Iran targeted human rights sanctions series: Can children of Iranian officials be designated?

By Holly Dagres, Celeste Kmiotek, and Lisandra Novo

Targeted human rights sanctions are, in short, a tool governments use to freeze the assets of and deny visas to those complicit in human rights violations. While they are generally intended to prompt offenders to change their behavior, they have additional effects. For example, preventing perpetrators from obtaining the tools needed to continue abuses and showing support for victims. However, the Atlantic Council’s Strategic Litigation Project (SLP) has heard from multiple sources that many people in affected communities—including the Iranian community—do not have sufficient information, especially in their native language, about these measures and what they mean.

Based on this feedback, this blog series was started to highlight important information about targeted human rights sanctions as they relate to the Islamic Republic of Iran; major updates on Iranian perpetrators who have been sanctioned for human rights abuses and why; and any other information that may be relevant to affected communities. Input is welcomed from readers, particularly in Iranian civil society, for questions and topics that should be addressed.

“Justin Bieber’s pool party time,” posted Naeima Taheri in her Instagram stories from her helicopter tour of the Hollywood Hills. The post would normally not be given much thought. However, Taheri is the great-granddaughterof Ayatollah Ruhollah Khomeini, the founder of the Islamic Republic, and considered an aghazadeh, or children of the elite—similar to the Western concept of “nepo baby.”

Taheri is one of many examples of children of Islamic Republic of Iran (IRI) officials who climb the ladder of the clerical establishment through family connections and financially benefit through cronyism, corruption, and a black market economy that gives them access to goods otherwise denied to Iranian citizens. Children of wealthy elite Iranians are known to also publicly document their affluence and “flaunt their wealth” on social media, flirting with the idea of being influencers by posting pictures of driving luxury cars, riding in private jets, donning designer accessories and clothes, or taking lavish international vacations, angering Iranians who struggle to make ends meet as the middle class fades into nonexistence.

In November 2023, the World Bank reported that 28.1 percent of Iranians were considered to be living in poverty, with an economic expert in Iran estimating the figure as closer to 50 percent. The circumstances leading to this  have disproportionately impacted women and have forced almost one million Iranian children to drop out of school.

Following the death of Mahsa Jina Amini at the hands of the so-called morality police and the resulting anti-regime protests known as the Women, Life, Freedom uprising in 2022-2023, the children of officials have again drawn criticism for using their parents’ wealth to live in the same Western countries levying sanctions on the IRI officials themselves. The number of these children is estimated to be in the thousands, though exact figures are unavailable, with some being reportedly the children of high-ranking officials, such as former Vice President Massoumeh Ebtekar and former Parliamentary Speaker Ali Larijani. Unsurprisingly, some discussion has turned to imposing visa restrictions and/or other targeted sanctions measures on these officials’ children as well, who often live and/or study in the West at sometimes elite universities.

Targeted sanctions are generally intended to promote behavioral changes in perpetrators and so are primarily used to designate those personally responsible for or complicit in relevant abuses. In some cases, for example, for financially independent children who have publicly or privately denounced their parents’ behavior, designating those children would not only be unproductive but could potentially endanger them by revoking their visas. However, in other instances, such as where officials personally fund their children’s education and overseas lives, such designations could serve as an additional pressure point when strategically implemented.  

Targeted sanctions designations for immediate family members

Some but not all sanctions regimes allow designations of “immediate” family members or of family members more generally. In the United States, under § 7031(c) of the Annual Department of State Appropriations Act (“§ 7031(c)”), officials of foreign governments and their immediate family members—which is not further defined—can be designated for “significant corruption” or “gross violation[s] of human rights.” However, unlike most targeted sanctions regimes, this only results in a visa ban—not an asset freeze. Likewise, under the US’ (Saudi Journalist Jamal) Khashoggi Ban, “individuals who, acting on behalf of a foreign government, are believed to have been directly engaged in serious, extraterritorial counter-dissident activities,” and the family members of those individuals can be designated, but again this is limited to a visa ban.

For other regimes, such as Global Magnitsky sanctions under Executive Order 13818 or sanctions for human rights abuses in Iran under Executive Order 13553, designations cannot be made based solely on the status of being the family member of a perpetrator. However, if that family member provided assistance or material support to the perpetrator or acted directly or indirectly on their behalf, then they could be designated as well.

Australia’s Autonomous Sanctions Regulations 2011 also allows for designations of immediate family members of those “covered by” a designation or declaration preventing travel for serious violations or serious abuses of human rights.

