Recent OFAC Actions
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The Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) amended the Iranian Transactions Regulations, 31 C.F.R. part 560 (the “ITR”), effective November 10, 2008, by revoking an authorization previously granted to U.S. depository institutions to process “U-turn” transfers  , and by making certain other conforming and technical changes.
A “U-turn” transfer is so termed because it is initiated offshore as a dollar-denominated transaction by order of a foreign bank’s customer; it then becomes a transfer from a correspondent account held by a domestic bank for the foreign bank to a correspondent account held by a domestic bank for another foreign bank; and it ends up offshore as a transfer to a dollar-denominated account of the second foreign bank’s customer. As a result of this amendment, effective November 10, 2008, U.S. depository institutions no longer will be allowed to process “U-turn” transfers involving Iran, thereby precluding transfers designed to dollarize transactions through the U.S. financial system for the direct or indirect benefit of Iranian banks or other persons in Iran or the Government of Iran. This amendment does not revoke the existing authorization in the ITR for funds transfers by U.S. depository institutions, through intermediary third-country banks, to or from Iran or for the direct or indirect benefit of the Government of Iran or a person in Iran arising from underlying transactions that are authorized by a specific or general license issued pursuant to the ITR (e.g., payments arising from authorized sales of agricultural products, medicine, and medical devices to Iran), are not prohibited by the ITR (e.g., a family remittance not related to a family-owned enterprise), or are exempt from the ITR (e.g., payment for the shipment of a donation of articles to relieve human suffering; the exportation or importation of information and informational materials; or travel-related remittances).
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