therefore, as attractive as
offers of high interest or foreign currency accounts in Iranian banks may
be, making such an investment is completely against U.S. laws absent prior
written authorization from OFAC, even if the money is deposited in a private
through individuals is a great way to transfer money between the United States
The U.S. government is increasingly cracking down on this way of informal
money transfer, in part because it opens the door to money laundering and
the financing of illicit activities. OFAC encourages ordinary citizens
sending personal funds to send such money from private, non-sanctioned banks
in Iran to certain non-Iranian, non-U.S. banks in third countries that will
send the funds on to the United States. People have been criminally charged
for acting as Havalehdars, and beneficiaries have been questioned as
well. Do not do it
are the penalties?
OFAC has certain
discretion in what actions it takes against parties violating its
regulations on Iran. The fines for violating these regulations can be
hefty. Broadly speaking, OFAC's civil penalties for violations of the ITR
can reach up to the greater of $250,000 or twice the value of
the transaction, depending on the facts. Furthermore, some cases can be
referred for criminal investigations, depending on a number of factors.
OFAC's civil penalties for violations of the ITR can reach up to the
greater of $250,000 or twice the value of the transactions,
depending on the facts.
I'm an Iranian Citizen. What does U.S. law have to do with this?
Again, if you meet the ITR's
definition of "U.S. Person," it is irrelevant whether you hold an Iranian or any
other passport. You are a U.S. person under the applicable regulations.
3. I need to sell my property in Iran or get a
lawyer in Iran to reclaim my property. What should I do?
Very simple -
apply for an OFAC license. After receiving the license, it will be advisable to
submit an affidavit to your bank declaring the purpose of the transfer - the
last thing you want is for the bank to mistakenly reject an incoming wire - your
money will be returned to the sender and you may receive an Administrative
Subpoena from OFAC. You must also take certain precautions, including ensuring
that the money does not pass through any sanctioned entities (e.g., Bank
Saderat, Bank Melli, and others). OFAC generally maintains a favorable
licensing policy on these activities and it usually does not take much time to
receive a license, so make sure you take the legal route.
4. OK, so it appears that I may have violated the law. What now?
sanctions regime currently in place against Iran is much broader than the topics
discussed in this short article. There are many other activities which fall
under the scope of U.S. laws, such as restrictions on trade with Iran,
charitable giving to Iran, as well as export control laws regulating the
movement of certain goods and know-how to Iran (and certain Iranians with
respect to the latter).
should consult a lawyer who is experienced in this area. He or she can
determine if a violation has occurred. If indeed a violation did take
place, one can sometimes (depending on the circumstances) mitigate any
penalties by making what is called a Voluntary Self-Disclosure. OFAC will
examine your Voluntary Self Disclosure and may ask for more information. It
will consequently make a determination as to the type of enforcement action
contact Farhad R. Alavi at +1 (202) 686-4859 or
should you have any questions.
The Law Office of Farhad R. Alavi, PLLC
This document and its content are solely intended for informational purposes and
should not be interpreted as constituting legal advice. You should consult with
legal counsel with regard to all topics and issues discussed herein.
Office of Farhad R. Alavi, PLLC
Wisconsin Avenue, NW, Suite 440, Washington, DC 20015
Tel: +1 (202) 686-4859 / Fax: +1 (202) 686-2877 /
... Payvand News - 12/31/10 ... --