Iran Sanctions: Inheritances, Wire Transfers, and Certain Devices

Below is information about OFAC’s Iran sanctions program, specifically regarding specific licenses, inheritances, the sale of property, funds and wire transfers, exportation of certain technology. We also provide information concerning:

Inheritances and the Sale of Property in Iran

OFAC has also authorized certain activities related to inheritances and the sale of real property located in Iran.  Specifically, section 560.543 of the Iranian Transactions and Sanctions Regulations states that:

“Individuals who are U.S. persons are authorized to engage in transactions necessary and ordinarily incident to the sale of real property in Iran and to transfer the proceeds to the United States, provided that such real property was either acquired before the individual became a U.S. person, or inherited from persons in Iran. Authorized transactions include, but are not limited to, engaging the services of any persons in Iran necessary for the sale, such as an attorney, funds agent, and/or real estate broker.”

This particular authorization only applies in the limited circumstances of inheritances and selling property acquired prior to becoming a U.S. person.  Other instances of selling property or transferring funds between the U.S. and Iran are likely prohibited and requires specific license authorization from OFAC.

In no way does this authorization apply to winding down business or commercial affairs in Iran, re-investment in Iran, or the exportation of goods or technology to Iran.

Funds and Wire Transfers between the United States and Iran

As a result of the sanctions against Iran, there is no direct banking relationship between Iran and the United States.  As such, all authorized, licensed, or exempted financial transfers must be processed through a third country bank located outside of both Iran and the United States.  For example, a wire transfer originating from Iran and arising from an authorized transaction must first be wired to a third country (e.g., Turkey, U.A.E., etc.) before being transferred to the United States.

U.S. persons must also be vigilant to ensure no persons or financial institutions appearing on the SDN List are utilized to facilitate the funds transfer.  The only exception to the latter rule are Iranian banks that are designated solely pursuant to Executive Order 13599 (pdf).  Utilizing the wrong designated bank will cause a violation of the sanctions and may potentially cause the wire transfer to be blocked by a U.S. financial institution.

Under no circumstance must a person utilize the services of a hawala, or informal value transfer system, that bypasses traditional banking methods.  Nor should a person attempt to evade financial reporting requirement or falsify currency declarations related to funds transfers or the cross-border movement of money.  Doing so may not only cause a violation of OFAC sanctions, it may also subject the offending party to federal investigation for money laundering, false statements, or terrorism finance.

OFAC revised the Iran sanctions to include a provision requiring Iran-related funds transfers to be directed into a person’s account.  See Section 560.550 (authorizing certain noncommercial, personal remittances to or from Iran).

Receiving funds in an informal manner (i.e., not through a third country financial institution) may subject a person to serious civil and criminal consequences.  See Section 560.550(a).

In certain circumstances a person may physically carry funds between the United States and Iran.  See Section 560.550(d)

Authorized Exportation of Certain Computers, Mobile Devices, and Other Devices Incident to the Exchange of Personal Communications to Iran

On February 7, 2014 OFAC issued General License D-1 (click here for a pdf link).  This general license authorizes the exportation of fee-based services and EAR99 software to Iran incident to the exchange of personal communications over the internet, such as instant messaging, chat and email, social networking, sharing of photos and movies, web browsing, and blogging.  The free provision of such services and software to Iran was previously authorized by OFAC pursuant to section 560.540(a) of the Iranian Transactions and Sanctions Regulations.

Most significantly, this new general license authorizes the exportation and re-exportation of certain mobile phones, smartphones, laptops, tablets, and personal computing devices.  The qualified items must meet certain classification requirements determined by the U.S. Department of Commerce’s Bureau of Industry and Security (BIS).  If an item does not meet the particular specifications dictated by OFAC and determined by BIS, then U.S. persons are prohibited from exporting the item to Iran.

There are additional restrictions associated with General License D-1.

OFAC has determined that the authorizations of this general license do not apply if the exportation, reexportation, or provision of services, software, or hardware to Iran are carried out with knowledge or reason to know that such services, software, or hardware are intended for the Government of Iran.

Nor may any of the exports subject to General License D-1 be exported to persons whose property are blocked pursuant to another sanctions program (e.g., persons appearing on the SDN List).  One exception to the latter restriction are persons whose property and interests in property are blocked solely pursuant to Executive Order 13599.