Written by attorney Erich Ferrari

U.S. Persons Working in Iran

Over the past six months I have had a number of inquiries asking whether or not U.S. citizens or greencard holders can work in Iran. The simple answer here is no, unless that party has a license to do so from the United States Department of the Treasury Office of Foreign Assets Control (OFAC). The Iranian Transactions Regulations (ITR) prohibit the export of services by U.S. persons to Iran, as well as, any trade transactions involving services where the benefit of the transaction is realized in Iran. As such, working in Iran as a U.S. citizen or green card holder is a violation of the ITR.

Obviously this answer proposes a series of problems for Iranian Americans who are working in Iran and transferring the funds back to the United States to their families. So what do you do if you or a family member has been working in Iran without a license? Below I have outlined three courses of action that should be followed if you or a family member are in violation of the ITR for engaging in services in Iran.

1. Submit a Voluntary Self Disclosure to OFAC. Yes, this does equate to telling on yourself, however, if OFAC finds out that you have been working in Iran without a license the penalties will be far more severe if you did not report it. As part of the determination as to what the base penalty for a violation will be OFAC's considerations include how severe or egregious the violation was and whether or not the violation was self disclosed. A self disclosed violation automatically reduces a base penalty in half. Furthermore, self disclosing a violation will put you in a more favorable light when asking for a reduction in any penalty proposed in an OFAC Pre-Penalty Notice.

2. Apply for a license to work in Iran or on behalf of an Iranian entity. Although there is a lot of skepticism surrounding OFAC's licensing program, OFAC is generally fairly liberal when it comes to licensing transactions which are not detrimental to the foreign policy interests of the United States and do not involve any Specially Designated Nationals (SDNs). However, it should be noted that if you do seek to apply for a license to work in Iran and you have already been working there for some time, then a voluntary self disclosure should be filed prior to applying for the license. The reason for this is that OFAC will become aware of your prior violation upon submission of your license application. Although they still might license you, OFAC will almost certainly become aware of the conduct and then you will not be afforded the benefit of the voluntary self disclosure. If you have already been working in Iran, then items 1 and 2 go hand in hand.

3. Consider the banks involved, as well as other regulations. Obviously as an agency within the Department of the Treasury, OFAC is very concerned with what financial institutions, both foreign and domestic, may be involved in transactions relating to Iran. Remember, that there are a number of Iranian banks which are blocked pursuant to OFAC sanctions. No dealings with those banks will be allowed and therefore no funds earned as compensation for work carried out in Iran or for an Iranian entity can be deposited in those banks, regardless of the holding of a license authorization to work in Iran. Moreover, U.S. persons cannot maintain accounts at those banks. The list of blocked Iranian banks is as follows:

  1. Bank Saderat

  2. Bank Sepah

  3. Bank Mellat

  4. Bank Melli

  5. Bank Kargoshaee

  6. Future Bank B.S.C.

  7. Export Development Bank of Iran

  8. Post Bank of Iran

  9. Europaisch-Iranische Handelsbank

  10. Ansar Bank

  11. Mehr Bank

  12. Bank Refah

Moreover, keep in mind that any compensation earned in Iran in exchange for services will need to be reported to the IRS. Finally, you may also be subject to reporting requirements for maintaining a foreign bank account if there is more than $10,000 in that foreign account or if you have more than $10,000 combined in any number of foreign bank accounts.

Being employed in Iran is not impossible, but there are a number of difficulties that could arise. Before engaging in any performance of services in Iran make sure that you are licensed by OFAC. Moreover, be aware of the consequences of any past work you may have carried out in Iran and any involvement you may have had with the aforementioned blocked Iranian banks.

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