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Understanding Iranian OFAC license-II

Posted by: Zaher Fallahi
Posted On: Mar 07, 2017

Understanding Iranian OFAC license-II

 

What is an OFAC license?

A license is an OFAC authorization to engage in an otherwise prohibited transaction under the law. There are two types of licenses: (I) general license and (II) specific license.

 

I- OFAC General License

An OFAC general license authorizes particular types of transactions for a class of persons without requiring an OFAC license. Some examples are:

 

1) Exportation of US medicine to Iran;

2) Exportation of most medical devices to Iran (some may require specific license);

3) Transferring gift money from Iran;

4) Transferring inheritance money from Iran;

5) Sale of inherited property in Iran;

6) Sale of property acquired prior to being a US person;

7) Importation of Persian rugs to the US; and,

8) Importation of Iranian foodstuffs to the US.

 

Notwithstanding the above general license provision, consultation with an Iranian OFAC attorney is recommended.

 

Gift and Inheritance

Inheritance is a property received from a decedent’s estate. If your folks live in the US, property you receive from them in Iran is not inheritance, because they are still alive and the property they give you is considered “gift“. Gift is something of value given to you without consideration. Although, there are exceptions to the rule, generally gifts or inheritances are received from a close relative or loved one, not from a stranger or neighbor.

 

Note: Receipt of gift property or inherited property in Iran may have different tax consequences for the donee or recipient, and tax attorney consultation is required.

 

II- OFAC Specific License

An OFAC specific license is a written document, authorizing a particular person to engage in a particular transaction pursuant to a written license request, generally for two years. There is no OFAC License application to be filed with OFAC.

 

Who needs an OFAC License?

Transactions not covered under the OFAC General License, not excepted by law, may require an OFAC specific license. The following are some transactions in Iran that require OFAC Specific License:

 

1) Selling property acquired after becoming a US person;

2) Selling property constructed or developed after becoming a US person;

3) Selling income producing property;

4) Selling other commercial property;

5) Winding down a business;

6) Closing a bank account (except for new comers within a few months of obtaining green card);

7) Purchasing property in Iran;

8) Hiring legal counsel or agent to litigate a case;

9) Conducting your own business (self-employment);

10) Employment, exceptions; UN related (World Bank, International Monetary Fund; etc.);

11) Items 2,3,4,5, and 6, may require OFAC Voluntary Self Disclosure (VSD); and,

12) Sale of civilian air craft.

 

Documentation of Property Received in Iran

Because of their tax consequences, it is important to document classification of the following assets acquired in Iran:

 

1) Gift;

2) Inheritance; and,

3) Property owned prior to becoming a US person.

 

Because the transfer of money from Iran could be of special interest to OFAC, Financial Crimes Enforcement Network (FinCen), IRS Criminal Investigation Division (CID), or any other government authorities, seeking legal advice from knowledgeable attorneys regarding documentation of character of your money is crucial.

 

The Bank Secrecy Act (BSA), also known as the Currency and Foreign Transactions Reporting Act, is a legislation passed by the United States Congress in1970 that requires US financial institutions to collaborate with the US government in cases of suspected money laundering and fraud. Therefore, the US banks and financial institutions are cautious about their own security, and strive to prevent any potentially illegal funds being transferred through them. This section of the bank must issue a “Suspicious Activity Report (SAR)” when they discern a suspicion. From time to time, these financial institutions reject the incoming funds and return them to the country where they came from.

 

To be continued………………III

 

Zaher Fallahi, Iranian OFAC Attorney, CPA, advises Iranian-American clients on the legal and tax implication of the Iranian OFAC Regulations, and may be reached at [email protected], (310) 719-1040 or (714) 546-4272.