Selling Property in Iran and Transferring Proceeds to the United States: Comprehensive Legal, Sanctions, and Compliance Guide

In recent years, many Iranian-Americans have faced growing uncertainty when trying to manage property or financial ties in Iran. One of the most sensitive issues is what happens when someone sells property in Iran and wants to transfer the money to the United States.

I. Executive Overview

What might seem like a simple, personal transaction — selling a home or inherited property — can actually trigger serious U.S. legal and regulatory risks. Without careful compliance, such transfers may violate federal laws under the Iranian Transactions and Sanctions Regulations (ITSR), the Bank Secrecy Act, the Foreign Account Tax Compliance Act (FATCA), and the Money Laundering Control Act.

This guide provides a clear overview of how to navigate this complex process, including:

• How property sales are handled under Iranian law;
• The U.S. sanctions framework and available OFAC licenses;
• Common banking and money-transfer challenges;
• The unique risks of using cryptocurrency or digital assets;
• Tax and anti–money laundering reporting obligations; and
• Practical steps and documentation to stay compliant.

 

II. Property Sale Under Iranian Law

1. Ownership Rights and Sale Procedures

Foreign nationals and non-residents are allowed to own real estate in Iran under the Law on Acquisition of Real Property by Foreign Nationals (1931) and its accompanying regulations.
When selling property, all transfers must be completed through a licensed notary public (daftare-asnade-rasmi) and officially registered with the Real Estate Registration Organization of Iran.

The process typically includes:

• Presenting the original title deed (sanad-e-malekiat);
• Paying all required municipal and transfer taxes;
• Obtaining clearance certificates for water, gas, and other utilities;
• Confirming that the property is not subject to any ownership restrictions, such as foreign-ownership limits or special-zone regulations; and
• Paying the property transfer tax, which is usually around 5% of the sale price.

2. Foreign-Exchange Control

Iran operates a managed exchange-rate system overseen by the Central Bank of Iran (CBI). Under current currency-control regulations, sending large amounts of foreign exchange out of the country requires prior approval from the authorities.

When a property is sold, the proceeds are usually deposited into a rial-denominated bank account. To convert those funds into hard currency — such as U.S. dollars or euros — the seller must often obtain special authorization from the Central Bank.

As a result, transferring money abroad is extremely limited and tightly monitored. The situation has become even more restrictive in recent years because most international correspondent banks have cut ties with Iranian financial institutions due to ongoing sanctions.

III. U.S. Legal Framework: The ITSR and OFAC Oversight

1. Core Prohibitions

Under U.S. federal law (31 C.F.R. § 560.204), U.S. persons are generally prohibited from taking part in any transaction that involves goods, services, or technology going to or coming from Iran.

This restriction also covers financial dealings. Section 560.427 makes it clear that providing any kind of financial service — such as transferring money, making payments, offering credit, or moving value in any form — falls under the same prohibition.

In practical terms, this means that a U.S. citizen or lawful resident cannot legally sell property in Iran, receive the proceeds, or use any financial channel connected to Iranian individuals or banks — unless they first obtain a specific license from the U.S. Treasury’s Office of Foreign Assets Control (OFAC).

2. General Licence — § 560.543

Recognizing that many Iranian-Americans still own family property in Iran, the U.S. Treasury’s Office of Foreign Assets Control (OFAC) has issued a limited general license that allows certain transactions involving the sale of real or personal property in Iran — and the transfer of related funds to the United States.

However, this authorization applies only under very specific conditions:

• The U.S. person must have owned or inherited the property before acquiring U.S. citizenship or permanent residency.
• The property cannot be jointly owned with anyone listed as a blocked or designated person under U.S. sanctions.
• The transaction must be strictly personal, not part of any business, investment, or development activity.
• Any transfer of proceeds must avoid prohibited financial channels, such as Iranian banks connected to U.S. correspondent accounts.

If any of these conditions are not met, the individual must apply for a specific OFAC license, a process that can take six to twelve months to complete.

3. Practical Application

Example:
A U.S. lawful permanent resident inherited an apartment in Tehran in 2015 and sells it in 2025. Because the inheritance predates the person’s U.S. person status, the sale qualifies under § 560.543. However, the seller must still ensure that the funds are not remitted directly through a sanctioned Iranian bank and that documentation of inheritance and sale is preserved for bank compliance.

 

IV. Funds-Transfer and Banking Compliance

1. Prohibition on Direct Transfers

U.S. financial institutions are barred from processing any payment directly involving Iranian banks. 

