What is OFAC Voluntary Self-Disclosure?

Disclaimer: Iran OFAC license data below is for general information, not legal advice.

What Is an OFAC Voluntary Self-Disclosure (VSD)?

An OFAC Voluntary Self-Disclosure (VSD) is the proactive reporting of a violation of U.S. sanctions laws administered by the Office of Foreign Assets Control (OFAC). When submitted voluntarily—ideally with the guidance of an experienced OFAC attorney—a VSD can significantly reduce potential civil penalties and often eliminates the risk of criminal prosecution.

This principle also applies to the Foreign Bank Account Reporting (FBAR) obligations. U.S. persons with foreign financial accounts exceeding a cumulative balance of $10,000 must report them annually. Voluntarily filing late or unreported FBARs, in coordination with an international tax attorney, can help avoid severe IRS penalties and criminal exposure.

The U.S. Department of the Treasury has long supported voluntary disclosures as a matter of enforcement policy. Below are examples of situations that may require an Iran-related OFAC License VSD:

Common Scenarios for Iran OFAC Voluntary Self-Disclosure:

Holding an account in Iran (bank or brokerage) that may involve OFAC or FBAR violations.
Running a self-employment business in Iran, potentially triggering OFAC, FBAR, and income tax compliance issues.
Working in Iran (outside of U.N.-related employment), which may carry the same violations noted above.
Hiring legal counsel in Iran without first obtaining a specific OFAC license.
Engaging in business activities in Iran, such as farming, trade, or manufacturing, without the proper OFAC authorization.

Why Legal Coordination Matters

Iran OFAC License VSDs often overlap with international tax compliance issues, including violations of:

FBAR (Report of Foreign Bank and Financial Accounts)
FATCA (Foreign Account Tax Compliance Act)
IRS Voluntary Disclosure Practice (VDP)

To ensure full compliance and maximize penalty mitigation, it’s critical to work with both an Iran OFAC Attorney and an International Tax Attorney.

How We Can Help

Dual-Licensed Attorney and CPA

Zaher Fallahi, Attorney At Law, CPA, licensed in both California and Washington, D.C. With extensive experience in OFAC regulations, he provides nationwide legal counsel on OFAC compliance, as well as IRS laws and regulations, in the following:

Iran OFAC license applications and compliance
Voluntary disclosures and violation resolution
Cross-border financial transactions and tax planning
IRS and Treasury-related matters including FBAR and FATCA
Reporting foreign gifts and handling related tax issues

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Amir Baradaran Rafii

3 months ago

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1 year ago

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1 year ago

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1 year ago

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1 year ago

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1 year ago

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1 year ago

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1 year ago

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1 year ago

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1 year ago

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What is OFAC Voluntary Self-Disclosure?

What Is an OFAC Voluntary Self-Disclosure (VSD)?

Common Scenarios for Iran OFAC Voluntary Self-Disclosure:

Why Legal Coordination Matters

How We Can Help

TestimonialsWhat our clients say about us

Testimonials
What our clients say about us