Canada’s Special Economic Measures (Iran) Regulations allow for the designation of family members of those engaged in “gross and systematic human rights violations in Iran,” former or current senior officials in the Islamic Revolutionary Guard Corps (IRGC), the associates of such individuals, and senior officials of entities owned by such individuals. “Family member” is not defined in the regulations and so would seemingly extend beyond immediate family. Canada further revised thirteen country-specific sanctions regulations in 2023, including those for Iran, to allow for designations against former nationals of the relevant state.

The United Kingdom (UK) and European Union (EU) allow the broadest relationship-based designations under both Iran-specific and human rights sanctions regimes, covering those “associated with” individuals who have committed the relevant acts. The UK further considers, for its Global Human Rights Sanctions Regulations 2020, that those who profit financially or otherwise receive a benefit from sanctionable activities as “involved persons” who can be designated. For the UK’s Iran (Sanctions) Regulations 2023, “associated with” means obtaining financial or material benefit or being an immediate family member of a person involved in the relevant activities (e.g. human rights abuses). Under the UK sanctions framework, “immediate family” means a spouse or civil partner, parents or stepparents, children or stepchildren, siblings or stepsiblings, aunts, uncles, grandparents, and grandchildren. Both the UK and the EU have sanctioned the children or stepchildren of perpetrators designated in the Russian context on the basis of their relationship and for financially benefiting from the parent. Rulings from the Court of Justice of the EU provide further guidance on what does and does not constitute “associated with” for familial relationships.    

For thematic sanctions regimes, such as Global Magnitsky or human rights regimes, whether family members can be designated is the same for all countries and contexts. For country-specific regimes, while there is variation, the Russia- and Iran-specific regimes generally mirror one another. For example, the language around family members and those “associated with” perpetrators in Canada’s Special Economic Measures (Russia) Regulations, the UK’s Russia (Sanctions) (EU Exit) Regulations 2019, and the EU’s Council Regulation (EU) No 269/2014 concerning restrictive measures in respect of actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine reflect those of their Iran-specific counterparts. Likewise, some US regimes related to Russia, like that under Executive Order 13661 on contributing to “the situation in Ukraine,” require materially assisting or supporting, or acting on behalf of, a perpetrator. However, others, like that under Executive Order 14024, allow for the designation of spouses and adult children of perpetrators.

Asset freezes and financial restrictions

Even if they are not personally designated, asset freezes could prevent the children of designated individuals from accessing their parents’ wealth overseas. Targeted sanctions generally deny visas to, freeze the assets of, and prohibit financial transactions with the designated person or entity. Additionally, the US interprets financial restrictions imposed as a consequence of a sanctions designation to include a ban on any transaction involving the US dollar—which, due to the dollar’s “centrality to the system of global payments,” involves a large portion of international trade, and, as of March 11, 2023, 88 percent of foreign exchange transactions. Any international transaction with someone designated by the US, therefore, especially risks violating sanctions regulations.

However, several sanctions regimes do permit derogations: exceptions to the sanctions restrictions, for specific reasons. For example, the EU allows derogations to meet the basic needs of dependent family members, such as “food, rent or mortgage, medicines and medical treatment, taxes, insurance premiums, and public utility charges.” Likewise, the UK allows licenses for the basic needs of designated persons and their dependent family members, including medical needs, food, payments of insurance premiums or taxes, rent or mortgage payments, and utility payments. Canada, Australia, and the United States also allow permits or license applications.

What does this mean in practice? While the family members of a designated person may be free to travel to the country of the designation, they will not be able to access any assets held there under the designated person’s name unless they qualify for an exception. For example, if an IRI official held a bank account and an apartment in London and was designated by the UK, their relative could travel to London but could not access either the bank account or the apartment. Additionally, that designated official could not personally conduct a financial transaction with any UK banks or businesses to provide this relative with funds and housing. While in the UK, the relative also cannot “deal with” the designated person’s funds in any way, including using, altering, or moving them. But, if this relative is a “dependent” family member, for example, a child who is not financially independent, then they may be able to access the funds to the extent necessary to cover rent, food, medicine, and other allowed basic needs. This is true across all countries and contexts, though each case would be handled uniquely.

Further, the full effect of asset freezes is often limited by sanctions evasion. For example, this may include the use of shell companies, “shadow banking” in third jurisdictions, and the use of intermediaries. Again, while true across all countries and perpetrators, the political will to address it may differ among contexts.

Sanctions violations penalties

Depending on the jurisdiction, the nationals or residents of a sanctions-issuing country are generally required to comply with sanctions rules. The penalties for violating sanctions depend on the jurisdiction but generally includecriminal charges, including possible fines and jail time. Notably, in the aftermath of Russia’s full-scale invasion of Ukraine, the Parliament and the Council of the European Union reached a provisional political agreement to standardize “criminal offences and penalties for the violation” of EU sanctions across EU member states, requiring certain violations to be treated as criminal offenses.