2. Third-Country Routing

In practice, fund transfers are typically routed through a non-U.S. intermediary bank — often located in the UAE, Turkey, Oman, or Qatar — provided the institution is not listed on OFAC’s Specially Designated Nationals (SDN) list.
Funds are usually converted into euros or dirhams before being transmitted to a U.S. bank, once all necessary compliance checks are completed.

Intermediary banks commonly require:

• Proof of property ownership and a copy of the sale contract;
• Identification of the buyer and verification of the source of funds;
• A copy of the relevant OFAC general or specific licence;
• Declarations of compliance with anti-money-laundering (AML) and counter-terrorism-financing (CTF) regulations.

3. U.S. Bank Review

Upon receiving an inbound transfer from a high-risk jurisdiction, a U.S. bank’s compliance department conducts enhanced due diligence under the Bank Secrecy Act (31 U.S.C. § 5311 et seq.). Without clear proof of legitimacy, the transfer can be frozen or returned, and a Suspicious Activity Report (SAR) may be filed with FinCEN.

 

V. Cryptocurrency and Digital-Asset Transfers: Heightened Sanctions and AML Risk

1. OFAC Classification of Virtual Currency

According to OFAC’s official guidance (FAQ 560 & 559, 2021; Sanctions Compliance Guidance for the Virtual Currency Industry, October 2022), virtual currency is treated the same as traditional money under U.S. sanctions laws.

This means that any transaction involving cryptocurrency — even for personal, non-commercial purposes — cannot be used to move value between Iran and the United States. Such transfers are subject to the same prohibitions and penalties as those made in dollars or euros.

2. Enforcement and Precedents

• Kraken (2022): Paid $362,000 and entered into an $11 million compliance commitment for allowing Iranian users to access its platform.
• BitPay (2021): Fined $507,000 for processing crypto payments for individuals in sanctioned countries including Iran.
• Binance (2023): Agreed to $4.3 billion global settlement with FinCEN and OFAC for AML/sanctions failures, including Iranian users.
• Individual Prosecutions: U.S. persons facilitating blockchain transactions on behalf of Iranian nationals have been charged under IEEPA and 18 U.S.C. § 1956.

3. Criminal and Civil Penalties

Violation Type	Statutory Authority	Maximum Penalty
Civil sanctions violation	31 C.F.R. Part 560; 50 U.S.C. § 1705 (b)	Up to $356,579 per transaction
Wilful violation (criminal)	IEEPA § 1705 (c)	Up to 20 years imprisonment + $1 million fine
Money-laundering	18 U.S.C. § 1956	Up to 20 years imprisonment
Unlicensed money transmission	18 U.S.C. § 1960	Up to 5 years imprisonment

4. AML, Tax, and Reporting Exposure

• Converting crypto into fiat currency in the U.S. requires compliance with FinCEN’s Travel Rule (31 C.F.R. § 1010.410 (f)).
• IRS Form 8949 and Form 1040 (digital-asset checkbox) require reporting of all crypto dispositions.
• Transfers over $10,000 must be declared under FinCEN Form 8300 and FBAR (Form 114) if held in foreign wallets.
• Attempting to conceal crypto origin linked to Iran can trigger structuring and false-statement charges.

5. Conclusion on Digital Assets

Using cryptocurrency to try to get around Iran sanctions isn’t a loophole — it’s illegal. Deliberately moving value with crypto to evade sanctions is treated as sanctions evasion and can lead to serious federal charges.

It’s not just U.S. actors who are at risk: non-U.S. banks, exchanges, or service providers that knowingly help facilitate these transactions can face secondary sanctions or other penalties.

Bottom line: if a transfer in any way involves Iran, do not use cryptocurrency for payment, remittance, or value transfer. Treat crypto the same as cash when it comes to sanctions compliance.

VI. Taxation and Reporting Considerations

1. U.S. Tax on Foreign Property Sales

For U.S. persons, worldwide income is taxable under 26 U.S.C. § 61.
Thus, gain from the sale of Iranian property — even if realised abroad — must be reported on Form 1040 Schedule D and Form 8949.
The gain is the difference between the property’s fair-market value (in USD) at acquisition and at sale.

