October 8, 2010

NIAC Works to Prevent Banking Sanctions from Hitting Innocent Iranian Americans

U.S. Department of the Treasury

US sanctions against Iran were never intended to divide Americans from their family in Iran, or Iranians from their children studying in America. However, as efforts to isolate Iran’s financial industry from the international community escalate, Iranians and Iranian Americans are increasingly running into new banking difficulties due to new US financial sanctions. While sending family remittances through bank transfers have been and remain perfectly legal under US law, as long as the transfers don’t involve individuals or banks on a U.S. Government blacklist or support a commercial activity*, new hurdles are preventing family remittances from being sent between the United States and Iran.

In response, NIAC is taking action with the United States Treasury to protect the practice of sending legal family remittances to and from Iran. NIAC has issued a formal request to the Treasury agency responsible for administering sanctions, the Office of Foreign Asset Controls (OFAC), to issue guidance on the different legal means by which individuals may send family remittances to and from Iran.

An interpretive guidance issued by OFAC would help prevent banks from refusing to conduct legal family remittances by removing legal ambiguities surrounding the issue. A guidance would also layout explicitly what is and is not permitted when family members send money to and from Iran and help prevent innocent Iranians and Iranian Americans from inadvertently running afoul of US sanctions laws, which can bring severe penalties and even prison time.

NIAC has emphasized the importance of clarifying these issues for banks and individuals at the highest levels of the government, including in a constructive meeting with the top Treasury official in charge of enforcing Iran sanctions, Undersecretary Stuart Levey.

“Growing numbers of Iranian Americans have come to us with examples of banks refusing to process family remittances to Iran that were conducted without a problem before the new sanctions were passed,” said David Elliott, NIAC Assistant Policy Director. “We also hear from Iranian students at American universities who are becoming increasingly cut off from financial support of their parents due to ambiguities in new sanctions.”

NIAC has worked with government agencies to seek clarity in individual cases where banks refused to process transactions for Iranian Americans and Iranians. These cases were resolved, and the transactions went forward, but broader action is required to ensure banks do not continue denying legitimate, legal transactions for Iranian Americans and Iranains because of sanctions ambiguities.

Because longstanding US sanctions prevent direct transactions between US and Iranian banks, it has always been difficult to find banks in third countries to facilitate transactions between the two countries. But given the increasing difficulty of conducting legal transfers and the lack of information about what types of transfers are illegal, some Iranians have resorted to using the informal money transfer systems known as havaleh (or hawala). However, the U.S. Treasury has stated that haveleh is not an appropriate method of transferring money to and from Iran, and several court cases have shown just how severe the repercussions for doing so can be.

The recent case of Iranian immigrant Reza Banki highlighted the dangers of such transactions for Iranian Americans. Banki was found to be in violation of Iran sanctions because he took part in haveleh transactions and was convicted despite the judge’s acknowledgement that Banki did not support terrorism or funnel money to Iran’s government. Even with support from Nobel Laureate Shirin Ebadi and the former director of OFAC, Banki was sentenced to 2.5 years in prison for conducting what he thought was a legal financial transaction.

“No one should be sent to jail because they didn’t understand an unclear policy,” said Elliott. “By providing clear guidance about family remittances, OFAC ensure innocent Americans have the information they need to stay on the right side of the law.”

NIAC is working to addressing the legal ambiguity and the many questions within the Iranian-American community about what options are available to legally transfer money between family in Iran and the US. According to those affected, these payments support dependents living and studying in the US and provide needed humanitarian assistance to families back in Iran. Without guidance from OFAC, many are afraid that their lifeline will be cut from them.


* The information in this article is for educational purposes only and should not be considered legal advice. If you have questions regarding the legality of a specific transfer, please contact OFAC or consult with a lawyer.




Back to top