EB5 Investors Magazine | Page 55

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