Children based in relevant jurisdictions could, therefore, be subject to criminal proceedings for knowingly violating sanctions regulations—such as engaging in a financial transaction with a designated parent while living in the country that made the designation. However, sanctions evasion cases require enforcement, which can be resource-intensive—for example, involving forensic accounting.

Asset seizures

If children of IRI officials fund their lifestyles in Western jurisdictions with their parents’ ill-gotten funds, their assets may also be subject to seizure. For example, the UK’s Proceeds of Crime Act (POCA) allows law enforcement to recover property obtained through unlawful conduct.

Under POCA, “unlawful conduct” includes that which “constitutes, or is connected with, the commission of a gross human rights abuse or violation.” POCA’s definition of “gross human rights abuse or violation” is narrow, and the required link between the property seized and the unlawful conduct can be difficult to prove. However, it also includes conduct occurring in the UK that is unlawful and conduct outside the UK that is unlawful where it occurred and would be unlawful in the UK. For example, the UK’s National Crime Agency recovered the forfeited contents of the bank account of Bashar al-Assad’s niece (£24,668 or $32,017), noting that fifty-six deposits were paid into the account during 2017 and 2018, totaling £150,000 ($194,686), “despite her having no identifiable source of income.” They ultimately determined that the funds were put into the account to bypass EU sanctions. 

In this vein, POCA also allows law enforcement to obtain Unexplained Wealth Orders (UWOs). If granted, these require the respondent to produce details about a specific identified property, including how they obtained it. Depending on the results, the UWO can lead to an asset forfeiture.

UWOs can be used when there is “reasonable cause to believe” that a person holds property valued greater than £50,000 ($64,903) and when there are “reasonable grounds for suspecting” that the person’s known sources of lawful income “would have been insufficient … to obtain [that] property,” or that the property was obtained through unlawful conduct. Additionally, the specific person must be a “politically exposed person,” which includes family members of those “entrusted with prominent public functions” in states outside the UK and European Economic Area. Otherwise, there must be “reasonable grounds for suspecting” that the person or someone connected to them is or has been “involved in serious crime,” either in the UK or elsewhere.

Australia has a similar law on seizing the proceeds of crime, which also allows for UWOs. Nearly all of Canada’s provinces have also enacted legislation allowing for the seizure of criminal property. In November 2023, British Columbia filed “the first ever application of an unexplained wealth order in Canada.”

A 2014 EU Directive requires member states to have necessary measures to confiscate proceeds of crime when belonging to someone convicted of a criminal offense. The conviction must be a final conviction, meaning it cannot be subject to further appeals and must be for a specific criminal offense as included in the directive or other EU legal instruments that refer back to the directive. This means it’s not applicable in relation to the same kinds of human rights abuses that result in targeted sanctions designations, as these do not require a conviction. If sanctions evasion is successfully standardized as a criminal offense throughout the EU, it is possible it may provide a basis for confiscation. For the moment, this would only apply to children of IRI officials if they are convicted of one of the currently listed criminal offenses under EU legislation.

Implementation of available tools in practice

Children of IRI officials might be impacted by targeted human rights designations, but only through strict sanctions enforcement and investigation and only where there is political will. Financially independent relatives who benefit from familial relationships with designated IRI officials are legally fair game in several jurisdictions, so long as the requirements are met. But there are valid reasons for the derogations built into sanctions frameworks to ensure the health and safety of dependent family members, and there are likewise valid policy reasons for using caution when designating individuals more tangentially linked to the human rights violations themselves. However, these derogations and hesitations can be exploited and merit increased scrutiny from sanctioning countries.

This issue is not unique to the Iranian context. Notably, the children of Russian officials and oligarchs are also known to live in luxury outside Russia, especially in Europe and the United States. However, while governments acknowledged the situation and responded in the aftermath of Russia’s full-scale invasion of Ukraine, they do not appear to be making the same efforts in light of the ongoing human rights abuses in Iran. Without such scrutiny and response, IRI officials can continue to access Western jurisdictions despite the prolific use of targeted sanctions.

This article was originally published here.

Holly Dagres is a nonresident senior fellow in the Atlantic Council’s Middle East programs and editor of the Atlantic Council’s IranSource blog. Follow her on Twitter: @hdagres.

Celeste Kmiotek is a staff lawyer for the Strategic Litigation Project at the Atlantic Council.

Lisandra Novo is a staff lawyer for the Strategic Litigation Project at the Atlantic Council.