Iran’s money transfer regulations

Due to the international sanctions against Iran, money transfers into and out of Iran are strictly regulated and, in some cases, not allowed. The US and Iran have no direct banking relationship, meaning that any currency transfers between the two countries must be processed through an approved third country financial institution located outside of the US and Iran. In many cases, Iranian assets are frozen and unavailable for international transfers or other transactions.

Serious civil and criminal consequences can result for individuals who attempt to receive money or transfer money into or out of Iran without going through an approved third country financial institution, and it is possible that the wire transfer will be blocked completely. In some limited cases, an individual may physically carry funds between Iran and the US. All money sent into or out of the country must be tracked and declared, however, and failure to do so may result in a violation of OFAC sanctions, and a potential federal investigation for money laundering or the financing of terrorism.

The EU also imposes strict regulations on money transfers into or out of Iran and it is considered a criminal offense to violate these restrictions. At this time, personal remittances above certain amounts require authorization from appropriate regulatory bodies.

Iran’s monetary and regulatory authority

Iran’s central bank, the Central Bank of Iran, oversees the Iranian rial (IRR), its cash and electronic payments systems, and its domestic banking policies and transactions. International economic sanctions have contributed to making the rial the world’s least valued currency unit.

Iran’s economic background

The Islamic Republic of Iran (Persia) is an Islamic theocracy located in Western Asia and the second-largest nation in the Middle East. Iran is an economically important country, due in part to its large size and geographic location between Eurasia and Western Asia, coastlines along the Indian Ocean and the Caspian Sea, and proximity to the Strait of Hormuz. The country has large reserves of fossil fuels, the largest supply of natural gas in the world, and the fourth-largest proven oil reserves. It is a founding member of the United Nations (UN), and a member of the Non-Aligned Movement (NAM), the Organisation for Islamic Cooperation (OIC), and the Organization of the Petroleum Exporting Countries (OPEC), of which it is the second largest oil exporter.

US sanctions have been in place since the Iranian Revolution of 1979, and in 2006 the UN Security Council imposed additional sanctions after Iran refused to suspend its uranium enrichment program, further isolating the country politically and economically. These sanctions have caused the Iranian rial to weaken, lowered manufacturing and oil production, caused rising prices, and diminished consumer purchasing power. It is currently very difficult to transfer funds internationally to or from Iran as a result of these sanctions.

Investment conditions

Although Iran holds 9% of the world’s oil reserves, the largest reserves of natural gas in the world, and large reserves of fossil fuels, the country’s economy continues to struggle due to international sanctions. As of 2013, it was estimated that nearly US$100bn of Iran’s money was frozen in foreign bank accounts and approximately 50% of its foreign exchange reserves were unavailable, crippling its economy.

The US sanctions have affected investments in the country’s oil, gas, and petrochemicals industries, exports of refined petroleum products, and additional business dealings. The rial has been devalued, and many of the country’s industries, including banking and insurance, have declined due to lack of investment and business opportunities.

Iran’s economy combines state ownership of large enterprises such as the oil industry, with central planning initiatives, local agricultural, and smaller, privately owned businesses and service ventures. According to the World Bank, Iran ranks as an upper-middle income economy, with GDP of approximately US$482bn in 2011. The country’s service sector is the largest contributor to the economy, followed by mining, manufacturing, and agriculture.

In an effort to create more employment and investment opportunities and to improve the economy overall, the Iranian government continues to implement a series of market reform plans to help diversify its oil-reliant economy and cut subsidies, gradually replacing them with social assistance targeted at specific industries. The country is also developing pharmaceutical, biotechnology, and nanotechnology industries and working to privatize them. Industries such as car manufacturing, textiles, construction materials, information technology, home appliances, and power and petrochemicals are successful, and Iran’s farming industry is a top five producer of agricultural products, including cherries, apricots, cucumbers, dates, eggplants, figs, pistachios, and walnuts. Agriculture contributes approximately 20% to the gross national product and accounts for nearly a third of Iran’s labor force.

Currency

The official currency of Iran, the rial, is often referred to as the ‘toman,’ which is the name of the former official currency. Common rial coins in usage today come in denominations of 250, 500, and 1000. Banknotes can be found in denominations of 100, 200, 500, 1000, 2000, 5000, 10,000, 20,000, 50,000, and 100,000 rials.

Sources

• World Bank
• US State Department
• Bank for International Settlements
• International Monetary Fund