A big part of addressing any question related to a transaction impacted by a sanctions program administered by the United States Department of the Treasury Office of Foreign Assets Control (“OFAC”) is to determine what bank(s) will be involved in the transaction. This is particularly true when dealing with common transactions with Iran. Below I address some of the key points that need to be understood when considering to engage in an authorized transaction with Iranian bank.

1. U.S. persons are prohibited from having a bank account in Iran without OFAC license authorization. Having such an account is a violation of the prohibition on transacting for Iranian-origin services. If you have an account at any Iranian bank OFAC requires that a license be obtained to close the account and transfer the funds to the United States.

2. There are a variety of banks in Iran. Some banks are blocked banks, some are designated as Government of Iran (“GOI”), and others are private banks which are not blocked or designated as GOI. Regardless, U.S. persons cannot maintain bank accounts at any of these banks, however, the characterizations of the bank come into play when examining authorized transactions or determining whether a transaction will be rejected or blocked.

3. Transactions arising from banks that are blocked are required to be blocked. Unauthorized transactions from either GOI banks or other banks are to be rejected. Keep in mind that transactions which are authorized by OFAC will generally not authorize the use of a blocked bank as part of that transaction.

Understanding the characterization of Iranian banks under U.S. sanctions programs is the first step to comprehending whether a particular transactions will be carried out legally. To determine whether a certain Iranian bank is blocked or GOI, check the OFAC Specially Designated Nationals and Blocked Persons List. If the only designation following the entry of the bank is [IRAN] then the bank is merely GOI. If there are other designations following the entry then the bank is blocked.

The author of this blog is Erich Ferrari, an attorney specializing in OFAC matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.