Iran Sanctions: Wiring Funds

When doing business on an international scale, it is important that your company is able to wire money and receive money that is wired to you. If an intermediary bank has returned money that was wired to your company, it may be because they suspect a sanctions-related issue. A lawyer could be an invaluable asset in resolving this issue. If you want to know more about Iran sanctions and how these sanctions could impact the wiring of funds, speak with a skilled OFAC attorney that has a working knowledge of the Iran sanctions program.

• What To Do When Wire Transfer Funds Are Being Held

Why an Intermediary Bank Would Return Funds Wired to a Company

An intermediary bank may have returned funds wired to a person’s company because it suspected an Iran sanctions-related issue with the wire transfer remitted to that entity in the United States or abroad. This includes names of persons or entities involved in the transaction that either may be suspected to be on the SDN list or are similar to a listing on the SDN list. It may be that the underlying transaction is related to a sanctioned country or sanctioned person. At times, banks may return the funds to the remitting bank when they are unsure or when the appropriate sanctions regime demands that the funds be returned to the remitter.

Sanctions Compliance Issues

A sanctions compliance issue is when a bank may be facilitating a transaction in violation of the sanctions regulations or laws. Since banks have their own internal compliance department to review every transaction, by a person or by a computer program, they will do a thorough review of the transaction before releasing the funds to the receiving bank if they detect suspicious activity or suspicious names of involved parties.

An example of a non-direct interaction that would warrant a sanctions compliance issue is when a bank requests documentation about the transfer and they notice that a third person or entity is involved in a transaction or has an interest in that transaction. The bank could find reason to return the funds to the remitter. In certain cases, the funds are not returned when they are remitted to a US intermediary bank or a receiving bank. In those cases, the funds may be frozen, meaning that they are put into an interest-bearing account and cannot be released until OFAC provides a license or authorization to release the funds.

How an Attorney Could Help if Funds are Returned

If a person’s funds and wire transfer are returned without explanation, or if the bank informs them that the return is due to OFAC or a sanctions compliance, it would be advisable to consult an OFAC sanctions attorney to understand the underlying issues regarding sanctions compliance issues or sanctions liability with the transaction. An attorney with experience handling situations involving Iran sanctions, may also provide advice about how best to proceed so that this issue does not continue to arise and cause problems for the person’s business transactions in the future. A sanctions attorney may do an internal audit or review of the returned transactions or international wire transfers and, if they realize that the transaction has an underlying sanctions compliance issue, then they will advise the person on that issue. If such an issue is not identified, they could communicate with the person’s intermediary bank or foreign US banks in order to understand why the funds have been returned.

Can Attorneys Represent Companies Santioned by the United States?

Contingent upon the scope and form of legal services and the purpose of the legal services, it is likely that an attorney is able to represent a person or entity in a sanctioned country or a person or entity that has personal or commercial ties to a sanctioned country. Most sanctions regimes or regulations have licenses or authorizations for attorneys to provide legal services to persons or entities in sanctioned countries or regions so that they have an understanding of US sanctions regulations. The legal services provided to said persons and entities may not facilitate a violation of sanctions regimes or regulations. This means that the attorney cannot provide legal services to a person or entity in a sanctioned country, or a person or entity dealing with a person or entity in a sanctioned country, to facilitate a violation of US sanctions law. Instead, legal advice should be provided so that foreign persons or entities can understand their legal obligations under the US government’s laws. It would be advisable to consult an OFAC sanctions attorney if there are any questions about the legal obligations of a US attorney in consulting or advising a foreign person or entity engaging in business with a sanctioned country, or a national or resident of a sanctioned country.

The Process for Lawyers to Comply with U.S. Sanctions

OFAC has general licenses in place so that lawyers do not need to obtain authorization from OFAC to engage in a transaction. If the activity falls outside of those general licenses, the attorney may require a specific license engagement transaction. Many times, these sanction regimes do not generally authorize or license the representation of persons or entities on OFAC’s SDN (or specially designated nationals) list. With a license, an attorney is able to obtain payment to represent persons or entities in a sanctioned country. An attorney is usually permitted to provide legal services to an SDN person or entity, but a specific license is necessary to obtain payments from the SDN person or entity for that legal representation or services. If an individual wants to learn more about Iran sanctions and how they could impact the wiring of funds, they should consult an attorney who could help.