Guidance

Overseas business risk: Iran

Published 20 May 2024

Political risk

The Iranian state is a mix of elected/un-elected, formal/informal, religious/secular, and traditional/revolutionary structures. The system is authoritarian and elections are deemed neither free nor fair. Its human rights record is poor and freedom of expression is restricted. 

UK companies trading with Iran therefore face a reputational risk of doing business with non-sanctioned individuals or entities operating in this system.

Economic and trade risks

Market barriers and protectionist trade policies have suppressed Iran’s foreign trade and investment in recent years. Main barriers include:

• US secondary sanctions affecting non-US companies
• limited direct banking channels
• opaque regulation
• import bans on some products
• corruption
• bureaucracy
• lack of money laundering legislation (FATF)
• associated due diligence costs

Banking

There are currently no UK banks with direct channels to Iranian banks. UK exporters typically use indirect payment routes and other bank and non-bank payment solutions.

Currency fluctuation and inflation

Banking and money transfer problems in Iran are exacerbated by the unpredictable exchange rate for the Iranian rial (IRR). The rial has been volatile in recent years and has seen marked depreciation. Inflation has also been high (41.5% in 2023^{[footnote 1]}) due to international sanctions and other internal economic drivers.

Non-payment

UK exporters should request advanced payments for goods to avoid the risk of non-payment.

UK sanctions and export controls

UK law permits trade with Iran in non-sanctioned goods and services. UK companies must comply with UN sanctions, UK sanctions and export controls. Trade could engage both trade and financial sanctions. UK sanctions apply to UK persons (natural or corporate) anywhere in the world as well as to anybody in the UK.

There are UK sanctions and export controls on certain goods and services – relating to human rights and Iran’s hostile activity, nuclear, military and dual-use items, and other restricted goods and technology.

There are sanctions relating to Russia and counter terrorism which are also relevant for trade with Iran.

You must check whether your activities are subject to sanctions or export controls and whether you need a licence from Export Control Joint Unit (ECJU), or Office of Financial Sanctions Implementation (OFSI) regarding financial sanctions. Licence applications related to export controls and trade sanctions are submitted to ECJU through SPIRE.

There are certain individuals and entities that you cannot do business with. Under UK financial sanctions, certain individuals are subject to an asset freeze and prohibition on making funds or economic resources available. You must check HM Treasury’s Consolidated List of Targets beforehand. You can get an exemption/license in some instances.

US sanctions

US primary sanctions on Iran remain in place. This means UK companies should consider their US connections, including the presence of employees holding US citizenship or green cards, before undertaking Iran-related activity.

The sanctions remaining in force prevent Iran-related transactions from passing through the US financial system. This complicates payments into and out of Iran.

If in any doubt you should seek legal advice. It is important to ensure appropriate due diligence measures take place before engaging in any business activity.

Protection of Trading Interests

Protection of Trading Interests (PTI) legislation protects legitimate trade between UK persons and countries affected by the extraterritorial application of certain laws (proscribed sanctions), including US sanctions on Iran.

The legislation applies to a UK national resident in the UK, a non-national resident in the UK, any legal person incorporated in the UK (and a few additional situations relating to transport services). Breaches of the PTI legislation are criminal offences in the UK.

Find more details on your obligations under the legislation, how to report affected interests and request authorisations to comply with extraterritorial sanctions at Protection of Trading Interests (retained blocking regulation).

Business and human rights

Iran was a founding member of the International Labour Organization. However, Iran continues to breach its obligations under the International Covenant on Civil and Political Rights.

The human rights situation in Iran continued to deteriorate in 2023. The number of executions nearly doubled compared to 2021, and human rights were further eroded in multiple areas: women and girls faced tightening restrictions; the persecution of certain religious minorities intensified; and Iran escalated its practice of using detained foreign nationals to pressure governments.

Iran is one of the Foreign, Commonwealth and Development Office’s (FCDO) Human Rights Priority Countries (HRPCs). For further information, see Human Rights and Democracy: 2022 Foreign, Commonwealth & Development Office report.

Bribery and corruption

It is a criminal offence for British nationals or someone who is ordinarily resident in the UK, a body incorporated in the UK or a Scottish partnership, to bribe anywhere in the world.

In addition, a commercial organisation carrying on a business in the UK can be liable for the conduct of a person who is neither a UK national nor a resident in the UK nor a body incorporated or formed in the UK. In this case it does not matter whether the acts or omissions which form part of the offence take place in the UK or elsewhere.

Iran ranks low in both the Corruption Perceptions Index (147/180) and the Ease of Doing Business Ranking (127/190).

Before you engage in business in Iran you should carry out due diligence measures. Seek legal advice if you have any doubts about whether you are exposed to compliance or reputational risks.

Iran’s bribery and corruption regulation is covered in several non-specific laws, but it is drawing up corruption and transparency measures.

Read the information on our bribery and corruption page.

Organised crime

The Global Organized Crime Index (OCI) ranks Iran 14/193 countries for criminality, particularly for human smuggling/trafficking, arms trafficking, the heroin and synthetic drugs trade, and non-renewable resource crimes. The OCI list state-embedded actors as the dominant criminal actors in Iran.

Terrorism threat

Terrorists are likely to try to carry out attacks in Iran. Attacks could happen anywhere, including in places visited by foreigners.

For the latest advice on the risk of terrorism in Iran, see Foreign, Commonwealth & Development Office travel advice.

Risk of detention

British and British-Iranian dual nationals are at significant risk of arrest, questioning or detention in Iran. Holding a British passport can be reason enough for the Iranian authorities to target you.

If you are detained in Iran you could face months or years in prison and your case will be in the hands of the Iranian authorities, who show a pattern of hostility towards the UK and its citizens. You should assume that no face-to-face consular assistance will be possible in an emergency situation and that the UK government will not be able to help you if you get into difficulty in Iran.

For more information, see Foreign, Commonwealth & Development Office travel advice.

Protection security advice

The threat to British travellers – including of questioning, arrest or detention – is likely to be higher if there’s any national unrest, terrorist incident or an increase in tensions between Iran and the international community.

The Iranian authorities have accused people with links to the UK of inciting protests. Anyone who is arrested in connection with protests and holds British nationality may come under added suspicion of espionage or working to undermine the Iranian government, increasing the risk of lengthy detention, criminal charges and/or receiving the death penalty.

For the latest travel and security advice for Iran, visit Foreign, Commonwealth & Development Office travel advice.

You can also read the information on our protective security advice page.

Intellectual property

Iran is a signatory to the International Convention for the Protection of Industrial Property of the World Intellectual Property Organisation (WIPO) known as the ‘Paris Union’.

The Iranian Industrial Property Office promotes IP protection and encourages accession to international agreements and treaties. Though there have been cases of IP theft involving foreign companies in recent years.

Patents and trademarks in Iran

Patents in Iran are valid from 5 to 20 years. The length of patents is decided by the inventor, who pays an annual fee. Patent applications are examined only for the correctness of documents and compliance with patent specifications.

Trademark registrations are effective for 10 years following the date of filing and are renewable. Trademark infringements can be challenged for up to 3 years.

Rejected applications for registration of trademarks and patents can be appealed in the Iranian courts.

Read the information on our intellectual property page.

Contact

Contact the Enhanced International Support Service team for more information and advice on doing business in Iran.

Useful links

For further information about doing business in Iran, read information provided in the Department for Business and Trade’s (DBT) Exporting to Iran Guide.

1. IMF, World Economic Outlook, April 2024 ↩