2. Foreign Bank and Asset Reporting

Reporting Obligation	Trigger	Form	Authority
Foreign Bank Account (FBAR)	> $10,000 aggregate in foreign accounts	FinCEN Form 114	31 C.F.R. § 1010.350
Foreign Financial Assets (FATCA)	> $50,000 for individuals	IRS Form 8938	26 U.S.C. § 6038D
Foreign Gift/Inheritance	> $100,000 from non-U.S. person	IRS Form 3520	26 U.S.C. § 6039F

Failure to disclose foreign accounts or transfers can result in penalties up to 50 % of account balance per year.

3. Currency-Conversion Records

Because Iranian rial is not freely traded, OFAC recommends using official exchange rates published by the CBI or IMF for IRS reporting consistency.

 

VII. Compliance Framework and Best Practices

1. Documentation Checklist

• Title deed and certified translation;
• Proof of acquisition date and inheritance documentation;
• Copy of buyer’s identification and source of funds;
• Sale contract notarised in Iran;
• OFAC general- or specific-licence documentation;
• Bank transfer statements and routing chain;
• Currency-conversion certificates;
• U.S. bank compliance correspondence;
• IRS and FinCEN reporting confirmations.

2. Due-Diligence on Counterparties

Conduct screening against:

• OFAC SDN List;
• Iranian Financial Sanctions Regulations (31 C.F.R. Part 561);
• EU Council Reg. 267/2012 (for EU intermediaries);
• UN Security Council List (if multilateral involvement).

3. Legal Opinion and Record Retention

Friling Law recommends that clients obtain a written legal-opinion memorandum confirming:

• Applicable licence basis (§ 560.543 or specific licence);
• Absence of blocked persons;
• Lawfulness of fund-transfer route.
  Maintain all records for ten years, consistent with OFAC’s record-keeping rule (§ 501.601).

VIII. Case Study: Lawful vs Unlawful Scenarios

 

Scenario	Description	Legal Outcome
A – Inherited Apartment Pre-U.S. Status	Inherited Tehran flat (2010); sold 2025; proceeds wired via UAE bank to U.S. account	Permitted under § 560.543 + bank documentation
B – Post-Naturalisation Purchase	Bought property in 2018 as U.S. citizen; sold 2025; funds routed via Iranian bank	Prohibited – requires specific licence; transfer blocked
C – Crypto Transfer	Buyer sends USDT to U.S. wallet from Iranian exchange	Prohibited; sanctions and money-laundering exposure
D – Sale through Third-Country Broker	Broker in Dubai collects funds, remits via non-designated bank, full records kept	Possibly lawful if § 560.543 applies and broker not blocked
E – Partial Ownership with Designated Relative	50 % co-ownership with individual on OFAC SDN list	Prohibited; entire property considered blocked property

IX. Interaction with Other U.S. Laws

1. Anti-Money-Laundering Statutes

Under 18 U.S.C. § 1956, any transfer designed to avoid reporting or conceal the source of funds is punishable by up to 20 years’ imprisonment.
Even if the underlying sale is legitimate, using unlicensed exchangers (hawala) or informal crypto payments converts the act into a potential money-laundering offence.

2. Counter-Terrorism and National-Security Provisions

Transactions with Iranian government entities or instrumentalities are barred under Executive Order 13599 (2012) and Executive Order 13876 (2019).
Funds indirectly benefitting such entities may be frozen indefinitely.

 

X. Professional Advisory: Practical Recommendations

1. Never use Iranian or digital-asset channels to move sale proceeds.
2. Confirm eligibility under § 560.543 before contracting.
3. Use a licensed third-country bank for fund routing; ensure it is not majority-Iranian-owned.
4. Engage both Iranian and U.S. counsel early to prepare documents for OFAC and tax compliance.
5. Disclose the transaction to your U.S. bank and accountant in advance.
6. Retain all written communications with buyers, intermediaries, and banks.
7. Avoid informal or cash-based transfers exceeding minimal limits; these trigger SARs.

 

XI. Concluding Remarks

Transferring the proceeds from a property sale in Iran to the United States isn’t impossible — but it does require careful planning, full transparency, and strict compliance with U.S. law.

Under OFAC regulation § 560.543, only properties that were owned before becoming a U.S. person or inherited may be sold and transferred without special permission. All other cases require a specific OFAC licence.

Attempts to bypass banking restrictions — through cryptocurrency, informal hawala networks, or unlicensed money transmitters — have led to serious enforcement actions and even criminal prosecutions. Penalties can include asset freezes, multimillion-dollar fines, and imprisonment.

Anyone considering such a transaction should consult U.S. sanctions counsel and tax professionals before proceeding. Careful preparation not only ensures compliance but also safeguards your finances, reputation, and even future immigration or citizenship prospects.