Law Firm Warns About Sanctions Pitfalls Involving Property Purchases

A U.K. law firm this week warned about sanctions risks tied to property purchases, saying one of its lawyers had to first obtain approval from a U.K. bank before a British-Iranian client could buy property in the U.K.

Ronald Fletcher said in a March 13 post that the issue began after its client sold a property in Iran and converted his funds to gold “to protect his assets from depreciation.” The client was looking to “liquidate the gold” and transfer that money into the U.K. to buy property, the firm said, but the firm had to first make sure that process wouldn’t violate sanctions, including restrictions imposed by the U.S.

The U.S. “has sanctioned the entire gold industry in Iran and UK banks are generally very much aligned with US sanctions to avoid heavy penalties,” the law firm said. “We had to review the matter and consider whether there was a risk of sanctions violations, i.e. risks to our client’s banking services, if he liquidated the gold and received the funds into his UK bank account.”

The firm said “a lot of property law professionals may be unaware of the potential for US sanction law violations” in similar cases. “However, the potential violation of sanctions presents a significant risk for both the client and the law firm.”

Lawyers and other compliance professionals should “monitor all matters for any direct or indirect link to sanction sensitive countries,” including Iran, Russia, Syria, Cuba and Sudan. “Whilst it can be costly and difficult to deal with matters such as these,” the firm said, “it is important to note that, in most cases, the risks can be mitigated.”