Navigating Sanctions: How Iranians Move Money Abroad Amidst Financial Restrictions

Decades of international sanctions have significantly hampered Iran’s integration into the global financial system, creating substantial hurdles for both individuals and businesses engaged in cross-border transactions. These sanctions have intensified following the current US-Israeli conflict involving Iran. Consequently, many Iranians have been compelled to seek alternative methods for international payments, as conventional banking channels have become largely inaccessible. While these workarounds offer avenues to circumvent restrictions, they invariably come with associated costs and risks, often failing to match the security, reliability, and efficiency of a standard international banking system.

One prevalent alternative involves leveraging networks of cross-border currency exchangers. This informal system connects individuals needing local currency within Iran with those requiring foreign currency abroad. By matching these opposing demands, transactions can be settled without direct movement of funds between Iranian and foreign bank accounts.

Similar methods are employed through intermediary firms that provide services akin to currency exchange traders. Typically, a client pays the intermediary in Iranian local currency, and the firm, or an international partner, facilitates payment to the foreign supplier in a convertible currency using funds held overseas. While these services can bridge gaps in international banking access, they often entail additional fees, unfavorable exchange rates, delays, and increased complexity.

Beyond formal companies, some Iranians resort to private arrangements with individuals, even those they do not know personally, for cross-border money transfers. These private deals can serve as practical solutions when formal channels are unavailable but heavily depend on trust rather than legally binding agreements. Reza, an Iranian IT manager based in Germany, noted, “The transaction involves strangers having to trust one another to conduct a deal without any legal documentation or proof. It relies entirely on trust, and either party can back out at any time, leaving the others out of pocket.”

These methods, whether through companies or individuals, are informal and inherently less secure. Ashkan Bahrami, an Iranian trade expert, explained, “We have to use informal exchange and remittance systems for international trade, which carries risks such as lost funds, fraud and high transfer costs.” These networks are also susceptible to geopolitical instability. For instance, some operations through Gulf countries have been disrupted by the ongoing conflict, adding further uncertainty for dependent businesses and individuals.

Cryptocurrency has emerged as another potential avenue, allowing wealth transfer without traditional banking intermediaries. However, even digital assets have not provided a foolproof escape from sanctions. Earlier this year, the US Treasury Department’s Office of Foreign Assets Control (OFAC) imposed sanctions on several prominent Iranian cryptocurrency exchanges, including Nobitex, Wallex, Bitpin, and Ramzinex. Alireza Yaghoubi, chairman of Iran’s FinTech Association board, cautioned that crypto transactions are traceable, and significant repercussions, such as sanctions on Iranian wallets, can occur.

The possibility of sanctions, coupled with intermittent internet disruptions, renders cryptocurrency an unreliable option. For businesses importing physical goods, the challenges extend beyond payment processing. War-related disruptions and restrictions, particularly following the US naval blockade on Iran, have complicated transportation, extended delivery times, and increased uncertainty regarding shipment arrivals. Arghavan Ghazanfari, CEO of Aron Trading Group, highlighted the severe impact on importers using the port of Shanghai, China. “Transit time used to be 26 days. But when it stretches nowadays to 102 or even 120 days, customers are bound to reconsider importing. Unfortunately, the main problem now is that our supply routes are gradually being cut off.”

Even when Iranians manage to make payments abroad and accept lengthy delivery delays, affording the intended purchases remains a significant hurdle. The sustained depreciation of the Iranian rial has drastically reduced purchasing power. The currency has lost over 10 percent of its value against the US dollar in the past month, more than 55 percent over the past year, and nearly 90 percent over the last five years. There is little indication that this economic pressure will abate soon. With the looming threat of further conflict escalation and a clouded economic outlook for the country, many Iranians are grappling not just with how to move money across borders, but with the long-term viability of navigating an increasingly restrictive financial system and its escalating costs.