The following is an excerpt from a recent interview in which OFAC Sanctions Attorney discusses family remittances and how they relate to the Office of Foreign Assets Control. If you are concerned that sending money to your loved ones could result in sanctions violations, contact an OFAC attorney at our Washington, DC law office to find out how best to proceed.
What are family remittances?
Family remittances are non-commercial monetary transfers between family members in the United States and family members in a sanctioned country. It is not uncommon in a lot of cultures to have family members go to the United States to work and then send money home. If a person is in the U.S. and wants to send money to their family in Iran, that would be a family remittance. A family remittance has to be processed in the correct manner to be considered lawful. In certain circumstances, the person might need a license. In Iran, for example, it is not prohibited. There is a general license authorizing family remittances, but the family remittance has to be structured in a way that does not violate any other parts of the law. That usually entails sending the money first to a third country and then from a third country to the ultimate beneficiary of the funds.
What are some best practices for sending money to family in a sanctioned country?
First, the person needs to investigate the actual sanctions regulations to determine whether the transaction is permitted pursuant to a general license or if it will need a specific license. Once that has been determined, they need to make sure that they structure the transaction in a way that does not utilize blocked persons (i.e., SDNs). A common error in family remittances involving Iran is the use of Iranian banks that appear on the SDN list for reasons such as supporting terrorism or the proliferation of weapons of mass destruction.
Even though people are normally allowed to send money between family members, if their family member is using a bank that is designated pursuant to one of those other sanctions programs, the transaction falls outside of the authorization contained in the general license. Thus carrying out the transfer of the funds would be a violation.
Lastly, the person should make sure that the money is being transferred through a third country and that the transactions are being processed through reputable financial institutions. It is advisable to avoid the use of hawalas, or informal value transfer systems. For more information on hawalas, refer to the following U.S. Treasury Department report (pdf).
Disclaimer: Blog posts should not be relied upon as legal advice and are only provided for informational purposes. Information contained in blog posts may also become outdated with the passage of time as laws change and U.S. foreign policy and national security objectives evolve.