BANKS’ OBLIGATIONS UNDER THE BANK SECRECY ACT IN IRAN, ISLAMIC REPUBLIC OF
Recent advisory issued by the Financial Crimes Enforcement Network (FinCEN) highlights the importance of banks complying with their obligations under the Bank Secrecy Act in Iran. The Islamic Republic of Iran has been accused of abusing the international financial system to facilitate its illicit conduct, including money laundering, terrorism finance, and proliferation finance.
Background
The United Nations Security Council Resolution 1929, adopted on June 9, contains new provisions aimed at preventing Iran from continuing this illicit activity. The resolution requires world states to implement their obligations under previous resolutions and prohibits the provision of financial services or assets that could contribute to Iran’s proliferation activities.
Vigilance Required
The advisory emphasizes the need for banks to exercise vigilance when dealing with Iranian firms, including those owned or controlled by the Islamic Revolutionary Guard Corps (IRGC) and the Islamic Republic of Iran Shipping Lines (IRISL). These entities have been designated as posing a risk to the integrity of the international financial system.
Global Financial System
Despite many major financial institutions cutting off or reducing their relationships with Iranian banks, Iran continues to maintain a presence in the global financial system and is seeking to expand its banking presence internationally. The advisory highlights the need for U.S. financial institutions to take risk-mitigation measures to diminish threats emanating from Iran.
Compliance Requirements
The Bank Secrecy Act requires banks to report suspicious transactions and maintain records of all financial transactions. In light of the recent advisory, banks in Iran must ensure that they are complying with these requirements to prevent their institutions from being used for illicit purposes.
Conclusion
In conclusion, the Bank Secrecy Act is an essential tool in preventing the misuse of the international financial system. Banks in Iran must take their obligations under this act seriously and work to prevent their institutions from being used for illegal activity. Key measures include:
- Ensuring that correspondent relationships are not used to facilitate illicit activity
- Monitoring transactions with Iranian banks
- Reporting suspicious transactions
- Maintaining records of all financial transactions
By adhering to these requirements, banks in Iran can help prevent the misuse of the international financial system and maintain their integrity in the global market.