Credit Institutions Must Be Vigilant of Unusual Account Activity

In an effort to combat money laundering and terrorist financing, credit institutions in Iran are required to implement strict measures to monitor customer accounts and report any suspicious activity.

Monitoring Customer Accounts

According to Article 23 of the Central Bank’s Guidelines for Effective System of Internal Control in Credit Institutions, credit institutions must set up a system to periodically monitor and control higher-risk accounts. This includes monitoring transactions that exceed normal limits or exhibit unusual patterns.

• Monitor transactions that exceed normal limits
• Identify and report any suspicious activity

Reporting Suspicious Transactions

Article 24 requires credit institutions to have an internal control system in place to report suspicious transactions to the appropriate authorities. This includes deposits or withdrawals of large amounts of cash, which may indicate money laundering or terrorist financing activities.

Risk Management and Customer Due Diligence

To ensure effective risk management, Article 25 states that the board of directors and senior management must ensure that Know Your Customer (KYC) programs are in place and functioning properly. These programs should allow for proper oversight, segregation of duties, and staff training.

• Ensure KYC programs are in place and functioning properly
• Conduct regular reviews and updates to KYC policies and procedures

Compliance Function and Internal Audit

The compliance function within credit institutions is responsible for ensuring that KYC policies and procedures conform to related laws and regulations. The results of these efforts should be reported to the audit committee, which is responsible for evaluating reports from the compliance function unit/units (Article 28).

• Ensure compliance with relevant laws and regulations
• Report findings to the audit committee

Internal auditors must inspect the implementation of KYC policies and procedures in all branches and units of credit institutions, reporting any deviations with proposals to amend (Article 29).

Employee Training and Record Keeping

Credit institutions must have ongoing employee-training programs on KYC to ensure that staff understand the importance and implementation of these policies and procedures (Article 30). Additionally, customer records and transactions must be properly retained and processed for at least ten years after the account is closed (Article 31-33).

• Provide regular training on KYC policies and procedures
• Retain customer records and transactions for at least ten years

Extent of Application

The guideline applies to all branches of foreign banks and credit institutions in Iran, as well as Iranian banking units abroad with lax KYC regulations. The guideline consists of 35 articles and 13 notes, approved by the Credit Commission on August 13, 2008.

In summary, credit institutions in Iran must be vigilant of unusual account activity, implement strict measures to monitor customer accounts, and report any suspicious transactions to the appropriate authorities. Effective risk management, compliance functions, employee training, and record keeping are also essential components of a robust KYC program.