July 22, 2015 / 5:19 AM / in 2 years

Iran deal offers faint hope for Iranian-American banking woes

NEW YORK (Reuters) - The Iran nuclear pact could eventually help thousands of Iranian-Americans who have struggled with red tape, shuttered accounts, and even criminal prosecution to conduct bank transactions, although relief seems unlikely anytime soon.

Iranian-American Mahmoud Reza Banki is shown at UCLA Anderson School of Management where he earned an MBA in Los Angeles, California in this 2013 handout photo. REUTERS/John Mar/Handout via Reuters

As Washington tightened sanctions on nearly all trade with Iran in recent years, international banking transfers that most Americans take for granted have become increasingly fraught for the roughly 500,000 U.S.-based Iranian-Americans.

Iranian-Americans and their families seeking to send and receive remittances have been hard hit, from students at U.S. universities in need of tuition money from home to Iranian-Americans trying to settle estates of deceased parents in Iran.

”My money is there, but I cannot use it here,” said Reza Hedayati, a New York radiologist who has not seen a cent of the proceeds from the recent sale of a family home back in Iran. Hedayati, 70, who moved to the United States in 1973, has yet to figure out how to get the money out of Iran.

The historic deal signed last week by Iran and six major powers offers a glimmer of hope for people like Hedayati.

It will eventually lift some restrictions on dealing with several major Iranian banks.

The U.S. trade ban still makes direct transfers between U.S. and Iranian banks impossible, but the change could open ways for European or Gulf banks to act as intermediaries for money transfers between family members in the United States and Iran.

A carve-out to the U.S. trade ban with Iran allows for family remittances, but those funds have to be routed through third-country financial entities that deal with Iran.

With a range of non-nuclear U.S. sanctions on Iran staying in place, major banks remain highly wary of dealing with Iranian institutions. The U.S. Treasury Department is not expected to relax its designation of the entire Iranian financial sector as a ”primary money laundering concern.”

About a dozen mostly European banks, including HSBC Holdings Plc and BNP Paribas, have paid nearly $14 billion in U.S. penalties for sanctions-busting since 2009.

Nonetheless, some foreign financial institutions will eventually want to test the waters, said Eytan J. Fisch, former assistant policy director for the U.S. Treasury’s Office of Foreign Assets Control (OFAC), which oversees the sanctions.

“It will be kind of a slow building process but I do think it will happen,” said Fisch, now a lawyer for Skadden, Arps, Slate, Meagher & Flom LLP in Washington who advises financial institutions.

ENSNARED

Some transactions, such as selling property in Iran, require a permit from OFAC which also typically authorizes the seller to transfer the proceeds. Lawyers say that the process to get the sale permit can take six months or longer and legal fees can run from $2,000 to $12,000.

“A lot of these transactions which are legally possible are logistically challenging,” said Farhad Alavi, a lawyer in Washington who helps Iranian-Americans facilitate remittances to and from Iran.

OFAC issues licenses “on a case-by-case basis consistent with foreign policy and national security,” the Treasury Department said. Timing depends on factors such as the activities and sanctions involved. OFAC has taken steps to streamline the process, the Treasury Department said.

Iranian-Americans more often have to turn to unofficial currency exchangers in countries such as Turkey or the United Arab Emirates to transfer money between Iran and the United States.

Many of those institutions are also used by money launderers and other criminal networks, raising red flags with bank compliance officers, U.S. regulators and prosecutors.

Several major U.S. banks contacted by Reuters, including Bank of America Corp, JPMorgan Chase & Co and Citigroup Inc declined to comment on how or whether they planned to change their policies on dealing with Iran.

Years of sanctions have snared some Iranian-Americans.

In one prominent case, federal agents in 2010 stormed the home of Mahmoud Reza Banki, an Iranian immigrant and U.S. citizen working for McKinsey & Co. in New York, after he received about $3.4 million from family members in Iran.

He said the money, which he declared on his taxes and used partly to purchase a New York apartment, came from his mother’s divorce settlement.

The 39-year-old was denied bail, convicted of conspiracy to violate sanctions laws and sentenced to 2-1/2 years in prison. An appeals court overturned the conviction in 2012, but not before Banki had served 22 months in jail.

Banki, who still has a criminal record for making false statements, told Reuters he shared a maximum security cell with a convicted murderer at one point and is still struggling to find work.

A spokesman for the U.S. Attorney for the Southern District of New York, which prosecuted Banki, declined to comment.

Many Iranian-Americans are hamstrung in less extreme ways.

Some have managed to get money into their U.S. accounts, only to have those accounts unilaterally shuttered by U.S. banks fearful of running afoul of sanction laws, according to the Washington-based National Iranian American Council and other Iranian-Americans.

Ehsan Lorafshar, a 38-year-old anthropologist from Orange, New Jersey, said he came to the United States in 2012 from Iran to pursue a Master’s degree in New York.

Two months later, he found out that Bank of America had frozen his account, with an $18,000 balance that his family had legally transferred to him.

Two near-penniless months later, Bank of America returned his money to him, he said, but refused to reopen his account. Bank of America declined to comment on why it froze the account.

Reporting by Suzanne Barlyn; Editing by Charles Levinson and Stuart Grudgings

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below