If a U.S. person is interested in moving to Iran on a permanent basis, can that U.S. person open a bank account there without falling afoul of U.S. sanctions? Surprisingly, the answer is “perhaps, yes,” according to recent interpretive guidance provided by the United States Department of the Treasury’s Office of Foreign Assets Control (OFAC).
Under the Iranian Transactions and Sanctions Regulations (“ITSR”), 31 C.F.R. Part 560, U.S. persons are prohibited from engaging in most transactions with or involving Iran. (For purposes of the ITSR, U.S. persons are defined to include: U.S. citizens and permanent resident aliens; any person in the United States; or an entity organized under the laws of the United States or any jurisdiction therein, including foreign branches.) This includes a prohibition on the export, re-export, sale, or supply of any goods, technology, or services from the United States or by a U.S. person, wherever located. Moreover, U.S. persons are barred from engaging in any transaction or dealing in or related to goods or services of Iranian-origin or owned or controlled by the Government of Iran, as well as in services for export, re-export, sale, or supply to Iran or the Government of Iran. It is clear that these prohibitions would bar a U.S. person from opening and maintaining a bank account in Iran, as such would constitute a prohibited export to and trade-related dealing related to Iran.
However, the ITSR does enumerate certain exceptions to these broad and expansive prohibitions. For purposes relevant herein, 31 C.F.R. § 560.552 authorizes U.S. persons “to engage in transactions in Iran ordinarily incident to the routine and necessary maintenance and other personal living expenses of U.S. citizens who reside on a permanent basis in Iran.” However, 31 C.F.R. § 560.552(b) excludes from this authorization “transactions related to employment by U.S. persons in Iran.” In other words, while the ITSR permits U.S. citizens resident in Iran to engage in transactions incident to personal living expenses (e.g., the purchase of goods and services in Iran ordinarily incident to residing in Iran), the ITSR does not allow such U.S. persons to engage in employment (i.e., to work) in Iran.
It has been an enduring question as to what kinds of transactions OFAC regards as “ordinarily incident to the routine and necessary maintenance and other personal living expenses of U.S. citizens who reside on a permanent basis in Iran.” If finding employment in Iran to sustain one’s livelihood is not a transaction “ordinarily incident to the routine and necessary maintenance” of residence in Iran, could a U.S. person open and maintain a bank account at an Iranian financial institution? Perhaps, but absent affirmative guidance from OFAC, could one state with confidence this to be the case…? So often, OFAC tends to play coy with specific guidance relating to the scope of its prohibitions and license exceptions.
Recent interpretive guidance from OFAC provides the necessary confidence, however. In this guidance, OFAC effectively states that U.S. persons intending to reside in Iran on a permanent basis can open and maintain a bank account at an Iranian financial institution not otherwise designated for sanctions than pursuant to Executive Order 13599. In OFAC’s view, the opening and maintenance of a bank account in Iran for such purposes is a transaction “ordinarily incident to the routine and necessary maintenance and other personal living expenses of U.S. citizens who reside in Iran on a permanent basis.” Good to know, all things considered.
Considering OFAC’s reluctance to permit U.S. persons engaged in the lawful sale of property in Iran to deposit the proceeds from such sale in an account located in an Iranian bank – a transaction that is outside the scope of current license authorizations and that OFAC has consistently denied when prompted by a license request – it is somewhat surprising to discover that OFAC views the opening and maintenance of a bank account in Iran to fall within the scope of 31 C.F.R. § 560.552. Not that OFAC’s view on this matter is inappropriate. It is difficult to imagine what U.S. persons intending to reside in Iran on a permanent basis would do if not able to deposit funds in a bank account in Iran. (Mattress-stuffing? Is that ok?) I think it is clear that OFAC came to the right answer on this one.