Firstly, U.S. entities still need to do their due diligence in
making sure that the funds coming from Iran have not originated from an Iranian financial institution which is on OFAC’s
Specially Designated List (SDN), more commonly referred to
as “bad banks.” Secondly, U.S. entities must ensure that the
individual investors and their spouses do not appear on the
SDN list. Some projects are not mindful of this distinction, and
assume that they are authorized to accept funds from an Iranian
National, citing the expanded 2012 general license. This misstep
by a regional center can prove to be fatal to both the investor
and to the regional center. In fact, Under 50 US Code’s Sections
1705 (b) and (c), if a U.S. entity violates US economic sanctions
laws against Iran, said entity may be subject to criminal violations that carry fines of up to $1 million and prison terms of
up to 20 years, or both. Civil violations carry fines of twice the
value of the transaction, or up to $250,000, whichever is greater.
Common challenges specific to
Iranian EB-5 Money Transfers
When representing an investor or a regional center, and
Iranian funds are involved, firms should act as “gate keepers”
that fully evaluate the source and path of funds prior to allowing
investors’ funds to be transferred to a given U.S. project. This
protects both the investor and the regional center. Oftentimes
there may be name similarities on the SDN list, which need to
be addressed head on. Additionally, significant blocks of time
should be dedicated to evaluating investors’ pools of funds, and
to counsel and educate them regarding the paths of their funds
before they initiate any transfers.
As there is no direct banking relationship between the U.S. and
Iran, some investors may gravitate toward use of an old-world
method commonly referred to as the “Hawala system.” This is
where an individual in Iran pays a certain sum to a money exThe figure house, called “Sarrafi” in left-hand side) approaches a hawala broker (X)
works:
customer (A,
chan